Bangkok, 6 February 2024 – The Securities and Exchange Commission (SEC) has provided an update on the progress of initiatives aimed at enhancing the quality of listed companies and the duty performance of personnel in the capital market. These initiatives fall under the Strong Securities Issuers Project and focus on preventing, deterring and suppressing inappropriate behaviors and misconduct. A recent development in this area is the SEC Board’s approval of amendments to the Stock Exchange of Thailand (SET) regulations to improve the screening process for companies applying for SET listing and to strengthen supervision of listed companies, as proposed by the SET. The SEC also gives emphasis to effective enforcement, ensuring that wrongdoers in all cases, without exception, are subject to legal action.
The Strong Securities Issuers Project is an initiative under the SEC Strategic Plan in the area of building trust and confidence in the capital market. The Project aims to enhance the quality of listed companies and the overall duty performance of the personnel associated with listed companies. In this regard, the SEC has been working with relevant organizations through various approaches and activities, using the key measures of preventing, deterring, and suppressing wrongful acts. So far, the Project has made significant progresses.
On 1 February 2024, the SEC Board Meeting No. 2/2567 gave its approval to the SET’s proposal to amend the regulations on qualifications of companies seeking SET listing and supervision of listed companies. This regulatory amendment is part of the SEC’s Preventive Measures, with the key points as follows:
(1) Revising the qualification requirements imposed on applicants for listing on SET and the mai (Market for Alternative Investment) whereby the criteria for considering the financial condition and the operating results to ensure that the potential issuer have a strong financial background;
(2) Revising the criteria for backdoor listing and trading resumption to ensure equally stringent regulations as those applied to IPOs;
(3) Revising regulations on investor alerts and delisting of the securities in which companies displaying inappropriate behaviors; and
(4) Revising disclosure rules for the lists of shareholders and unitholders in the case of listed companies, trusts and mutual funds.
The amendment under (1) will take effect from 1 January 2025 while most provisions of the amendments under (2) and (3) will take effect on 1 April 2024, and the amendment under (4) is expected to take effect from 1 March 2024*.
Additionally, the SEC is reviewing relevant regulations to enhance the quality standards of the applicants for SET and mai listing. For example, the regulations related to material transactions (MT) and related party transactions (RPT) to lay out the responsibilities of listed companies regarding clearer disclosure of investment information. Furthermore, the regulations requiring listed companies to submit the financial statements for the latest three financial years, as reviewed in compliance with the financial reporting standards of the Publicly Accountable Entities (PAE), have become effective for companies submitting an IPO application in 2024.
Furthermore, improvements have been made to the roles of personnel associated with listed companies to strengthen the line of defense consisting of, for example, directors, the audit committee, independent directors, executives and secretaries, as well as the gatekeepers, for example, auditors and financial advisors, enabling them all to perform their duties accurately and in the best interest of listed companies. Concurrently, the SEC continues its emphasis on investor education and protection activities.
As for the Deterrence Measures, the SEC has been collaborating with relevant organizations such as the SET, the Thai Bond Market Association (ThaiBMA) and the Bank of Thailand (BOT), to exchange information and enhance systems for detecting and alerting irregularities or risks in various areas. Leveraging technology, these efforts aim to enhance supervision, improve responsiveness, and increase efficiency in order to mitigate systemic risk effectively.
Furthermore, the regulatory and measure review includes stricter securities trading, for example, client investment limits, consideration of collateral quality, and prohibition of Non-Voting Depositary Receipt (NVDR) investment by Thai entities. The SEC has also collaborated with the SET to study guidelines for the auto halt rules and temporary trading suspension concerning irregular trading activities. Such regulations are expected for issuance and implementation within this year.
SEC Secretary-General Pornanong Budsaratragoon said: “The SEC has been working tirelessly to ensure effective law enforcement, as part of the Suppression Measures. In the case of public interest in Stark Corporation Public Company Limited (STARK), the SEC has already filed a criminal complaint with the Department of Special Investigation (DSI). When news of the concerns in the matter appeared, we did not stay indifferent. We have confidence in the evidentiary documents that we have investigated to hold the wrongdoers accountable. Also, the SEC has collaborated further with the DSI and the Office of the Attorney General regarding the information used for the prosecution in this case. Additionally, to improve the efficiency and speed of law enforcement, the SEC has restructured the organization, adding another Assistant Secretary-General in charge of the Enforcement Department 2 and the Litigation Department. Police Lieutenant Colonel Sutthisak Jitpimonmas, an expert on special case investigation, has been appointed to the position as from 1 February 2024.
As the Thai capital market regulator, the SEC emphasizes the importance of regulating securities issuers and actively promotes awareness across all sectors about the significance of fulfilling their duties to prevent, deter and suppress inappropriate behaviors by listed companies, which could harm and undermine trust and confidence in the capital market. Going forward, the SEC also focuses on building a sustainable capital market for Thailand.
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Remark: * The effective periods may change as specified by the SET.