You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

Search
Close this search box.
September 3, 2019

Thailand’s SEC Provides Legal Clarity with Equity Crowdfunding Regulations

Subscribe to Updates
Informed Counsel

Crowdfunding in Thailand has generally been regulated by the Securities and Exchange Commission (SEC), and this covered a narrow scope of crowdfunding activities, including offering newly-issued shares via “electronic systems or networks.” Recently, the SEC issued new regulations expanding the scope of permitted crowdfunding activities to include other parts of equity crowdfunding. SEC Notification Tor Jor. 21/2562 Re: The Offering of Securities for Sale through Crowdfunding Portals and related regulations came into force on May 16, 2019, and replaced the previous SEC notifications on crowdfunding. The new SEC crowdfunding notification expands previous restrictions, including allowing issuers to offer “plain vanilla” debentures as well as shares, and adjusting the specific restrictions on issuing securities to retail and non-retail investors.

Crowdfunding Portals

The new SEC crowdfunding notification defines crowdfunding portals as websites, mobile apps, or other similar electronic media developed for offering securities for sale. Crowdfunding portals must be incorporated in Thailand, must have a minimum paid-up registered capital of THB 5 million, and their systems must be ready for use upon applying to the SEC for approval to operate.

After receiving approval from the SEC, crowdfunding portals must operate within the scope of their license and comply with the standards and requirements of the notification. This includes an obligation to record information relating to the issuing of securities on the platform and keep that information for at least two years after the date of offering. Crowdfunding portals are also required to disclose transaction summary reports to the SEC.

Crowdfunding portals are responsible for complying with Know Your Customer procedures relating to their investors and must also assess each investor’s knowledge and abilities regarding investment in shares and debentures. Crowdfunding portals must also provide investors with information about investment, including the benefits and risks of investing in shares and debentures, rights of cancellation, and information on the issuers.

Issuers

Under the new SEC crowdfunding notification, an issuer must not be listed on the Stock Exchange of Thailand, must be a company incorporated under Thai law, and must intend to use the proceeds of newly-issued shares and debentures to fund the company’s operations, or for refinancing. Qualifying issuers will be exempt from licensing requirements; however, they must only offer securities through one crowdfunding portal unless they receive approval from the SEC to do otherwise. Issuers must also file the results of offering crowdfunding securities with the SEC and must appoint a securities registrar.

Issuer compliance with SEC crowdfunding regulations is generally the responsibility of the crowdfunding portal on which the issuer is offering securities. Crowdfunding portals are responsible for screening issuers wishing to offer crowdfunding shares or debentures via the crowdfunding portal, in order to determine whether the issuer complies with the requirements under the SEC crowdfunding notification. If the crowdfunding portal discovers, or has reason to believe, that an issuer violates the provisions of the notification or other law, the crowdfunding portal must reject the issuer and inform the SEC of the violation immediately.

Investors

Non-retail investors include institutional investors, mutual fund companies and venture capital investors, angel investors, and other crowdfunding portals. The term “angel investors” refers to private individuals who either:

  • have invested directly in shares for a period of at least one year, and (i) have net assets of at least THB 50 million, not including the property value of that person’s residence, or (ii) have an annual income of at least THB 4 million; or
  • have knowledge and skill relating to business operation or investment, experience assessing the value of business operators, or experience advising on business development

An issuer may not offer crowdfunding securities to more than 50 different angel investors and crowdfunding portals in any 12-month period.    

Retail investors are individual investors who do not meet the criteria listed above. The value of crowdfunding securities offered by an issuer to a retail investor must be no more than THB 100,000 to each retail investor. The value of crowdfunding securities offered by an issuer to all retail investors must be no more than THB 20 million within 12 months of the first offering of crowdfunding securities, and the total value of crowdfunding securities that may be offered to individual investors starting from the date of first offering is capped at THB 40 million.

Conclusion

Thailand’s embrace of crowdfunding and innovative crowdfunding platforms is a further strengthening of the increasingly active and profitable fintech sector in the country. While tech entrepreneurs had already been taking steps in the equity crowdfunding space, the SEC’s actions have codified the process, aiming to facilitate grassroots financing through crowdfunding initiatives in a way that mutually benefits both entrepreneurs and their supporters (i.e., investors) as well as the platform operators who bring these groups together. The effect of this development will become clear in the coming years, but in principle it should smooth out challenges, remove uncertainty, and provide legal clarity for greater crowdfunding innovation in the country.

Download Full Article

Practices

Banking and Finance

Capital Markets

Location

RELATED INSIGHTS​

December 4, 2024
Thailand Legal Basics, a valuable primer for foreign investors, explores all aspects of living and doing business in Thailand. Written by specialists at Tilleke & Gibbins in Bangkok, it is the only comprehensive English-language guide to the Thai legal system with a focus on the concerns of foreign business and investment.
Read More
November 19, 2024
Thailand’s Securities and Exchange Commission (SEC) has announced a public hearing on proposed amendments to takeover regulations under Thailand’s Security and Exchange Act B.E. 2535 (1992) (and the regulations issued thereunder) that have the potential to reshape the country’s market for takeovers. The proposed changes, which have not yet been compiled in a formal draft regulation, may affect acquisition planning but could also help reduce unnecessary regulatory and administrative burdens. The SEC is accepting comments on the proposed changes through its website until November 30, 2024. The key proposed changes are detailed below. Alignment of tender offers and reporting under Section 246: Previously, Section 246 (reporting of acquisition/disposition upon reaching or crossing any multiple of 5% shareholding) focused only on group shareholding changes, while Section 247 (tender offer obligation) looked at both groups and individuals to trigger tender offering obligations. The proposed amendment aligns these requirements by considering only group-level triggers for both sections. Another change addresses situations where an entity acquires another entity (persons under Section 258) that already holds shares in a listed company. Currently, actions of shareholders in a listed company resulting in a person under Section 258 and such shareholders as a group holding shares in a listed company in aggregate and triggering the tender offer threshold only result in reporting under Section 246 while having no tender offer obligation. Under the proposed amendment, such actions will trigger a tender offer obligation—not immediately upon the acquisition of persons under Section 258 and reaching or crossing the relevant threshold, but once there is any increase (even a single share) in the shareholding in the listed company, unless the circumstances fall into an exemption (e.g., disposal of the additional shares within seven business days) or a waiver is obtained. Currently, obligations are triggered at the next threshold,
Read More
October 30, 2024
On September 18, 2024, Thailand’s Securities and Exchange Commission (SEC) issued comprehensive guidelines to make it easier for foreign business operators to provide investment services in Thailand. These guidelines are designed to support Thailand’s goal of becoming a global financial hub and align with government efforts to enhance the ease of doing business. The guidelines primarily focus on streamlining the process for foreign firms applying for securities and derivatives licenses, and ensuring quicker and more transparent entry into the Thai market for businesses offering securities (such as shares, mutual funds, and collective investment schemes) and derivatives (such as futures and options). Fast-Track Licensing Under the new guidelines, the SEC will provide support to foreign companies wishing to operate securities businesses in Thailand. This support includes a fast-track licensing process for foreign operators that meet certain qualifications, such as having a company incorporated in Thailand, having operated a system of group companies for at least five consecutive years, and being supervised by a regulator under the IOSCO MMoU (International Organization of Securities Commissions Multilateral Memorandum of Understanding). The SEC will also collaborate with the Ministry of Commerce to grant exemptions from the requirement of a foreign business license for companies providing certain services relating to or supporting securities or derivatives businesses, such as net asset value calculation/confirmation for mutual funds, and promotion of capital market products. Applying for foreign business licenses has long been a complicated process for foreign operators, and this exemption can help reduce such complications. Targeted License Exemptions to Reduce Regulatory Burdens Foreign operators providing specific investment services may be exempt from full securities and derivatives licensing requirements, saving time and costs associated with the full licensing process, and allowing them to start their businesses quickly and efficiently. Key exemptions include: Foreign operators providing derivatives services solely
Read More
October 24, 2024
On September 27, 2024, the Securities and Exchange Commission of Thailand (SEC) issued a circular clarifying reporting obligations in relation to listed company securities held by the company’s directors, executives, auditors, or persons related to them (“Key Persons”). The circular aimed to address growing concerns over transparency in shareholding, particularly when shares are used as loan collateral by company executives without sufficient public disclosure, which can lead to sudden share loss and executive departures, destabilizing the company. This circular is likely a stopgap measure, and a full overhaul of the reporting regulations may be needed. The current reporting obligations came into effect on March 16, 2024, and were designed to simplify reporting procedures while still maintaining transparency in the capital markets. The rules allow the Key Persons to consolidate multiple transactions and report them only when certain thresholds are crossed — such as when the total transaction value reaches THB 3 million or when six months have passed since the last report. The rules were intended to reduce the number of minor reports and limit penalties for missed deadlines. However, recent scandals have raised concerns about the reporting rules, particularly issues related to the enforcement of share collateral on executives’ or directors’ loans where the listed company may face a change of direction and management due to such forced sales. To ease these concerns, the SEC issued the new circular to reiterate the rules and lay out three key situations triggering a reporting duty: Force-Selling Due to Default: If shares are forcibly sold due to a loan default, this must be reported, and the transaction should be recorded with the Thailand Securities Depository (TSD). Transfer of Shares to Custodians: Under current rules, the transfer of shares to/from a custodian holding them on behalf of a beneficial owner does not
Read More

Contact

We have seven offices in six countries
across Southeast Asia.

Contact Us

Careers

We are always seeking great people to grow
our amazing team.

Join Us

Networks

© 2024 Tilleke & Gibbins International Ltd. All rights reserved.

© 2020 Tilleke & Gibbins International Ltd. All rights reserved.

Privacy Policy

| Fraudulent Communications

| Legal Notice