Thailand’s Securities and Exchange Commission (SEC) announced a potential new scheme on September 15, 2021, that will allow SMEs and startups in Thailand to raise financing through public offerings. The SEC is scheduled to issue regulations to implement this new scheme in the first quarter of 2022. Are you planning to open an SME or Startup in Thailand? Now is the right time as far as funding is concerned.
Since 2019, Thailand’s Securities and Exchange Commission (SEC) has authorized SMEs and startups to raise financing through private placements or crowdsourcing. With the new SEC plan, SMEs and startups will be able to raise capital on a bigger scale through a new sort of public offering (the so-called SME-PO). In addition, the SEC intends to create the “SME Board,” a secondary market for trading SMEs’ equities.
Who will be Eligible?
SMEs and startups who want to pursue an SME-PO under the new SEC scheme must be established as public companies with investor protection features in compliance with the Public Company Act, B.E. 2535. (1992). Although SEC representatives previously stated that SME-POs would be subject to an information-based approach rather than the normal public offering approval process, the September 15 announcement does not go into detail about this, other than to say that the SEC may decide in the future to relax certain requirements such as filing for approval, appointing an independent financial advisor, and fees.
Institutional investors, private equity or venture capital companies, angel investors, or SMEs’ own directors, employees, or affiliates are all examples of sophisticated investors who are risk-tolerant and well-capitalized in public offers for SMEs and startups.
What is the SEC Initiative for SMEs and Startup in Thailand?
The Securities and Exchange Commission (SEC) has authorized fundraising requirements for small and medium-sized businesses (SMEs) and startups. This is in both primary and secondary markets, with the goal of increasing capital market access.
The criteria will go into force this year, according to Ruenvadee Suwanmongkol, the SEC’s secretary-general.
However, institutional investors, venture capital companies, corporate investment units, SMEs, and startup workers can only invest in SMEs and startups. This is possible only if they have experience, skills, and expertise investing in these sorts of enterprises.
Because of the high amount of risk, retail investors are not permitted to engage in SMEs and startups.
According to Ms. Ruenvadee, the SEC and the Stock Exchange of Thailand (SET) reaches an agreement on the requirements for SMEs and startups fundraising. This is on the primary market and listing on the secondary market, as well as the development of the SME Board, a secondary market for SMEs and startups.
SMEs and startups may seek to raise funds or list on the secondary market. To do this, they must have the status of a public company with a legal framework for minor shareholder protection. However, this is in order to comply with the broader funding model.
How can SMEs and Startups in Thailand satisfy the Criteria?
The criteria in the primary and secondary markets for SMEs and startups will be more permissive. This will allow them to obtain money more easily. The businesses must file records and make investing disclosures, but hiring a financial consultant or paying fees is not mandatory.
In the primary and secondary markets for SMEs, only investors with experience and understanding of investment products, as well as a high level of assets, can invest. Institutional investors, private equity trusts, venture capital funds, angel investors, as well as the directors and workers of the SMEs raising financing, are among them.
In addition to the SME-PO, the SEC has established two more important funding channels for SMEs and startups. The Securities and Exchange Commission (SEC) will allow them to raise capital through private placements in 2020. (SME-PP). Last year, the Securities and Exchange Commission (SEC) made amendments to its restrictions on crowdfunding. 83 SMEs and startups have raised THB 795 million using the two channels in the last two years.
Companies must submit half-year and annual financial statements from an auditor. Moreover, it must have certification of the SEC for enlistment on the SME Board.
Directors and top management officers of companies must be responsible for fiduciary duty as directors and executive officers. Whereas, an intermediary company will be responsible for the share distribution. Moreover, this company will be responsible for the know-your-client process. Additionally, it will recommend appropriate investments for companies.
The Bottomline
The Thai Economy went through a crisis situation due to the COVID-19 pandemic. Although it is one of the most fast recovering nations from this blow, yet it is striving hard to pace up the recovery.
Promoting and supporting startups and SMEs are a few of the most recent initiatives of the Royal Thai government in the process. This is one of the major reasons behind the fundraising support of the government. It is a good time to take benefit of this privilege open startups in Thailand. For assistance and guidance, mail us at [email protected].
