The Securities and Exchange Commission (SEC) and the Stock Exchange of Thailand (SET) are considering revising the criteria for free-float shares in both initial public offerings (IPOs) and secondary markets after unusual surges of many large-cap stocks with low free float disrupted the SET Index in 2020, says Ruenvadee Suwanmongkol, the SEC's secretary-general.
In addition to the SEC, the SET is also in discussions with its securities firm and brokerage members to decide on additional measures, which will be disclosed after an agreement is reached, said SET president Pakorn Peetathawatchai.
He said the SET already announced listed companies are required to distribute shares of at least 15% of the paid-up capital to minority shareholders. This is the same criteria implemented in foreign countries in which the required portion is 10-15% on average.
Listed companies with a proportion less than the threshold must disclose this information to investors and increase the level to at least 15%.
"Although the required proportion of free-float shares does not differ from the international standard, the key is to disclose the company's real proportion of free-float shares," said Mr Pakorn. "We are studying a way to distinguish true free-float shares from shares that arbitrarily fall under the current definition."
In addition to the market surveillance measures, the SET also implemented measures to monitor investment movements and detect illegal activities such as price manipulation using insider information. If such irregularities are detected, the SEC plans to proceed with legal action.
Mr Pakorn said a number of factors are causing the kerfuffle, meaning it requires a combination of methods to solve the problem. Some low free-float stocks, including Delta, were put on a trading alert list and in effect cash balance last year as the shares skyrocketed.