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Stock Exchange of Thailand

The Stock Exchange of Thailand (SET) is Thailand's primary stock exchange in Thailand. It was established in 1974, and is supervised by a Board of Governors. The Board consists of 11 Governors, with five appointed by the Securities and Exchange Commission (SEC), five elected by the SET members companies, and a full time president, who is appointed by the Board and serves as an ex-officio Board member.

The SET considers applications from companies requesting listing on the Exchange, including ensuring applicants meet requirements as well as submit the correct documentation. It has also established information disclosure requirements for listed companies and monitors all trading activities involving listed securities. The Exchange's regulations strictly prohibit insider trading and price manipulation of listed securities.

Net Clearing and book entry settlement are services handled by the Thailand Securities Depository Co., Ltd. (TSD), a subsidiary of the SET.

The SET lists a wide range of equity and debt instruments. Listed securities include ordinary shares, preferred shares, bonds and debentures, warrants and covered warrants, and unit trusts.

A. SET Members
Currently, the SET has 50 broker seats. At present, there are 27 active members at the Exchange. Member companies must be securities companies permitted by the Ministry of Finance to conduct securities business in the category of securities brokerage.

B. SET
Listed Companies All listed companies are publicly limited firms. Becoming a listed company not only allows a firm to gain access to development capital, but also allows shareholders to benefit from investment liquidity and enjoy dividend income as a result of revenue or profit growth at the companies they invest in.

C. Foreign Shareholding Limits
The Thai Cabinet recently approved a new draft law that relaxes foreign ownership limits in certain industries. Its aim is to allow foreign investors to hold more majority stakes without limit in Thai companies, depending on certain criteria, that may apply to some sectors or industries.

Under earlier legal changes, the limits on the foreign ownership of securities companies have been relaxed, depending on a number of conditions. These included any new foreign owner investing at least 500 million baht in the securities company. Such amount of that money will include funds brought into the securities company within the period of one year prior to the date of applying for permission from the Ministry of Commerce. It must also be maintained for a minimum period of three years. Any foreign managing director must also reside in Thailand at least 60 days a year.

Guidelines for Equity
Holding in Financial Institutions The Ministry of Finance and the Bank of Thailand have recently announced measures to restore confidence in the financial sector by requiring commercial banks and finance companies currently in operation to increase their capital as a cushion against any potential loss from asset deterioration.
All financial institutions are encouraged to take early action so as to prevent any problem in the future. To facilitate and expedite financial institutions' capital increase, the Bank of Thailand, with the approval of the Minister of Finance, has set the following guidelines for the financial institution's capital increase:

Guidelines for foreign equity participation in Thai financial institutions
1.1 Foreign investors that have sound financial status and high potential to help increase the efficiency in the management of the financial institution shall be allowed to hold more than 49 percent of the share in the 15 commercial banks, 33 finance companies, and 12 credit foncier companies for a period of 10 years. After 10 years, foreign investors will not be forced to sell their shares but they may not purchase any additional shares, unless the amount of foreign shareholdings is less than 49 percent of total shares. Additional shares may be acquired to bring foreign shareholdings to 49 percent of total shares. For the holding of shares of the 58 suspended finance companies, the Financial Sector Restructuring Agency (FRA) shall follow the guidelines of the Committee to Supervise the Merger and Acquisition of Financial Institutions announced on 13 October 1997. The guideline allows unlimited amount of shareholding by foreign shareholders up to a period of 10 years. After 10 years, foreign investors may not purchase any more shares unless the amount held is less than 49 percent of total shares in which case additional shares maybe acquired until the 49 percent mark is reached.
1.2 The guideline shall be the same for foreign investors that are banks. The foreign bank that already has a full branch or a Bangkok International Banking Facility will be allowed to continue their existing operation. However, the authorities reserve the right not to allow a foreign bank that has more than 49 percent stake in a Thai bank to have an additional full branch in Thailand.

D. The Securities and Exchange Commission
In March 1992, the Securities and Exchange Act established a Securities and Exchange Commission (SEC) in Thailand. The SEC plays a supervisory and policy formulation role in the Thai capital market. However, it does not directly regulate the SET's operations, other than to give approval to the SET's major regulations not concerned with day-to-day operations.

E. Market for Alternative Investment (MAI)
In line with the Thai Government policy to support the development of small and medium-sized enterprises, in June 1999, the SET established a new secondary market for trading SME shares, or the Market for Alternative Investment.

Sat, 29 March, 2003


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