Disclosure Compliance Framework under Thai SEC and SET Regulations

Highlights

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Thailand’s capital market is underpinned by a comprehensive framework of investor protection mechanisms established and overseen by the Securities and Exchange Commission (the “SEC”) and the Stock Exchange of Thailand (the “SET”). Among the most critical protections for investors offered is the requirement that listed companies disclose material information or events that could influence investment decisions. This obligation ensures transparency and fairness, provides all investors with timely and equal access to information that could influence investment decisions.

In this article, Wise Equity Legal Counsel Limited offers a concise introduction to the disclosure compliance framework under SEC and SET regulations, with a particular focus on the requirements and processes for disclosing material events.

Disclosure of material information or events

In addition to the requirement for periodic disclosure such as the disclosure of the financial statements, under the Regulation of the SET re: Rules, Conditions and Procedures Governing the Disclosure of Information and Other Acts of a Listed Company B.E. 2560 (2017), the SET has classified information or events into three types according to urgency required for their disclosure. The urgency is assessed according to whether the information or event has the potential to affect the interests of securities holders, influence investment decisions, or alter the price of a listed company’s securities.

The first type is the information that requires immediate disclosure by a listed company. To exemplify, these situations are such as the resolution on the date for the general meeting of shareholders, the share register closing date or record date, payment or non-payment of dividends, capital increase or capital decrease or issuance of new securities, a change in the shareholding structure of major shareholders that results in a change in the management control, acquisition or loss of a significant commercial contract, entering into a significant acquisition or disposition of assets, entering into a connected transaction, acquisition or disposal of an investment in another company which results in that other company becoming or ceasing to be a subsidiary, amalgamation, borrowing or issuance of bonds, significant dispute, change in the par value, change in significant accounting policy, liquidation, request for business reorganization or being placed under receivership by court order, share buy-back, provision of financial assistance, default of debt payment, as well as any event which affects or will affect the interests of securities holders or any decision to invest in or any change in the price, etc.

When any of these events occur, the listed company must disclose the relevant information without delay. Disclosure must be made at least one hour before trading hours on the day of the event or after trading hours, except in the case where an immediate disclosure is not possible due to unforeseen circumstances beyond the company’s control. In such a case, the listed company is permitted to disclose the information at least one hour before trading hours on the next
business day.

The second category is the information that does not directly affect trading, investment decisions, or the price of the listed company’s securities, but should nevertheless be disclosed to investors. Examples include change in directors or persons with management power, CFO or accounting supervisor, the company’s head office or auditor. In such cases, the listed company is required to disclose the relevant information within three business days following the occurrence of the event.

The third category involves information that the SET needs to collect for future reference, such as the submission of a report from a shareholders’ meeting which shall be submitted within 14 days from the date of the meeting. The applicable disclosure timeframe for this type of information is typically seven or fourteen business days, depending on the specific requirements set forth in the relevant rules and frameworks.

Content of the Disclosure

Disclosures must be complete, accurate, clear, and sufficiently detailed to enable investors to make informed investment decisions. Listed companies should avoid concealing negative facts, presenting uncertain information as certain, or using promotional language that is unjustified, exaggerated, or unsupported by actual facts or developments. All disclosures should be objective and limited to information that is necessary for investors to make well-informed decisions.

It is important to note that listed companies are not required to disclose internal estimates or projections of earnings. However, if such information is released, it must be prepared carefully, on a reasonable factual basis, and presented realistically including appropriate qualifications. Furthermore, if any disclosed estimates or projections are later found to be inaccurate, they must be promptly and publicly corrected.

In addition, in certain events, the SET and/or the SEC impose further obligations to ensure the quality and completeness of such disclosures. Listed companies are required to provide a certain level of detail, specified by standardized disclosure checklists such as material litigation or disputes checklist, the provision of financial assistance checklist, default of debt payment checklist, etc. In addition, in the events of acquisitions or dispositions of material assets, and connected transactions, not only are the disclosure items clearly specified, but the applicable regulations also set out procedural requirements for the approval of the transactions, thereby enhancing transparency and protecting the interests of investors.

Exception to an Immediate Disclosure

A listed company may temporarily refrain from disclosing material information if maintaining confidentiality is essential. Under the Notification of the SET re: Guidelines on Disclosure of Information of Listed Companies, this exemption includes when immediate disclosure would jeopardize the company’s ability to achieve its corporate objectives; when the facts are still uncertain or in a state of flux; or when disclosure would significantly benefit a competitor. To exemplify, during ongoing negotiations, the terms may still be subject to change, and premature disclosure could confuse or mislead the public.

Failure to meet the Disclosure Deadline

If a listed company fails to disclose the required information regarding prescribed events or circumstances, the SET is authorized to suspend trading of the company’s securities or impose a warning sign on its listing. This measure aims to prevent potential harm to investors who might otherwise make decisions based on incomplete or unavailable information.

Furthermore, listed companies may face additional penalties for failing to comply with any order issued by the SEC in relation to these disclosure requirements.

Disclosure is a sensitive and strategic obligation that listed companies must carefully navigate. While failure to disclose material information can lead to regulatory penalties and undermine investor trust on one side, certain disclosure may expose listed companies to competitive risks or misinterpretation. Determining the right balance between transparency and prudence is therefore essential. Listed companies must exercise sound judgment, guided by the SEC and SET’s regulatory framework, to ensure that disclosures serve their intended purposes, which are protecting investors and maintaining market integrity, without inadvertently causing harm.

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For more information and proper guidance concerning this matter, please feel free to reach out to Phatamol Phisibuntoon at phatamol.p@wiseequitylegal.com or Noraseth Ohpanayikool at noraseth.o@wiseequitylegal.com