Listing Information

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Listing on mai

Common Share

Holding Co.

• Considering listing on SET or mai
• Preparation prior to listing on the exchange
• IPO filling preparation
• Consultation Team
• Roles and Responsibilities of listed company

SET provides a market for large companies with more than THB 300 million in paid-up capital after IPO to raise long-term funds. mai, on the other hand, is a source of funding for small and medium-sized enterprises having over THB 50 million in paid-up capital after IPO. However, from the viewpoint of firms applying to the Securities Exchange Commission (SEC) for an IPO, there are no regulatory differences.

Selected and appointed financial advisor(s) and auditor is the first thing which the company has to do after making decision to list on SET/mai as follow :

1. The company shall select financial advisor(s) and auditor approved by SEC to assist in its IPO filing preparation. The company can find more information about financial advisor(s) and auditor approved by SEC and their experience on : http://www.sec.or.th/TH/RaisingFunds/MA/Pages/List-Of-Professionals.aspx
2. The company has to select financial advisor(s) and auditor who have good principles and be able to guide the company to follow SET and SEC regulations.  
3. Selected financial advisor(s) and auditor should have experience and understand your company business and have enough time to work for the company.

It depends on the readiness in many aspects of the company, for instance the Accounting system, Internal control, etc. It usually takes around 2 years for this preparation.

A company’s listing process may be delayed if:

• It’s structure appears to be unclear or unfair, or if there is a potential conflict of interest.
• It’s internal control systems are insufficient or ineffective.
• It’s accounting practices do not meet Thai Generally Accepted Accounting Practices

Case 1 : Competition

Firm A and Firm B hold shares by the same shareholders in the same type of business, which is real estate development. However, the shareholders concentrate to list only one firm into the financial market. This is a case of intra-transparency. We cannot be certain if the majority shareholders would prioritize the businesses’ well-being of the right firm.

Case : 2 Related-Party Transaction?

Firm C and Firm D hold shares by the same shareholders. However, the shareholders only choose to list one firm into the financial market. Additionally, Firm C and Firm D conduct transactions between one another for materials. Should the firms could prove that such transactions are justifiable within the range of market prices, it would be a good case of addressing conflict of interest.

In the case where it could be proven that there is no conflict of interest, or where ambiguous transactions are justifiable by being beneficial for both parties, the Management Team could retain their shares without having to liquefy such shares or businesses. However, the Management Team has to make the relevant information clear and transparent.

There is no prohibition on the business to be listed in SET/mai. However, business would need the following:

1. Not contrary (against) the public policy or government policy.
2. Does not cause a negative impact on the credibility of the whole of Thailand's capital market.
3. Does not cause damage or unfairness to the investors. 

Please note - The announcement of the SEC, Notification of the Capital Market Supervisory Board. No. TorJor. 39/2559 :  Application for and approval of offer for sale of newly issued shares. 

What needs to be considered for the company that wants to list on the exchange is the possibility of a conflict with other businesses that are still in the family business holdings and determine if there is a conflict of interest. If there is a potential conflict then those other company connections need to be rearranged in the company structure. Furthermore, the company wishing to list on the exchange, a holding company might be the best option to make this company control the voting rights.

Internal control is an important element that SEC will consider for approving the company for IPO. Internal control system ensures checks and balances in management. Clear authority and responsibilities with best practices, in writing. The company must have a good internal control and require a committed and comprehensive team ensuring internal control is efficient and also reports regularly to the Audit Committee.

In the case of the company that has Internal Audit In house, they need to have an independent evaluation that the company has adequate and effective internal control system. Also, having checks and balance in management to verify issues which have to adjust in the management letter of auditor. However, majority of listing companies do not internal audit in house so they have to hire Internal Audit Outsource during listing process.

If the company does not have any standard to make financial statements, it should start by obtaining a good accounting system. The company needs to appoint auditor who is approved by SEC to recommend about accounting system of the company. Company needs to do quarterly financial reports and consolidated financial statements. Moreover, the company’s financial statements have to be audited by auditor who approved by SEC at least 1 year before submitting filing for IPO.

Board of director must be elected by the shareholders and has the role and responsibility to determine policy and direction. Additionally they oversee the company for the benefit of shareholders. Appointed ID and AC which having no management role is a qualification specified by SEC and SET/mai in order to represent minority shareholders as an internal check and balance system.

Independent director (ID) and Audit Committee (AC) have similar roles and responsibilities. They will be the representatives of minor shareholders. Also, giving opinion to board of directors based on shareholder benefit and stakeholder.

Regarding Notification of The Board of Governors of the stock exchange of Thailand. There is the condition for the company to set provident fund. Employee benefit is necessary for a good corporate governance company.

1. Application expenses for both SEC and SET/mai. For example, Initial fee and annual fee
2. Financial advisor(s) fee and other fees for example Auditor fee, Attorney’s fee, Internal audit fee etc.
3. Underwriting fee – the usual rate will be a percentage of raised capital value.
4. Other expenses to improve quality of the company to be standard for example, accounting system, data system and human development

The SET/mai Team is ready to have early consultation with a company and FA in order to prepare before applying for IPO and listing. However, some issues may need time to fix for example company structure which still have conflict of interest , accounting issues or internal control etc.

SET/mai and SEC have worked together in partnership. Both organizations are ready to giving recommendations through pre-consultation service with the company and financial advisor(s) in order to help the company find the way solve any problem before submitting filing. Financial advisor(s) need to combine issues that the company have and method to fix them by sending to SEC and SET/mai in advance. If the company is having some accounting issues, the company can let the auditor attend pre-consultation meeting together with other parties.

The financial advisor has to determine the timeline for the important listing processes by consulting with SEC and SET/mai as following:

• Financial advisor working paper
• Auditor Working paper
• Management Interview and SEC site visit
• Distribution shares and listing on the exchange etc.

Company visit is required for SEC and SET/mai to be able to visit operating site and observe real company business. It will give SEC and SET/mai chance to ask questions that might concern them with the board of directors and management team directly to improve confidence with the information which a company disclosed on their filing. Also, the company can give opinion and answer questions to get resolution of issues that could affect approving IPO.

1. Disclose transaction during last 3 years. For example, related party and relationship, detail of transactions, value, price/interest, conditions. According to related party transactions, principle between listed companies, the company need to clarify that transaction use fair value or market price.    .
2. Disclose reason to make those transactions by the Audit committee opinion
3. Company policy for doing transaction in the future and appropriate standard to do transaction in the future

After filling gets approved by SEC, a company has to sell shares to public within 6 months after the SEC approves. However, the company can extend this 6 months period by sending letter with reasons why a company is not be able to distribute their shares to SEC 30 days before expiration date. Moreover, under SET rule a company also has to distribute shares to minority shareholder within 6 months and a company can extend 6 months more by sending letter with reasons to SET committee not less than 7 days before expiration date.

After the company gets approved for selling their shares to the public from SEC, they need to appoint underwriter to distribute their shares to investors. Offering shared price depends on their financial performance. IPO price is usually higher than par, for example the company offering 100 million shares to raise fund by using par value which is 1 baht per share. However, the company may be able to sell IPO stock 3 baht/share. So, the company will get money from raising fund 300 million baht.

Although each individual strategic shareholder is free to sell any number of his or her shares, collectively they cannot sell more than 55% of their combined paid-up holdings.

The Exchange’s marketing unit is pleased to advise firms interested in listing on SET. This advisory service is free of charge.

If the company uses money which raised funds from an IPO in different objective but still has intention to operate in the project that is informed in filing, SET/mai will not decide be at fault. However, the company needs to give reasons that they did not bring IPO money to use in the objective that was shown on their filing.

The company must maintain qualification to be a good listed company. For instance, having good accounting system, adequacy and effectiveness internal control, no conflict of interest and the most important is to disclose information with integrity and on time.

Public disclosure is required to provide useful information to investors. It is of utmost importance that listed companies make immediate public disclosure of all information concerning its affairs-enabling the public to make informed investment decision. There are 2 types of public disclosure:

1. Periodic Reports: Annual financial report, Quarterly financial report etc.  
2. Non-Periodic Reports: Acquiring other business or being acquired by other business, increase and reduction of capital and dividend payment decision etc.