The Securities and Exchange Commission (SEC) has approved the fundraising criteria for small and medium-sized enterprises (SMEs) and startups in both the primary and secondary markets, aiming to provide more access to funding in the capital market.
The criteria are expected to become effective this year, said Ruenvadee Suwanmongkol, secretary-general of the SEC.
However, investment in SMEs and startups is restricted to investors with accredited skills and experience investing in these types of businesses, such as institutional investors, venture capital firms, investment units of corporations, SMEs, and startup employees.
Retail investors are not allowed to invest in SMEs and startups because of the high level of risk.
Ms Ruenvadee said the SEC came to an agreement with the Stock Exchange of Thailand (SET) on the criteria for SMEs and startups' fundraising on the primary market and listing on the secondary market, as well as the establishment of a secondary market for SMEs and startups, known as the SME Board.
According to the criteria, SMEs and startups with plans to raise funds through the primary market or list on the secondary market are required to have the status of a public company with a legal mechanism for minor shareholder protection, in line with the broader funding model.
The criteria for SMEs and startups in the primary and secondary market will be more lenient to help them access funds from the capital market. The companies must submit filing documents and investment disclosures, but are not required to have a financial adviser or pay fees.
To list on the SME Board, companies must submit half-year and annual financial statements from an auditor by an audit firm certified by the SEC.
Directors and top management officers of the companies are required to be responsible for fiduciary duty as directors and executive officers, while share distribution needs to be done through an intermediary company that will be responsible for the know-your-client process and recommend appropriate investments for companies.