Currently, there are SMEs and startups with good potential for growing into large enterprises. However, they lack broad funding tools and face limitations that prevent them from listing on SET and mai. To promote and create opportunities for SMEs and startups to access new funding sources suitable for their business size, SEC and SET therefore collaborate to establish channels for SMEs and startups to raise funds from investors through public offering and allow their shares to be traded in a secondary market.
 

SMEs intending to raise fund through public offering and to have their shares listed in a secondary market must be a public company limited and have investor protection measures under the law (the Public Limited Companies Act, B.E. 2535 (1992)). The draft regulations would relax the regulations in both primary and secondary markets to suit the context of SMEs and alleviate unnecessary burdens imposed on them. For example, an application for approval, a financial advisor, and fees would not be required. Nevertheless, to be qualified, SMEs and startups must meet specific requirements, such as:
            1.  File the registration statement to disclose company information and financial statements audited by an auditor who is employed by an audit firm that has been inspected by the SEC*;
            2.  Submit half-year and annual financial statements that have been reviewed or audited by an auditor who is employed by an audit firm that has been inspected by the SEC** as well as the annual report;
            3.  Directors and senior executives of each work unit must not have untrustworthy characteristics and must perform fiduciary duty;
            4.  Shares must be sold through an intermediary that is responsible for conducting know-your-customer screening process and recommending suitable investment. (Suitability)
 

Investing in primary and secondary markets is restricted for qualified investors with knowledge, experience and high net worth who can afford high-risk investment, such as institutional investors, private equity, venture capital and angel investors. Eligible investors also include directors and employees of the SMEs or companies in the same group, etc. This is to maintain investor protection suitable for potential investment risks.

In this regard, there are certain requirements for trading on the SMEs Board. For example, the trading must be done by sending orders through an intermediary via a matching system in the form of auction once per day; Buyers must have the full amount of cash before buying and sellers must have sufficient shares in their portfolios before selling (prepaid market); Unfair activities related to securities trading must also be regulated in the same manner as those on SET and mai, etc.   

The consultation paper is available at www.sec.or.th/hearing and www.set.or.th. Stakeholders and interested parties are welcome to give comments and suggestions via the websites or email: tayakorn@sec.or.th or wareeya@set.or.th. The public hearing ends on 13 August 2021. 

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Notes:

* An auditor working for an audit firm that has been inspected by the SEC is a certified public accountant (CPA) from the Federation of Accounting Professions under the Royal Patronage of His Majesty the King pursuant to the Accounting Professions Act B.E. 2547 (2004), and is a partner or employee of the audit firm.

** An audit firm that has passed an inspection of the SEC has an audit quality control system in line with professional standards and sufficient personnel for providing auditing service to businesses in the capital market. Such audit firm must employ at least one auditor in the capital market. The name list of the audit firms inspected by the SEC is available at https://market.sec.or.th/public/orap/AUDITOR01.aspx?lang=th.