Listing Guide. Matching Your Right Financial Opportunities English Version

Transcription

1 Listing Guide Matching Your Right Financial Opportunities English Version

2 1. Benefits of Listing Listing on the Stock Exchange of Thailand (SET) and Market for Alternative Investment (mai) is beneficial to all involved persons, namely, business owners, business partners, investors, the capital market, creditors, debtors, employees, and the nation as a whole. However, the most prominent benefits are benefits to companies and their shareholders, as follow: Benefits of a Listing Status: Benefits to the Company 1. Access to a long-term funding source with no obligation on repayment terms in forms of both principal and interest; 2. Access to additional funding channels in order to facilitate effective financial management by issuing a variety of financial instruments; 3. Recognized as a credible company complied with standards in which enable all parties to operate with confidence; 4. Able to issue securities as rewards to employees and/or management through programs such as EJIP (Employee Joint Investment Program) and ESOP (Employee Stock Option Program) thus encourage loyalty among employees; 5. Creates responsibility and management professionalism; 6. Eliminate issues regarding business sustainability by converting family business management style to professional management. Benefits of a Listing Status: Benefits to the Shareholders 1. Increases liquidity for shareholders because company s securities are traded on the exchange; 2. As a result of the reference price and liquidity of the company s securities, the securities can be used as collateral when applying for loans from most financial institutions or used to lessen the amount of collateral secured for loans prior to obtaining listing status; 3. An individual who owns shares of a listed company will be tax exempt on the profit gained from trading of securities on the Exchange and it will not be calculated as part of the individual income tax.

3 2. Preparation Prior to Listing on the Exchange A company planning to list its securities on the Exchange may take the following precautions before selecting a designated financial advisor whom will assist the company with the Initial Public Offering filing and the listing application: Replace the company s auditor with an auditor approved by the Securities and Exchange Commission (SEC) for the latest fiscal year prior to IPO filing submission (may replace auditor after having appointed financial adviser); Execute vigorous changes in the company s accounting and internal control systems to meet the standards; Acquire personnel to be independent directors and audit committee members; Prepare a business plan to accommodate the use of funds raised from the IPO; Arrange internal documents for the financial adviser in preparation for the filing of its initial public offering to the SEC and the listing application to the Exchange. After such preparations, the company may appoint a financial adviser to assist in company s structure modification, business re-structuring, equity and shareholding re-structuring, as well as its initial public offering application to be filed with the SEC and the listing application to be submitted to the SET. The company should appoint an appropriate financial adviser who is skillful as well as being able to satisfactorily work with the company. Listing Process Step 1 Appoint Financial Advisor and Auditor Takes from six months to one year The company shall select a financial adviser approved by the SEC to assist in its IPO filing preparation. The duties of the financial adviser are as follow: Establish a standardized internal control system; Conduct due diligence; Organize the company s structure, business structure, as well as equity and shareholding structure;

4 Prepare the company s information for the IPO filing application with the SEC as well as the listing application with the SET; Distribute securities (if possess an underwriting license) or acquire an underwriter(s) to help distribute securities; Continue to assist the company for at least one fiscal year since its first trading day on the SET. Step 2 Conversion of a Private Company into a Public Limited Company Takes approximately one month Normally, a legal adviser will undertake relevant actions regarding the conversion. Steps for Conversion to a Public Company. Private Company The Board of Directors approves the convening of an extraordinary meeting of shareholders No fewer than 14 days apart Within 7 days Within 14 days Notices of the extraordinary meeting of shareholders are sent out to shareholders and published in a newspaper The meeting approves the conversion (3/4 of the total voting rights) The existing board hands over the business to the new board The conversion is registered Agenda - Approve the conversion - Consider the memorandum of association (name/objectives/ capital) - Consider the articles of association, elect directors and specify the authority of directors - Other (if any) Step 3 IPO Filing Submissions and Listing Application Takes approximately two to three months After company status has been changed the financial adviser, as the agent of the company, will take the following actions: Submit IPO filing to the SEC; an IPO filing consists of three sets of documents, namely: 1) application for public offering, 2) registration statement, and 3) draft version of the company s prospectus. Submit an application for securities listing to the SET. In this step, the SEC and the SET will deliberate on the information submitted and later schedule a visit to the company. The company shall submit additional information requested by the SEC and should

5 be able to provide adequate retort to any inquiries. The SEC will further revise the IPO filing, which usually takes 45 days after having received all requested information. Upon receiving the SEC s permission to IPO, the SET will then approve the company s listing application on condition that the company must distribute its securities/shares to minority shareholders at/above the minimum quotient required by the SET. Step 4 Distributions of Shares to the Public Takes approximately three to five days Upon obtaining permission to IPO and a listing status on the Exchange, it is obligatory that the company must distribute its securities /shares to minority shareholders at/above the minimum quotient. The company shall appoint an underwriter(s) to assist in the task of shares distributions. There are two main methods of underwriting, they are as follow: Firm underwriting: The underwriter must sell all securities. Failing to do so, the underwriter shall buy all unsold/undistributed securities. This way, the company can ensure that the full amount of capital can be sought. Best effort underwriting: The underwriter uses its best efforts to sell/distribute as many securities as possible. In case that underwriter is unable to distribute/sell all shares, the underwriter does not need to buy the unsold securities. Normally, the fee for this method is lower than the first method. Step 5 Trading and Listing on the SET/mai After having distributed shares to minority shareholders in accordance with the minimum quotient required by the SET or mai, the company shall arrange its trading activities at the SET/mai. Prior to trading, the company may take the following actions: Appoint a securities registrar by opening an account with Thailand Securities Depository Co., Ltd. (TSD); Deposit securities in the amount required by the SET or mai with TSD; Prepare all reports to be submitted to the SET after IPO. They are statement of capital issued by the Ministry of Commerce, share distribution report and relevant fees receipts; Having received all relevant documents, the SET/mai will announce the listing of the company s securities.

6 In order to reduce the risk of changes in price due to market conditions, the SET suggests that distributed shares shall be traded promptly; within four to five days from the date in which all shares were distributed. Thus, the securities of the company may then be traded on the SET or mai. 3. Qualifications for a Listing Status on the SET and mai The SET and mai are committed to seek and to select potential companies to be listed on the exchange in order to create confidence for investors. To obtain a listing status, a company must have a substantial track record, is profitable, and must be able to readily distribute its shares to the public. More importantly, such company must have go od cor por ate gov erna nce as well as pro no unc ed cre dibil ity. A listed company must meet all of the following qualifications according to each exchange and listing test: Financial Position and Operating Results Code Paid-up Capital After IPO The Exchange (SET) Net Profit Market Capitalization Market for Alternative Investment (mai) Net Profit Market Capitalization 300 million Baht 300 million Baht 20 million Baht Shareholders Equity 300 million Baht 300 million Baht 20 million Baht Track Record 3 years 3 years 2 years 1 years Net profit/ Market Capitalization Total net profit in the latest two or three years 50 million Baht + most recent year 30 million Baht + accumulative results in the most recent quarter > 0 Market capitalization* 5 billion Baht Profit in most recent year > 0 + accumulative results in the most recent quarter > 0 Same Management 1 years 1 years Market capitalization* 1 billion Baht *Market Capitalization can be calculated by the following: (1) In case the applicant submits a listing application to the SET within a year after having distributed its shares, the public offering price shall be used; (2) In case that the applicant submits a listing application to the SET after a year or more from the last date of its public offering, the fair price determined by the financial advisor shall apply.

7 Share Distributions The Exchange (SET) Number of minority shareholders - No fewer than 1,000 Free float ratio - No less than 25% of the paid-up capital for paid-up capital of at least 300 million Baht but does not exceed 3 billion Baht. - No less than 20% of the paid-up capital for paid-up capital of at least 3 billion Baht. Market for Alternative Investment (mai) Number of minority shareholders - No fewer than 300 Free float ratio - No less than 20% of the paid-up capital. Initial Public Offering - If the paid-up capital is less than 500 million Baht, the number of shares to be distributed to the public must not be lower than 15% of the paid-up capital. - If the paid-up capital is 500 million Baht or above, the number of shares to be distributed to the public must not be lower than 10% of the paid-up capital or 75 million Baht; whichever is higher. The number of shares to be distributed to the public must not be lower than 15% of the paid-up capital. Management Integrity and Corporate Governance The company must have good corporate governance; with one third of its board of directors and no less than three members must be independent directors as well as having at least three members in its audit committee (it is possible for an independent director and an audit committee member to be the same person), and an internal control system that ensures efficiency, transparency and traceability of the management system; There must be no conflict of interest between the IPO applicant and its management, major shareholders or any other companies with the same group of management and/ or major shareholders; The company must have a credible financial report authorized by an SEC-approved auditor; The company must appoint a financial adviser approved by the SEC.

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