The Stock Exchange of Thailand (SET) is preparing to strengthen its supervision of listed companies on both the main bourse and the Market for Alternative Investment (MAI) next year to bolster fraud prevention and warn investors about potential misconduct.
Following the More Return share scam and Stark Corporation accounting fraud, the SET is trying to find solutions to prevent such problems from recurring in the future, said Paveena Sriphothong, senior executive vice-president and head of the market supervision division at the SET.
Supervision criteria will be revised for listed companies starting next year, said Ms Paveena. The revisions include the listing process, trade monitoring, and delisting stocks from both exchanges, as well as disclosing companies' information to the public.
For example, the SET is improving the required qualifications of listed companies on both bourses, which currently differ by amount of registered capital, financial status and past operating results. This move aims to enhance high-growth businesses that do not require high capital, but are capable of competing in the regional market.
Rules will also be adjusted for companies to make initial public offerings (IPOs), indirect or backdoor listings, and trading resumptions, she said. The free-float proportion for newly listed companies on both the SET and the MAI will be increased from the current level of 15% of registered capital, said the bourse.
In addition, the SET studied the guidelines for "auto halt" or a temporary ban on trading of listed securities found to have significant irregularities.
A "C" sign to inform investors of news about listed companies, such as low income, consecutive losses, default on debt payments, auditors not expressing an opinion on financial statements, or low trading liquidity, would also be imposed starting early next year, said Ms Paveena.
Manpong Senanarong, senior executive vice-president of the SET, said the bourse will also improve the warning system about potential misdeeds of listed companies, making it more efficient.
"Stronger supervision will make it more difficult for listed companies to commit fraud. However, the SET has limited authority to supervise listed companies under the Securities and Exchange Act. We will gather the evidence and send it to the SEC to take legal action," he said.