Rules relaxed for holding firm IPOs
The Capital Market Supervisory Board has approved rules governing initial public offerings of holding companies, in an attempt to support their business diversification and draw more investment into the country.
Securities and Exchange Commission secretary-general Vorapol Socatiyanurak, a member of the board, said two main revisions to the rules were approved, involving their minimum interests in subsidiaries and their asset sizes.
The holding companies now will only be required to hold more than 50 per cent of voting rights in subsidiaries that generate a sizeable portion of their group’s revenue. The subsidiaries may be based locally or overseas. They would also enjoy relaxation, if such holding violates the accounting code or the public-private investment code.
Earlier, the holding companies had to hold at least 75 per cent of such key subsidiaries. The amendment is aimed at facilitating the holding companies’ business operations and joint investment, while their control over the subsidiaries is maintained.
The SEC also specifies that the total asset size of subsidiaries and their affiliates must not be lower than 75 per cent of the holding company’s assets. The holding company’s investment in non-core business must be lower than 25 per cent of its assets.
"The current requirement on minimum interests is set high to ensure absolute control, but in practice, many companies have problems meeting the requirement, particularly with foreign joint investment," Vorapol said. "The relaxation will draw Thai and foreign investment to holding companies.
"Though the companies can own businesses in the region, investors can make a single investment in the Thai market. This will enhance the diversity of Thai financial products, boost the market size and allow Thailand to be the biggest investment hub in the region."
