The SEC has revised the definition of Qualified Subordinated Debt to be excluded from the total liabilities for the calculation of net capital of business operators, viewing that the debt instruments with conditions for postponing or canceling interest payments and postponing principal repayment without being considered an event of default are complex and high-risk debt instruments. Therefore, the SEC deemed it appropriate to issue regulations concerning the NC Bond offerings of business operators. A public hearing on the matter was conducted in October 2024. The majority of the respondents agreed with the proposed regulations. 

This current public consultation on the proposed regulations related to NC bond offerings of business operators concerns the key points as follows: 

(1)  To require that NC bond offerings comply with the revised definition of Qualified Subordinated Debt in addition to plain vanilla bonds. For example, obtain a credit rating, disclose additional information other than plain vanilla instruments, all types of offerings must submit an application for approval and ensure continuous disclosure of information on net capital; 

(2) To require that plain vanilla instruments* contain no complex features. For example, the issuer is allowed to postpone or cancel interest payments or other compensations or to establish write-off criteria, etc. NC bonds are not considered plain vanilla instruments. 

Concurrently, the SEC is proposing to amend the regulations concerning the process for revising the use of proceeds in accordance with the standard terms and conditions** and the criteria for considering the qualifications of bond issuers with a record of using the funds for a wrong purpose. 

Additionally, the SEC is proposing to revise the wording in the relevant notifications to enhance clarity, as well as to include additional responsibilities for debt issuers to align with the principles outlined in other notifications. For example, requiring financial statements be prepared in accordance with the Thai Financial Reporting Standards for Publicly Accountable Entities (TFRS for PAEs) in the case of government agencies offering to high-net-worth investors, and requiring the appointment of a financial advisor (FA). 

The consultation paper is available at: https://www.sec.or.th/TH/Pages/PB_Detail.aspx?SECID=1052  and the legal hub at https://law.go.th/ . Stakeholders and Interested parties are welcome to submit comments and suggestions via the SEC website or email: debt@sec.or.th. The public hearing ends on 13 January 2025.  

Remark: 

* Plain vanilla instruments exclude Basel III, Insurance Capital Bond (IC Bond), subordinated perpetual bonds, securitized bonds and Net Capital Bond.    

** Except in cases where a method of change has been specified otherwise in the terms and conditions of such bond series.