Listed companies have a handful of ways for raising additional funds, but private placement (“PP”) remains a favored method due to its higher certainty and efficiency compared to other alternatives. Since PPs involve financing from a small group of sophisticated investors rather than the general public or having a limited share offering value , the regulations and procedures governing this approach are more streamlined than those associated with other forms of share issuance and offerings. Nonetheless, these regulations ensure that the interests of existing shareholders remain protected by requiring the company to disclose sufficient information for the shareholders to be able to make an informed decision when considering the transaction.
The key regulation governing PPs in Thailand is the Notification of the Capital Market Supervisory Board No. TorJor. 28/2565 Re: Permission for Listed Companies to Offer Newly Issued Ordinary Shares via Private Placement.
A private placement refers to the offering of newly issued shares of a listed company to a specific group of investors, made in one of the following manners:
Moreover, if the issuer has initially opted to raise capital by way of a rights offering (RO) or preferential public offering (PPO) and has remaining shares, the issuer may offer such remaining shares by PP with the offering price not lower than the price offered to the shareholders, subject to compliance with the requirements prescribed by the Securities and Exchange Commission (the “SEC”).
Private placements in Thailand are governed by the Securities and Exchange Act B.E. 2535 (1992) (the “SEC Act”), which is overseen by the Office of the SEC. Under the relevant regulations, the issuance and offering of shares by way of PP are deemed approved by the Office of the SEC, provided that the requirements set out in the subsequent section are met.
In order for the PP to be considered deemed approved, the issuer shall deliver a notice of the shareholders’ meeting at least 14 days in advance with the minimum particulars as prescribed by the Office of the SEC and obtain a resolution for the issuance and offering of shares by PP, approved by at least three-fourths of the votes of the shareholders attending and eligible to vote. In the specific case where the shareholders’ meeting has approved for the offering price to be determined at a price lower than the market price, there must be no veto of such offering by shareholders holding in aggregate 10 percent or more of the votes of the shareholders attending and eligible to vote.
Furthermore, a report of the independent financial advisor’s opinion (IFA) is required to be submitted with the notice of the shareholders’ meeting in the following ‘significant’ cases:
The opinion of the IFA must at least contain the following details:
In such ‘significant’ cases, the issuer must submit the draft notice of the shareholders’ meeting and report of the IFA’s opinion to the Office of the SEC for its review and comments (if any). Additionally, as PP is an issuance and offering of the shares of a listed company, the company shall also comply with the Notification of the Capital Market Supervisory Board No. TorJor. 73/2558 Re: Particulars of Notice Calling Shareholders’ Meeting of Listed Companies to Obtain Approval for Issuance and Offer of Securities for Sale, which sets out the details that must be included in the notice of shareholders’ meeting approving the PP transaction.
The offering periods for PP shares differ depending on the type of placement. If a shareholders’ meeting grants the board of directors a mandate to determine the offering price based on the market price, the placement shall be completed within five business days after each determination by the board and within the 12-month period from the shareholders’ meeting.
If the shareholders’ meeting approves the PP at a specific price, the placement must be completed within three months from the shareholders’ meeting. The shareholders’ meeting may also have approved to authorize the board of directors to further determine the offering price based on the market price after the three-month period has lapsed, in which case the offering period may be extended to be within 12 months from such shareholders’ meeting, but each placement must still be completed within five business days after each determination of the offering price by the board of directors.
Lastly, the placement of remaining shares from an RO or PPO shall be completed within three months after the end of the subscription period of such RO or PPO.
Failure to comply with private placement regulations can lead to significant penalties, including fines and legal action. Issuers must ensure full compliance with SEC regulations to prevent negative legal consequences and potential damage to their reputation.
For more detailed advice and tailored assistance on private placements or other transactions in Thailand, please contact our firm. Our team of experts is ready to guide you through every step of the process.
