Thai Capital Market Development Plan
The Thai Capital Market Development Plan aims to strengthen the capital market by addressing both supply and demand. It focuses on introducing new financial products, enhancing listed companies through tax incentives and legal reforms, and expanding the investor base. The plan also attracts new funds and builds investor trust via improved regulations and good governance.
Key Takeaways
Enhance capital market supply by supporting new products and strengthening listed companies.
Boost demand by expanding the investor base and attracting new funds with tax benefits.
Improve market trust and confidence through stricter regulations and good governance.
Streamline IPO processes and promote foreign company listings for market growth.
Support SMEs and startups in fundraising by relaxing listing criteria and regulations.
How is the Thai Capital Market Enhancing its Supply Side?
The Thai Capital Market Development Plan strategically enhances its supply side by fostering innovation and strengthening market participants. It supports the introduction of diverse new financial products and streamlines regulatory frameworks to accommodate emerging technologies like electronic securities, ensuring flexibility for fundraisers. The plan also empowers listed companies through targeted tax incentives and comprehensive legal reforms, facilitating growth and stability. Additionally, it broadens the types of businesses eligible for capital raising, relaxing listing criteria for specific industries and supporting fundraising for SMEs and startups. These collective measures aim to increase the quantity and quality of offerings, making the market more inclusive and dynamic.
- Supporting New Products in the Capital Market:
- Increase attractive products for the capital market:
- Attracting foreign companies for primary and secondary listings:
- Reducing the time and steps for IPO approval by amending SEC regulations and adjusting processes for flexibility, including regulatory mapping, disclosure-based approaches, and approving foreign auditors.
- Promoting foreign companies operating in target industries to list securities on the stock exchange.
- Providing benefits to foreign companies engaging in businesses beneficial to the Thai capital market for underserved services like Market Makers, Asset Allocators, and Reinsurance.
- Increasing financial products in the capital market, such as DRs or ETFs referencing Carbon Credits, both domestic and international.
- Legal Amendment Guidelines: Adjusting regulations to be flexible for new technologies and innovations, including the issuance of electronic securities.
- Strengthening Listed Companies:
- Providing tax benefits for listed companies participating in the Jump+ project:
- Corporate income tax exemption only on increased profits for three years if conditions are met, aiming for higher future tax collection.
- Special corporate income tax rate for companies consistently paying dividends at a rate higher than the industry average, similar to South Korea's KOSPI 5,000 policy.
- Amending the Public Company Limited Act to support and promote listed companies:
- Allowing Preferred and Dual-Class Shares with more voting rights or multi-class shares, along with establishing overall shareholder protection measures.
- Adjusting M&A laws to support diverse forms of mergers between public and private companies, such as A+B=A/B and A+B=C, along with establishing guidelines for protecting stakeholder rights:
- Allowing accumulated losses of the original company from an amalgamation merger to be gradually deducted as expenses of the new entity.
- Requesting income tax exemption for companies transferring shares in group restructuring cases, as it is a business restructuring, not a true sale.
- Establishing laws to support cases where public companies can revert to private company status.
- Specifying that only significant parts of the acquisition or transfer of business from another company or private company to a public company require a special resolution (3/4) of the shareholders' meeting.
- Amending the Civil and Commercial Code/Issuing supporting policies: Amending laws and establishing policies to support startups seeking access to funding through various forms of securities issuance and offering, including public offerings, limited offerings, or offerings to directors or employees.
- Expanding Business Types Eligible for Capital Raising in the Stock Exchange:
- Relaxing listing criteria for certain business types currently facing restrictions, such as alcoholic beverage manufacturers, by potentially setting appropriate conditions and regulatory mechanisms.
- Supporting fundraising for SMEs and Startups through appropriate channels like LiVEx and MAI by reducing regulatory burdens.
What Strategies are Boosting Demand in the Thai Capital Market?
To stimulate demand, the Thai Capital Market Development Plan implements several key strategies aimed at expanding the investor base and attracting new capital. This includes promoting savings and investment among minors, fostering a new generation of market participants. Significant tax benefits are proposed to encourage both individual and institutional investors to bring new funds into the market, particularly for long-term holdings. Crucially, the plan prioritizes building investor trust and confidence through enhanced regulatory oversight, stricter enforcement, and promoting good governance among all market participants. These initiatives collectively aim to deepen market liquidity and ensure sustainable growth.
- Expanding the Investor Base by Promoting Savings for Minors (under 18) to Invest in the Capital Market.
- Increasing New Funds into the Capital Market:
- Providing tax benefits to promote savings through the TISA (Thailand Individual Saving Account) project, with investment conditions:
- Investment is possible from age 15, and/or savings for children can be transferred at age 20.
- An investment limit of 200,000 Baht for five years (day-to-day).
- Investments can be made in Thai and foreign equity/debt funds, and other stock exchange products.
- Income tax deduction based on income bracket.
- Income tax exemption on dividends and interest (proposed 50% or 100% exemption).
- Providing tax benefits for institutional and retail investors (both domestic and international) who bring new funds into the Thai capital market, with the condition of long-term security holding for at least three years:
- 10% dividend tax exemption for Thai, foreign investors, funds, and Family Offices.
- 15% Capital Gain tax exemption for Thai and foreign institutional investors and Family Offices (Thai individuals and mutual funds are already exempt).
- Income tax exemption on foreign-sourced income brought into Thailand, specifically for the portion invested.
- Building Trust and Confidence for Investors:
- Increasing regulatory efficiency, establishing stricter laws and regulations to protect investors, including severe penalties for offenders.
- Enforcing laws and regulations quickly and transparently; a draft Royal Decree amending the Securities and Exchange Act is currently under consideration.
- Promoting good governance and responsibility among listed companies, capital market operators, and various Gate Keepers.
Frequently Asked Questions
What is the primary goal of the Thai Capital Market Development Plan?
The plan aims to strengthen and expand the Thai capital market by enhancing both the supply of financial products and the demand from investors, fostering a dynamic and trustworthy environment.
How does the plan intend to strengthen listed companies?
It proposes tax benefits for companies joining the Jump+ project and amends the Public Company Limited Act to support various corporate actions like M&A and dual-class shares.
What measures are in place to attract new investors and funds?
The plan promotes minor savings and offers tax incentives for individual and institutional investors, especially for long-term holdings, to inject new capital into the market.
