What is an IPO? • A company offers shares to the public for the first time. • Lists on the SET or MAI to raise capital, build profile, and support M&A. | Key Regulators • SEC: Oversees disclosure, investor protection. • SET/MAI: Review listing qualifications and approve market entry. | Legal Foundations • Governed by the Securities Act and Public Limited Companies Act. • Only public companies can offer shares to the public. | |
Listing Requirements at a Glance | |||
Requirement | SET | MAI | |
Paid-up Capital | ≥ THB 100M | ≥ THB 50M | |
Operating History | ≥ 3 years (1 year same mgmt) | ≥ 2 years (1 year same mgmt) | |
Profit (last full year) | ≥ THB 75M | ≥ THB 25M | |
Free Float | ≥ 1,000 shareholders | ≥ 300 shareholders | |
Key IPO Steps 1. Restructure & Due Diligence 2. Improve Governance & Internal Controls 3. File with SEC (multiple rounds possible) 4. Apply to SET/MAI in parallel 5. Public Offering & First Trading Day | Post-IPO Obligations • Maintain listing standards • Disclose key transactions and financials • Comply with ongoing SEC & SET rules • Use SEC-approved auditors |
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Overview of Initial Public Offering in Thailand
Conducting an Initial Public Offering (“IPO”) in Thailand is a complex process that requires strict adherence to local laws and regulations. The Thai Securities and Exchange Commission (“SEC”) and the Stock Exchange of Thailand (“SET”) play pivotal roles in supervising IPO activities, ensuring that listing companies meet governance and disclosure standards to protect investors’ interests. While the regulatory framework is detailed and demanding, a well-prepared company with proper planning and professional guidance can successfully navigate the process.
What is IPO?
An IPO is the process through which a company offers its shares to the public for the first time and becomes a listed company on the SET or the Market for Alternative Investment (“MAI”) to raise capital, boost its public image, improve liquidity, and use its shares as a tool for mergers and acquisitions.
The IPOs in Thailand are primarily governed by the Securities and Exchange Act B.E. 2535 (1992) (“Securities Act”) along with the relevant rules and regulations issued by the SEC and the SET. The Securities Act established the SEC and authorized it to supervise and regulate public offerings of securities. Thailand’s capital markets consist of several exchanges, including the SET, the MAI, the Bond Electronic Exchange (BEX), the Thailand Futures Exchange (TFEX), and the LiVE Exchange. Each exchange is designed for companies at different stages of growth and subject to distinct regulatory requirements.
This article focuses on the regulatory framework and key legal considerations for listing shares on the SET and the MAI, as these are the principal markets for public equity offerings available to a broad range of investors under the Thai securities law. Listings on the LiVE Exchange, while regulated, operate under a separate and more flexible framework tailored to SMEs and are accessible only to specific categories of qualified investors.
Regulatory Framework and Legal Considerations
Key regulations governing IPO under Section 33 to 36 of the Securities Act include the Notification of the Capital Market Supervisory Board No. Tor Jor. 39/2559 re: Application for Approval and Granting of Approval for Offering of Newly Issued Shares and Bor.Jor./Ror.01-00 Regulation of the Stock Exchange of Thailand re: Listing of Ordinary Shares or Preferred Shares as Listed Securities B.E. 2558 (2015). These regulations set out the procedures and requirements for obtaining approval from the SEC and the SET for the public offering and listing of newly issued shares.
It is important to note that, under the Public Limited Companies Act B.E. 2535 (1992) (“Public Company Limited Act”), only companies incorporated as public limited companies (or certain entities established under special laws) are permitted to offer shares to the general public in Thailand. Consequently, companies seeking to undertake an IPO must typically convert from a private company to a public company before pursuing an IPO. Once converted, these public companies remain subject to the Public Company Limited Act and Securities Act, which sets out corporate governance requirements (e.g. board composition, shareholder rights, and resolution requirements) that apply alongside the relevant securities regulations.
Below are key regulatory requirements for listing on the SET and the MAI:
Subject | The Stock Exchange | Market for |
Paid-Up Capital in Common Shares | ≥ THB 100 million | ≥ THB 50 million |
Financial condition and liquidity |
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Operating requirements |
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Free float | ≥ 1,000 shareholders | ≥ 300 shareholders |
Management |
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Appointment of responsible person |
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It is important to note that specific listing rules applicable to holding companies and infrastructure businesses differ from those governing operating companies.
IPO Process
The IPO process involves a series of stages, which can be broken down into the
following key steps.
The initial step in an IPO is to prepare the company for listing, which often involves restructuring the corporate group and conducting due diligence to ensure the company meets regulatory standards for governance and compliance.
Corporate restructuring may be required not only to demonstrate transparent ownership and mitigate conflicts of interest, but also to optimize the company’s tax structure.
Comprehensive due diligence is essential at this stage; any issues identified during the pre-IPO review should be addressed and resolved before proceeding further. In parallel, the company must ensure that its financial statements, prepared in accordance with Thai Financial Reporting Standards (TFRS), comply with the relevant SEC requirements.
Prior to an IPO, companies are expected to enhance their corporate governance frameworks and internal control systems to align with regulatory standards and investor expectations. This includes adopting a well-defined board structure (for example, at least one-third of the board must consist of independent directors), establishing audit and risk management committees, and preparing the board and committee charters, along with all required policies applicable to listed companies. These measures aim to promote transparency, ensure compliance with relevant laws and best practices, and uphold the principles of good corporate governance as prescribed by the SEC and the SET. Strengthening these areas is essential to building investor confidence and supporting the company’s long-term sustainability as a listed entity.
Once the company’s governance structure and regulatory compliance are in place, the next step is to submit the prospectus and other required filing documents to the SEC. These documents must provide comprehensive information about the company, including its business operations, financial conditions, management composition, and key risk factors.
Given the level of detail required, it is common for the SEC to conduct multiple rounds of review, which may extend the approval timeline. When the SEC is satisfied that the company meets all regulatory criteria, it will declare the filing documents effective. This means formal approval is granted, and the company may proceed with the public offering of its shares. The offering process must be completed within 6 months from the date that the SEC grants approval for the IPO.
In parallel with the SEC approval process, the company typically submits an application for listing on the SET (or MAI, as applicable). Although the SET will list the shares only after the SEC has approved the public offering, the review of listing qualifications can proceed concurrently. Once all required applications and supporting information are complete, the SET will issue a listing notice and designate the first trading day. The company can then offer its shares to the general public through underwriters.
It is important to note that once a company is listed on the stock exchange, stricter regulatory requirements apply to both the listed company and its subsidiaries. These include, among others, maintaining the qualifications for listing, complying with management and director requirements, ensuring proper financial conditions, and having financial statements audited by an SEC-approved auditor. Companies must also meet periodic disclosure obligations, as well as disclose significant transactions as required under applicable regulations. These are only examples of the ongoing compliance measures, and listed companies are subject to a broader set of continuing obligations under Thai securities laws and stock exchange regulations.
Conclusion
An IPO presents a valuable and interesting opportunity for companies to raise capital, enhance their public profile, and support long-term growth. While the IPO process may be demanding, it plays a vital role in protecting investor interests and reinforcing confidence in Thailand’s capital markets. Ultimately, a well-executed IPO fosters sustainable business expansion and encourages broader participation from investors in a trusted, transparent and well-regulated environment.
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For more in-depth information on any of the above, please reach out to Yaowarote Klinboon at yaowarote.k@wiseequitylegal.com or Thanchon Phetroocheang at thanchon.p@wiseequitylegal.com
