New IPOs could be snagged by changes

The launch of new initial public offerings (IPOs) could be delayed to four years from the current duration of two to three years because of greater compliance with standards set by the International Organisation of Securities Commissions (IOSCO), says the Stock Exchange of Thailand.

SET president Kesara Manchusree said the planned regulatory revision will enhance the quality of information disclosure.

Such compliance could cause delays in new IPO launches to four years in order to accord with the IOSCO standard, she said, adding that small-cap listings may have to deal with lengthier periods because they are not well-prepared for such procedures.

The Securities and Exchange Commission (SEC), the Bank of Thailand and the Office of Insurance Commission will be among the organisations taking part in the Financial Sector Assessment Programme (FSAP), which is scheduled to begin near the end of this year and continue into early next year.

The FSAP is a joint programme of the International Monetary Fund and the World Bank. Launched in 1999 in the wake of the Asian financial crisis, the programme aims to help countries reduce the likelihood and severity of financial sector crises.

The FSAP provides a comprehensive framework through which assessors and authorities in participating countries can identify financial system vulnerabilities and develop appropriate policy responses.

A good assessment result would be a boon for Thailand’s capital market, as it would reflect domestic regulatory standards on a par with those of international counterparts, thus boosting investor confidence.

The SEC recently announced that it was conducting public hearings on the regulatory revision concerning information disclosure of equity instruments and listed companies, aiming to bring standards in line with the IOSCO.

Based on a meeting between the SEC and the business sector in November, the market regulator took some key points into consideration.

Compensation of top executives, disclosure of capital usage and disclosure of three-year retrospective financial statements are among the changes.

Manpong Senanarong, managing director at Kasikorn Securities, said the regulatory revision is not expected to have a substantial impact on new IPO listings, as the main revision points have already been applied by the SEC.

The greater depth of information disclosure has to be assessed further because the public hearings have not concluded yet, Mr Manpong said.

“Disclosing additional information about financial purposes, such as debt repayment and the amount of debt, remains a point of discussion as to whether these factors would impede companies’ business operations,” he said. “Business flexibility also has to be taken into consideration.”

Tisco Securities chief executive Paiboon Nalinthrangkurn said there could be some impact on companies with no track record that are required to comply with the new standards, subsequently causing a delay in IPO listing.

Based on his assessment, companies that have been in business for an extensive period and want to launch an IPO are unlikely to be affected.