The amended draft bill on the Securities and Exchange Act will empower the Securities and Exchange Commission (SEC) board of directors to formulate a mechanism to govern investment of fund management companies, lessening their investment in products related to their parent firms.
The move is aimed at reducing these fund management companies' conflicts of interest and protecting unit holders, said Sakkarin Ruamrangsri, the SEC's assistant secretary-general.
Most investment management companies are bank subsidiaries, and putting money into products issued by their parents could cause a conflict of interest, he said.
The mechanism could have several options, including requiring these firms to have independent directors or a subcommittee to supervise the issue, as well as hiring outside professionals to manage asset allocation, Mr Sakkarin said.
To address the frequently occurring problem of a lack of quorum, the amended bill lowers the minimum requirement for the number of mutual fund unit holders to half of attendees, down from half of total unit holders.
The cabinet on Tuesday approved the amended draft bill of the Securities and Exchange Act 1992, including an improved definition of securities, the paid-up capital requirement for securities firms and the supervisory power of the SEC.
The new bill has also authorised the SEC's board of directors to reduce the new minimum registered capital for listed companies from 100 million baht stipulated by the previous law, as existing technology allows some operators to run their businesses with less registered capital.
For instance, business operators that use applications in running their operations could have registered capital of only 1 million baht.
The bill bypasses the Stock Exchange of Thailand by allowing securities brokers that are not SET members to execute securities trading orders through the stock market, though they must be regulated by the SEC.
The bill also calls for the establishment of a Capital Market Development Fund (CMDF), which will function as an independent organisation tasked with promoting Thai capital market development, human resources and infrastructure for the SET, in addition to R&D for capital market development.
The SET is required to financially support the CMDF and transfer 5.7 billion baht to fund it.
The Finance Ministry earlier required the SET to provide 8 billion baht of initial funding and contribute 90% of its net profit yearly to the CMDF.
The seed funding and contribution requirements to the CMDF are part of the Market Development Plan for 2017-22, which aims to separate market development functions from exchange functions.