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The Thai SEC Enhances Public Offering Rules for Listed Companies Undergoing Rehabilitation

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The Thai SEC Enhances Public Offering Rules for Listed Companies Undergoing Rehabilitation

The Thai Securities and Exchange Commission ("SEC") has introduced new amendments to the rules governing securities offerings by companies listed on the Stock Exchange of Thailand ("SET") which are undergoing court-approved rehabilitation ("Rehabilitating Company"). These amendments are expected to provide more flexibility toexpedite the fundraising process for Rehabilitating Companies, while maintaining adequate investor protection through proper information disclosure. Key amendments include exemptions from approval requirements, waivers of filing registration fees, adjustments to the offering timeframe, and other provisions to facilitate smoother operations.

1. Introduction

Past economic crises have had a significant impact on businesses of all sizes, from start-ups to large corporations. Many companies have had to adapt to survive, by securing loans, raising capital, and implementing other measures. For some, pursuing rehabilitation under the bankruptcy law became a crucial step to ensure survival. Even companies listed on the SET have opted for this pathway and undergone rehabilitation. 

The rehabilitation process offers significant advantages, particularly the 'Automatic Stay' in the bankruptcy law, which provides relief from creditor actions. However, in exchange, companies must adhere to certain restrictions, including a requirement that they operate strictly in accordance with the rehabilitation plan approved by both the creditors and the court.

To address these challenges, the SEC has introduced amended regulations to govern securities offerings by Rehabilitating Companies. These amendments aim to enhance flexibility and expedite fundraising, enabling these companies to exit rehabilitation status more efficiently and resume normal operations. At the same time, the amendments prioritize investor protection by ensuring adequate and appropriate disclosure of information. 

This newsletter will explore the key provisions of the amendments to the public offering rules for listed companies undergoing court-approved rehabilitation. These amendments, which were established in the following five notifications, took effect on 16 April 2024: 

  • Notification of the Capital Market Supervisory Board No. TorJor. 9/2567 Re: Issuance and Offering of Securities by Listed Companies Under Business Rehabilitation Plan; 
  • Notification of the Capital Market Supervisory Board No. TorJor. 10/2567 Re: Filing of Registration Statement for Securities Offering (No. 22); 
  • Notification of the Capital Market Supervisory Board No. TorJor. 11/2567 Re: Filing of Registration Statement for Debt Securities Offering (No. 4); 
  • Notification of the SEC No. SorMor. 7/2567 Re: Determination of Fees for Filing Registration Statement and Other Applications (No. 69); and 
  • Notification of the SEC No. No. SorChor. 8/2567 Re: Approval of Financial Advisors and Scope of Operations B.E. 2552 (No. 13). 

2. Key Provisions

Below is a list of the main topics addressed in the amendment to the public offering (“PO”) rules for listed companies undergoing a court-approved rehabilitation process.

(1) Exemption from Approval Requirement 

In general, when a company listed on the SET wishes to offer newly issued securities by way of a PO, the company is required to obtain approval from the SEC, which considers various factors before granting permission. For example: (i) the listed company must demonstrate a clear and equitable shareholding structure, (ii) there is no conflict of interest between directors, executives, major shareholders and the listed company, (iii) the company's management must be capable of safeguarding shareholders' rights and ensuring fair treatment for all shareholders, and (iv) the company’s financial statements are accurate, reliable, and comply with SEC regulations. 

The recent amendments state that a PO by a Rehabilitating Company is deemed approved by the SEC, without the need to submit a formal approval request to the SEC, if the Rehabilitating Company fully complies with the SEC’s requirements and conditions. Key examples of these requirements include: 

  1. Making the offering in accordance with a court-approved rehabilitation plan that clearly specifies (a) the amount and type of securities to be offered, (b) the nature and types of offerees, and (c) the offering period; 
  2. Compliance with financial standards; specifically, the Rehabilitating Company’s consolidated financial statements must be prepared in accordance with the applicable financial standards and audited by an auditor authorized by the SEC; and 
  3. Timely financial reporting, meaning that within one year prior to the offering date, the Rehabilitating Company must not have any overdue financial statements or required reports, and must not be subject to unresolved corrective actions ordered by the SEC. 

(2) Additional Conditions for Filing the Registration Statement

A Rehabilitating Company remains obligated to disclose material information to investors by filing a registration statement and draft prospectus prior to offering securities. 

In addition to the general filing requirements, the Rehabilitating Company is required to provide additional information relating to the rehabilitation (e.g. the rehabilitation plan, a summary of the key aspects of the plan, and a discussion of associated significant risks). 

(3) Waiver of Filing Registration Statement Fees 

The Rehabilitating Company is exempt from paying filing fees for a securities offering registration statement. 

(4) Enhanced Requirements for Financial Advisors

Under the amended regulations, the financial advisors must maintain independence from the plan administrator. For example, they cannot serve as the plan administrator or operate under the plan administrator's influence.  

(5) Offering Timeframe

A Rehabilitating Company offering securities is required to distribute the offered securities within the timeframe specified in the court-approved rehabilitation plan. 

3. Summary

The new amendments to the rules governing securities offerings by Rehabilitating Companies appear to offer a compelling alternative to the existing framework, providing qualified Rehabilitating Companies with the opportunity to navigate their rehabilitation plans with greater ease and flexibility. By alleviating unnecessary burdens and aligning the rules with the increasingly diverse nature of rehabilitation processes, these amendments appear to open new pathways for success. At the same time, they retain key provisions aimed at safeguarding investor protection, ensuring a balanced approach. 

However, the true impact of these amendments will become clear only through careful observation of how securities offerings unfold using this new channel. We must remain vigilant to determine whether these regulations will empower Rehabilitating Companies or fall short of their promise. 

Authors

ジラポン・スリワット

He advises on a wide range of merger-and-acquisition transactions, joint ventures, foreign direct investments, general corporate, international corporate finance, and restructurings. His expertise is advising, structuring and leading complex transactions both within and outside of Thailand. He regularly represents, among others, Japanese, Thai and international investors, international investment banks, international private equity investors, hedge funds and international corporations and financial institutions. His main areas of practice include public and private mergers and acquisitions (takeover rules), legal due diligence, joint ventures, fund raising, listings, block trades, stock exchange and securities exchange related laws, restructuring of shareholdings and general corporate advice. His additional areas of practice also cover banking and finance, renewable energy in Japan and Thailand, exchange control law, labor law, and debt restructurings. Before setting up the Bangkok office of Nishimura & Asahi in 2013, he worked with Linklaters for almost a decade. He is also a registered arbitrator of the Thai Arbitration Institute (TAI) with the areas of expertise in corporate M&A, joint venture, banking and finance, capital markets, debt restructurings and energy.

アピンヤー・サーンティカセーム

Apinya’s extensive practice covers a wide array of matters ranging from business set-up, domestic and cross-border transactions to day-to-day business operations, to name a few. Her clientele includes both local and international conglomerates, trading companies, aircraft operators, real estate developers, petroleum and energy companies, financial institutions, securities companies, venture capitalists, and fund managers. Well-read and a holder of law degrees from three different jurisdictions - Thailand, the United States and Japan, Apinya is able to leverage her international experience and cultural insights to effectively and efficiently resolve complex cross-border legal issues and provide tailored legal services and solutions to her clients. In addition to being a practicing lawyer, Apinya is regularly invited to teach business law at various prestigious universities in Thailand, and serves as a counsellor to the Ad-hoc Committee of the House of Representatives of Thailand for consideration of amendments to the Civil and Commercial Code. Her other notable achievements include being registered as a Barrister-at-Law, Attorney-at-Law, and Notarial Services Attorney in Thailand.