SET pushes amendment of Public Companies Act to allow dual-class shares and boost free float, eyeing 2,000-point index
RegulationIndustry
The Stock Exchange of Thailand is pushing for amendments to legislation governing public companies to pave the way for listed companies to issue shares with differing voting rights, or dual-class shares, and to increase the proportion of shares freely traded in the market, or free float, in order to accommodate investment from institutional and foreign investors. The Ministry of Finance has accepted the principle for consideration, but the relevant legislative amendment process must still be completed before it can take effect. Professor Kittipong Urapeepatanapong, Chairman of the Board of the Stock Exchange of Thailand, said the dual-class share mechanism would allow business owners to sell more shares to raise capital while retaining control over the company's direction through shares carrying higher voting rights, for example ordinary shares with one vote per share, while another class of shares might carry multiple votes. Dividends could still be set equally. This would help ease the constraints faced by founders, particularly technology companies, new economy businesses, and enterprises whose core asset is intellectual property. Initially, the approach aims to accommodate new IPO companies, and there is a proposal to allow already-listed companies to adopt such a structure in the future. There is also a proposal for golden shares for enterprises in which the state holds a large stake, so that the government can reduce its shareholding and sell off part of its stake to increase free float while retaining oversight rights over key matters. Both dual-class shares and golden shares still require clear legal and regulatory support, covering the scope of use, the rights of each class of shares, and shareholder protection, before they can be implemented. As for the chance that the Thai stock index will rise to 2,000 points, this is seen as possible within the next two to three years if new supply, especially new economy companies, continues to enter the market alongside a recovery in investor confidence.
