Thailand's Securities and Exchange Commission plans to issue new guidelines on the sale of debt securities in a bid to enhance investor protection and curb systemic risks, The Bangkok Post reported March 28, citing the commission's secretary general, Rapee Sucharitakul.
Sucharitakul said the new rules aim at creating a balance between benefits to investors and issuers, as well as protecting investors of different types at an appropriate level.
Under the new rules, issuers will be required to limit the sale of bills of exchange to a private placement basis and to institutional investors, instead of raising funds from a wider range of investors. When offering securities to non-connected major investors, the issuer must make the offer through intermediaries.
Meanwhile, intermediaries will be required to screen debt securities before issuing them and clearly delineate the product from the sales agency. The seller must properly advise clients on the nature and risks of the debt instruments and also disclose the information in a fact sheet format.
The commission also enhanced investor protection mechanisms, requiring the involvement of a debenture holder representative in the sale of debentures to major investors. The issuer will also be required to share information showing greater debt repayment ability.
Further, the new rules separate oversight of major investors from institutional investors to protect the former and make sure that they have the correct information to make investment decisions.
The move comes after 10 companies defaulted on bond payments during 2016-2017, the publication reported, citing the commission. While three companies have resolved their debts, seven companies are still in the resolution process.
The new rules take effect April 1.