SET-listed AEC Securities has resolved its net capital rule problem by obtaining funding from a juristic person and has opted for a capital increase by allotting new ordinary shares to reduce future investment risk.
The company has received funding worth 150 million baht from a juristic person that is not a related party in order to maintain its net capital under the requirements of the Securities and Exchange Commission (SEC).
AEC Securities submitted a notification to the SEC to consider a resumption of business operations.
The firm also has a medium-term strategy to resolve the issue by increasing capital through a rights offering and a private placement at a combined 300 million baht.
AEC Securities will issue debentures worth about 2 billion baht and decrease the amount of existing debenture investment to reduce risk and the impact on net capital in the future.
"The company will use the proceeds from the issuance and allocation of the newly issued ordinary shares through a rights offering as a source of funds and working capital for the company's business operations in order to improve financial liquidity and enhance business potential to sustainably support current operations and future business expansion," the firm said in a release.
AEC Securities shares were previously tagged with halt (H) and suspended trading (SP) symbols because net capital was lower than zero for more than five consecutive business days, resulting in a halt of business operations as per SEC rules.
The SEC applies the net capital rule approach, whereby securities and derivatives businesses are required to maintain net capital -- liquid assets less liabilities and risk haircuts -- to ensure sufficient liquid assets to absorb losses, maintain a stable financial status and, in the event of insolvency, prevent damage to clients' assets and the financial system.
In the case of a shortfall, the operator is required to observe whether its net capital or net capital ratio is less than or equal to 1.5 times the minimum requirement of 10.5% or 22.5 million baht, respectively, for securities companies operating only in securities or derivatives business.
If a securities company experiences negative net capital for five straight days, all operations must cease, while risks associated with proprietary trading must be reduced and client positions are to be transferred.
AEC Securities engages in securities brokerage, trading and underwriting, as well as investment advisory, and is also a sales and derivatives agent.