Thailand

Posted By Steve On Wednesday, October 28th, 2009 With 0 Comments

Thailand Securities and Equities

Trading Hours:
Monday to Friday
Morning Session: 10:00 – 12:30*
Afternoon Session: 14:30 – 16:30*
Off-hours trading: 16:30 – 17:00

* There are random opening times between 09:55 and 10:00 for calculating opening prices in the morning trading session, and between 14:25 and 14:30 for calculating opening prices in the afternoon trading session. Closing time varies between 16:35 and 16:40 for the calculation of the days closing proces.

Off hours trading starts from the random closing time until 17:00.

ISIN: Yes
Other: Company abbreviations are also used (e.g. BBL for Bangkok Bank Plc).

 

Instruments
Equities: Common shares, preferred shares, warrants, non-voting depository receipts (NVDRs), transferable subscription rights
Debt: Corporate debt, straight debt, debentures, convertible debentures, government bonds
Money Market: None
Other: Unit trusts, mutual funds (certificates issued by investment companies)
Derivatives: SET50 Index Futures

Board Lots

Equities:
Main Board: 100 shares. Trades must be at least one board lot, or multiples thereof.
Odd Lot: less than one board lot
Big Lot: for lots greater than THB3 million or more than one million shares. Minimum trading value of THB50 million applies of investors choose to settle on a gross basis and before T+3.
Debt: No set board lots

Dividend Payment Frequency:

Semi-annual or annual. Foreign investors holding local shares are not eligible for dividend payments.

Interest Payment Frequency:
Semi-annual or annual

Interest Accrual Rate:
Actual/365-day basis.

Corporate Actions:
Common Events: Rights issues, dividend announcements, stock splits, public offerings, warrant conversions
Rights Tradeable: Only transferable subscription rights can be tradeable
New Shares from Exercised Rights: There is no standard delivery timeframe for new shares. Foreign investors holding local shares cannot participate in corporate actions

Foreign Investor Restrictions
Entitled to exercise voting rights on foreign status shares.

NVDR holders have no voting rights with respect to their underlying shares. The Thai NVDR, reserves the right to attend the meeting of the shareholders but will not vote unless the meeting has been called specifically to consider the delisting of the company from the Exchange. The Thai NVDR will then vote without asking or obtaining any comments from the NVDR holders.

New proxy voting forms to be used for the custodian only have been approved, the new proxy voting forms (form Kor) are for custodians’ use at a shareholders meeting of public companies. This new form, effective February 2, 2007 has replaced the previous proxy forms. Split voting and partial voting is allowed for custodian’s use at a shareholders meeting of public companies

Shares Blocked:
No.

Meeting Notices/
Agendas

Provided in English. Annual general meetings and extraordinary general meetings are announced three to seven weeks in advance.

Meeting Outcome
On request, subject to availability.

Company Reports
On request, subject to availability.

Power of Attorney:
Required.

Other: Foreign investors holding local shares are not eligible to vote. Only foreign registered shares carry voting rights. Foreign investors holding NVDRs are entitled to all corporate actions except voting.

Foreign Ownership
Market Entrance Requirements:
None.

Investment
Restrictions

An investor, who acquires or disposes shares, of public companies that are listed, unlisted, and delisted in the SET, that result in the holdings to reach the threshold of any multiple of 5% of the total outstanding issued shares of a company, is required to submit a Report of Acquisition or Disposition of Securities of a Business (Form 246-2) in accordance with Section 246 of the Securities and Exchange Commission Act. This disclosure requirement applies at beneficial owner level.

In general, foreign investors can buy the same shares as the local investors on the Main, Special and Big Lot Boards. Once the foreign ownership limit has been reached in a particular stock, foreign investors can either purchase "foreign shares" on the SET’s Foreign Board (usually at a premium) or purchase "local shares" on the other boards (but forego the right of registering them in their name). Foreign investors cannot buy local shares in the primary market (i.e. IPO). Foreign shares are distinct from the local shares, and have separate ISIN numbers from those of the corresponding local shares.

Special restrictions on commercial banks

Under the Commercial Banking Act B.E. 2505, the following restrictions on any commercial banks holding in any other commercial banks apply:

* any local commercial bank is not allowed to hold any shares in other commercial banks
* any foreign commercial bank (that has a branch in Thailand) is not allowed to hold any shares in local commercial banks
* a branch in Thailand of a foreign commercial bank is not allowed to hold any shares in other local commercial banks
* a foreign commercial bank that does not have a branch in Thailand may hold shares in other local commercial banks.

Other special restrictions on shareholding in local banks

Investors are permitted to hold more than 5% of shares of commercial banks, however, the BOT reserves the rights to seek shareholder disclosure

Repatriation Policy
Effective December 19, 2006 the Bank of Thailand (BOT) issued a non-recompensated reserve requirement on short -term capital inflows.

Foreign currencies bought or exchanged against Thai baht for the following transactions are exempt from the 30% foreign currency reserve requirement:

* Foreign exchange transactions related to current account activities including transactions related to exchange of goods, services, income, transfers and aid.
* Inflows for equity investment in companies listed in the Stock Exchange of Thailand (SET) and Market for Alternative Investment (MAI) (excluding mutual funds), investment in the Thai Futures Exchange (TFEX), and investment in the Agricultural Futures Exchange of Thailand (AFET).
* Foreign direct investment defined as investments by non-residents in resident entities where the investor owns at least 10% of the equity capital, and has managerial power.
* Investment in real estate such as land and condominiums (excluding real estate mutual funds).
* Foreign currency borrowings transacted prior to December 19, 2006.
* Currency swap transactions associated with rolling over existing exchange rate hedging contracts with the original financial institution.
* Foreign currencies bought or exchanged against THB amounting to less than 20,000 USD or equivalent.
* Foreign exchange bought or exchanged against THB from clients or authorised money changers in the form of travelers’ cheques and bank notes.
* Foreign currencies bought or exchanged against THB from (a) foreign embassies, foreign consulates, specialised agencies of the United Nations, international organisations/ institutions incorporated in Thailand; and (b) Thai embassies, Thai consulates or other Thai government entities located outside Thailand. Foreign currency borrowings of government entities.

Foreign currencies bought or exchanged against Thai baht for the following transactions are subject to the 30% foreign currency reserve requirement:

* Investments in debt securities and warrants transacted from December 19, 2006 onwards.
* Foreign currency borrowings transacted from December 19, 2006 onwards.
* Foreign currencies bought or exchanged against THB for purposes other than those exempted above.

Non-residents are allowed to engage freely in spot transactions but forward THB transactions must be matched with a securities transaction. If non-residents wish to engage in forward transactions, they must acquire approval from the Bank of Thailand.

The BOT requires all commercial banks in Thailand to provide daily reporting on foreign exchange transactions and on all THB payments made and received by non-residents within three days of execution date.

Additional information is required as follows:

* The purpose for the payment transaction is required for a THB payment made from a non-resident THB account to a resident THB account. If the information is not received, the payment may not be able to be executed on value date, due to the BOT’s strict control on these types of payment.
* For a THB payment from a resident THB account to a non-resident THB account, the commercial bank in Thailand transacting the payment on behalf of the resident THB account holder must obtain the relevant documentation and prior approval from the BOT authorities before executing the transaction.
* For a THB payment made between two non residents, some additional information regarding source of funds, purpose of payments, tax ID is required
* For THB payments related to securities transactions, such as settlement of trades, where the source of funds is from a foreign exchange transaction, no additional information is required.

Non-resident is allowed to hold an accumulated THB balance in its accounts (i.e. current, savings, term deposits) maintained with any financial institutions in Thailand in limit of THB300 million per non-resident entity. The intra-day outstanding balance can exceed the permitted limit, but non-resident have to reduce their outstanding balance to be within THB300 million at the end of each day. The excess over the limit of THB300 million has to be converted to another currency or be repatriated out in order to be within the limit. There are no regulatory approvals that need to be obtained for opening a new account or investment of repatriation of assets. Balances in all non-resident Thai baht accounts are allowed to exceed 300 million Thai baht without limit until January 8, 2007. From January 9, 2007 the balances should not exceed 300 million Thai baht. The Bank of Thailand will continue to review the appropriateness of this limit.

Securities Lending

Market Entrance Requirements:
None

Investment
Restrictions

An investor, who acquires or disposes shares, of public companies that are listed, unlisted, and delisted in the SET, that result in the holdings to reach the threshold of any multiple of 5% of the total outstanding issued shares of a company, is required to submit a Report of Acquisition or Disposition of Securities of a Business (Form 246-2) in accordance with Section 246 of the Securities and Exchange Commission Act. This disclosure requirement applies at beneficial owner level.

In general, foreign investors can buy the same shares as the local investors on the Main, Special and Big Lot Boards. Once the foreign ownership limit has been reached in a particular stock, foreign investors can either purchase "foreign shares" on the SET’s Foreign Board (usually at a premium) or purchase "local shares" on the other boards (but forego the right of registering them in their name). Foreign investors cannot buy local shares in the primary market (i.e. IPO). Foreign shares are distinct from the local shares, and have separate ISIN numbers from those of the corresponding local shares.

Special restrictions on commercial banks

Under the Commercial Banking Act B.E. 2505, the following restrictions on any commercial banks holding in any other commercial banks apply:

* any local commercial bank is not allowed to hold any shares in other commercial banks
* any foreign commercial bank (that has a branch in Thailand) is not allowed to hold any shares in local commercial banks
* a branch in Thailand of a foreign commercial bank is not allowed to hold any shares in other local commercial banks
* a foreign commercial bank that does not have a branch in Thailand may hold shares in other local commercial banks.

Other special restrictions on shareholding in local banks

Investors are permitted to hold more than 5% of shares of commercial banks, however, the BOT reserves the rights to seek shareholder disclosure.

Repatriation Policy
On April 2, 1999, Securities Borrowing and Lending (SBL) programmes were launched under the following two categories by the TSD:

1. Mandatory Thailand Securities Depository Co Ltd (TSD) borrowing, to cover settlement failure
2. Standard SBL.

1. Mandatory SBL programme
Under this programme, settlement failures on the broker side no longer affect the counterparty. If a broker is short of securities, the trade will settle in the books of the TSD, the counterparty’s account will be credited and the broker’s account will be debited, thus resulting in a negative securities balance. The TSD will then go into the market and try to borrow the necessary securities to cover the account short-fall. It will do so as principal, for the account and on behalf of the broker.

There are two attempts to borrow; one on the after noon of T+3 and the second at the end of that day. If the TSD is unable to borrow sufficient securities, the broker will have one day (T+4) to regularise their position independently. If this fails, the TSD will buy in for the account and on behalf of the broker on T+5.

Unless there was an error on the broker’s side, all expenses related to borrowing and/or a buy-in will be for the seller’s account, as will penalty fees charged by the TSD for late settlement. However, if the TSD manages to borrow securities on the first attempt (at noon on T+3), no late settlement penalty will be charged to the broker.

Requirements for Borrower and Lender
Borrower is required to be a general member of the Clearing House, whereas, lender must be a depositor of the depository center as stipulated by the regulations on depository service. Moreover, the lender must have computer systems connected to the depository system of the TSD.

Conditions of Borrowing and Lending:

* The borrowing of securities has to take place upon the default in delivery of securities.
* Securities to be borrowed, lent or returned must amount to board-lot units as classified by the SET.
* Lender needs to transfer the securities to the "Lending Account".
* Lender is randomly chosen, under the following conditions:

A) Number of securities to be lent is equivalent to or more than those to be borrowed.
B) Fee at the lowest rate is proposed.
C) Priority of time when transferring the securities to the "Lending Account".

Lending Period: Effective for six business days.

2. Standard SBL programme
It involves unrestricted securities borrowing and lending in the classic sense. In any lending transaction, at least one party, i.e. either the lender or the borrower, must have a SBL licence, which is issued by the Securities and Exchange Commission.
However, according to the BOT’s announcement, dated September 2, 2003, effective August 26, 2003, all commercial banks in Thailand are not allowed to engage in the securities lending transaction with any non-residents. Currently, only SBL licensed brokers can lend securities to non-resident investors.

In September 2005, the SET approved the business expansion plan of the TSD including securities borrowing and lending (SBL) service. The SBL service will cover collateral management and bond lending. The TSD will provide the SBL service including collateral management, back office processing for its member companies.

This will be an additional service to the existing SBL mandatory program where the TSD acts as the Principal in covering failed transaction. In this new service, the TSD will act as an agent in facilitating the SBL transaction for borrower and lender.

Taxation

Dividend Tax Rate:
10% withholding tax

Interest Tax Rate
Standard withholding tax rate is 15%, however, for countries that have signed a double taxation treaty, this varies.

Capital Gains Tax Rate: Standard withholding tax rate is 15% payable by foreign funds and companies. For countries that have signed a double taxation treaty, this varies.

Tax Treaties

Armenia India Philippines
Australia Indonesia Poland
Austria Israel Romania
Bahrain Italy Seychelles
Bangladesh Japan Singapore
Belgium Korea (South) Slovenia
Bulgaria Kuwait South Africa
Canada Laos Spain
China Luxembourg Sri Lanka
Czech Republic Malaysia Sweden
Cyprus Mauritius Switzerland
Denmark Nepal Turkey
Finland Netherlands Ukraine
France New Zealand United Arab Emirates
Germany Norway United Kingdom*
Hong Kong Oman United Sates
Hungary Pakistan Uzbekistan
Vietnam

Stamp Duty
Investors buying stock in companies which use TSD as a registrar are exempt from stamp duty. Others normally pay 0.1% of the value of the transaction (THB1 for every THB1,000 or fraction thereof) payable upon registration of ownership. Duties are payable by the seller.

Other Taxes:
Tax Issues Relating to SBLThe Revenue Department of Thailand published revenue ruling no. Gor.Kor.0706/10946 in April 2006. The ruling, dated December 30, 2005, states that a securities lending transaction is considered to be a service under Section 77/1(1) of the Revenue Code. As such, fees arising from a securities lending fee are classified as income from a tax standpoint, and are treated in a similar way to the taxation of interest income.

The ruling outlines that the lending fee would be subject to the current 7% VAT, plus WHT since the fee is regarded as interest income (for example, if the recipient is off-shore entity, 10% or 15% WHT would be applied depending on the Double Tax Treaty and as to whether or not the recipient is a Financial Institution).

This tax ruling applies to the lending fee arising from transactions in which one or both of the counterparts are on-shore entities.

The tax ruling does not provide any interpretation for offshore transactions between off-shore non-Thai entities. In line with general Thai tax law, where both lender and borrower are off-shore non-Thai entities, and neither carry on business in Thailand, the lending fee would not be subject to Thai tax.

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