The Stock Exchange of Thailand (SET) will apply the caution symbol (C) to shares whose companies' financial conditions are deemed an investment risk, coming into effect July 2.
The caution symbol is a flag to alert investors to invest with caution in listed companies that have financial risk, business risk, or those in which auditors do not express an opinion on their financial statements, or they express a conditional opinion.
Companies that are flagged with this trading symbol are required to trade only through their cash balance account.
SET president Kesara Manchusree said companies flagged with the caution symbol are required to provide additional information within 15 days from the date the symbol is given.
The symbol will remain until listed companies have addressed factors causing the marking, said Mrs Kesara.
Factors to cause a caution flagging include problems with a company's financial statements, auditors' opinions, or orders by the Securities and Exchange Commission (SEC) or Central Bankruptcy Court.
For instance, if a company's financial condition deteriorates significantly to the point that shareholders' equities are less than 50% of the paid-up capital after deducting share premiums, then the caution symbol will be applied. Another example is if the SEC orders a listed firm to amend its financial statements or conduct a special audit.
If a firm is classified as a cash company, meaning a listed issuer whose consolidated assets consist of 70% or more of cash or short-term investments, or a combination of both, that would also warrant the symbol.
"The caution symbol is a reminder for investors to be aware of increasing investment risks. This is why the bourse requires trading from a cash balance account for such equities so that investors will consider the investment before making it," said Mrs Kesara.
Trading via a cash balance account differs from the SET's list of listed companies placed under a cash balance stemming from trading irregularities, she said.
Initially, the bourse will flag a notice pending sign (NP) on securities with incomplete information and a notice received sign (NR) when all information is received. The caution symbol is considered the second stage of warning.
The third stage is the halt (H) and suspension (SP) symbols, where shares are temporarily halted or completely suspended from trading. This could happen either from the bourse's own actions or if a listed company asked for such symbols to be flagged.
"Investors will have one more tool to assess their investment decisions," said Mrs Kesara.
The caution symbol will become effective on July 2 as listed companies have to be informed about the process, she said.
