The amendments to the Securities and Exchange Act B.E. 2535 (as amended) which came into effect on 12 December 2016 are aimed at regulating increasingly complex market misconducts as well as improving the efficiency of legal enforcement.
Key amendments include:
1. The scope of unfair trading practices has been expanded across four main categories of offences, namely (i) disclosure of false or misleading information; (ii) insider dealing; (iii) market manipulation; and (iv) others, e.g. sending of orders which create disruption or delay to trading system or use of nominee accounts to commit market misconduct.
2. Severity of criminal punishment for unfair trading offences has been raised.
3. Interestingly, the amendment has also introduced civil sanction for certain offences, including, amongst others, unfair trading practices and breach of fiduciary duty by directors or executives. Accordingly, a civil penalty committee will be established to consider and determine certain matters and to impose an appropriate level of civil penalty, e.g. fine, monetary compensations of illicit benefits, ban from securities trading or from being directors or executives, and etc.
4. Whilst all charges against offenders will cease upon settlement of all fines and fees imposed by the civil penalty committee, failure to settle them will now direct the relevant matters to the civil court directly.
With effect form 1 October 2016, companies listed on the Stock Exchange of Thailand ("SET") and Market for Alternative Investment ("MAI") are required to have par value of not less than Baht 0.5 per share, except in certain permitted circumstances (e.g. having closing price for each trading day of Baht 100 or more for a consecutive period of 6 months or undergoing rehabilitation or restructuring process). Nevertheless, the amendment does not apply to listed companies whose par value is currently below the new minimum or those which have obtained a resolution of the meeting of the shareholders to reduce the par value below the new minimum prior to the amendment came into force.
Further, certain criteria for listing on SET and MAI have been revised with an aim at improving the quality and liquidity of listed securities and will take effect from 1 January 2017. Key changes include:
1. Companies applying for listing on both SET or MAI shall now have positive shareholders' equity prior to their IPO with a minimum free float of at least 25 per cent of their paid-up capital (or at least 20 per cent if their paid-up capital (ordinary shares only) is Baht 3,000 million or more).
2. Listing on MAI requires minimum paid-up capital (ordinary shares only) and shareholder's equity of Baht 50 million, with a minimum net profits in the latest year of Baht 10 million.
3. Market capitalization for listing on SET has been increased to at least Baht 7,500 million.
After a long wait, the Secured Transaction Act B.E. 2558 (2015) has finally come into full force on 2 July 2016. The Act introduces a new form of security interest over assets to the Thai legal system, which previously recognised only (i) mortgage (available for immovable property and certain specific types of movable property); and (ii) pledge (available for movable property and requires the delivery of the pledged property). Thanks to the new legislation, the old limitations were overcome and a legal security can now be created over a broader range of assets of economic value (e.g. business, rights of claim, machinery, inventory, raw materials, immovable property (only if the security provider directly engages in a real estate business), intellectual property, and etc.) without the need for delivery of the secured asset. Particularly, the security provider retains the right under the Act to possess, use, exchange, dispose of, transfer and mortgage the secured asset during the secured period, as well as to use it as a security to secure other performances except by way of pledge in which case the pledge will be void.
The Act also sets out registration requirement of the secured transaction agreement, upon which the security receiver (i.e. a financial institution or other person to be prescribed by ministerial regulation) shall have preferential rights over the secured assets and in priority to the unsecured creditors. Moreover, specific procedures for the enforcement of security created under the Act have been established with an aim at promoting a more efficient and less time-consuming out-of-court enforcement.
In light of this significant development, small and medium enterprises or even large-scale businesses would benefit from gaining more flexibility and greater access to the needed finance.
The Inheritance Tax Act B.E. 2558 (the "ITA") is one of the key tax reforms which came into force on 1 February 2016 with an aim at bridging the gap of income disparity in Thailand as well as increasing state revenue.
An inheritor receiving the prescribed assets (e.g. immovable property, securities, bank deposit, registered vehicle, and other financial assets to be further announced) with aggregate value over Baht 100 million from each testator will be taxed on the portion exceeding the said threshold at the rate of 5 percent for ascendants and descendants and 10 percent for others. In any event, the ITA does not apply to inheritance received by the surviving spouse and tax exemption is also available for an heir who will use the inheritance for religious, educational, or public purposes as intended by the testators.
As a countermeasure for possible avoidance of the inheritance tax, the Thai Revenue Code was amended to include a new gift tax which came into effect on the same date as the ITA. In brief, an individual receiving certain types of gifts in excess of the tax-free thresholds will be subject to personal income tax at the rate of 5 percent of the exceeding portion with an option to exclude such income from annual income tax computation.