Small and medium-sized enterprises (SMEs) will soon be able to use the bourse as a funding source as part of the capital market regulator's plan to help the sector gain easier access to low-cost funding.
Vorapol: New board to improve transparency
A dedicated new SME board is expected to begin trading this year with pioneer stocks of 10-20 firms, said Vorapol Socatiyanurak, secretary-general of the Securities and Exchange Commission (SEC).
Although SMEs account for most businesses in Thailand and many developing countries, they are weaker than larger operators in all aspects.
As they have lots of room to expand, the trading board will be a springboard for them.
The move will also increase the capital market's volume and create a variety of stocks and investors.
This can be a major step towards development of strategic industries and innovation where sources of new ideas and funding can be matched.
Mr Vorapol said the SEC would set less strict listing requirements on the SME board than those of the Market for Alternative Investment (MAI), with listed SMEs needing minimum capital of only 10 million baht and an operational track record of two years.
The MAI has required at least 20 million baht in registered capital for a firm to list on the bourse, with a two-year business operating record. It has also allowed firms with a one-year operating record to list on the market if their shares are worth at least 1 billion baht.
However, after relaxing rules for small companies on the new trading board, the SEC has a duty to protect investors at the same time, Mr Vorapol said.
He said listed firms must agree to be audited by auditing firms and financial advisers authorised by the SEC.
Also, rules on the disclosure of information and transactions will be applied to the same standard as those on the Stock Exchange of Thailand and the MAI.
On the investment side, the SEC will allow only accredited investors with a good knowledge of trading risks.
Investors can trade only in cash on the SME board, while margin loan trading will be prohibited for its stocks.
The SME listings are classified as high-risk assets, so investors must be skilled in handling risks, said Mr Vorapol.
"The SME board will help indirectly to lift SMEs' transparency in accounting and management," he added.