Listed companies may be delisted if their free float does not conform with the new Regulations

On 19 February 2024, the Stock Exchange of Thailand (“SET”) circulated a letter among listed companies, financial advisors, member companies and non-member securities companies regarding the revision of procedures for the minority shareholders (free float) of listed companies that do not possess qualifications in accordance with the rules, which became effective as of 25 March 2024. Free float, also known as public float, refers to the shares of a company that are readily available for trading in the stock market and are not restricted, i.e. held by insiders. The term is used to describe the number of shares available to the public for trading in the secondary market.

Pursuant to the Regulation of the Stock Exchange of Thailand Re: Listing of Ordinary Shares or Preferred Shares as Listed Securities (No. 12) B.E. 2567 (2024) and the Regulation of the Stock Exchange of Thailand Re: Listing of Securities, Disclosure of Information and Delisting of Securities in the Market for Alternative Investment (“MAI”) (No. 4) B.E. 2567 (2024), a listed company must have minority shareholders, who are not strategic shareholders with roles in managing the company, of not less than 1,000 persons for a company listed on the SET or 300 persons for a company listed on the MAI; provided that they hold shares in an amount of not less than one trading unit and in aggregate as follows:

• Not less than 30 % of the paid-up capital, if the paid-up capital of the ordinary shares is less than Baht 300 million;
• Not less than 25% of the paid-up capital, if the paid-up capital of ordinary shares is not less than Baht 300 million but less than Baht 3 billion; and
• Not less than 20% of the paid-up capital, if the paid-up capital of ordinary shares is not less than Baht 3 billion.

In the case of an Initial Public Offering (“IPO”), the aggregates of the free float shall be as follows:

• Not less than 20 % of the paid-up capital, if the paid-up capital of the ordinary shares is less than Baht 300 million;
• Not less than 15% or Baht 60 million of the paid-up capital, whichever is higher, if the paid-up capital of the ordinary shares is not less than Baht 300 million but less than Baht 3 billion; and
• Not less than 20% or Baht 75 million of the paid-up capital, whichever is higher, if the paid-up capital of the ordinary shares is not less than Baht 3 billion.

A listed company must maintain the qualifications regarding shareholding distribution by having at least 150 minority shareholders, collectively holding shares amounting to at least 15% of the company's paid-up registered capital. Thus, non-compliance with this requirement would be considered as the company failing to comply with the free-float requirement, unless the aggregate number of shares held by the minority shareholders is in accordance with those to be waived by the Board of Governors of the Exchange.

In the event that the listed company fails to submit its strategic shareholder report within 14 days after the last date of the annual ordinary shareholders meeting, e.g. 14 May for the fiscal year ended 1 January – 31 December or 14 August for the fiscal year ended 31 March, the SET shall consider that the listed company has a free float which does not conform with the regulation.

Upon the listed company’s preparation of a report on the distribution of shares to shareholders, the SET will announce a list of listed companies with incomplete free-float requirements. According to the Regulation of the Stock Exchange of Thailand Re: Measures in case of Events that may Affect Listed Companies’ Financial Condition and Business Operation (No. 4) B.E. 2567 (2024), the SET will take measures against listed companies that do not comply with the free-float requirement, particularly by posting the ‘CF’ (Caution – Free Float) sign on the securities of such listed company. Thereafter, such listed company shall hold a meeting to provide information and explain guidelines to resolve such issues to the investors and related parties, i.e. a Public Presentation, within 15 days from the date of being marked as CF.

When the SET has posted the CF sign continuously for one year and the listed company is still unable to comply with the free float qualifications, according to the Regulation of the Stock Exchange of Thailand Re: Rules, Conditions and Procedures for Temporary Suspension of Listed Securities Trading (No. 5) B.E. 2567 (2024), the SET will remove the CF sign and replace it with the ‘SP’ (Trading Suspension: SP stands for “suspension”) sign until the listed company can comply with the free float qualifications.

According to the Regulation of the SET Re: Delisting of Securities (No. 2) B.E. 2567 (2024), when the SET posts the SP sign continuously for a period of one year, it will cause the ordinary shares of the listed company to be subject to delisting. In such regard, the SET will announce that the ordinary shares of such listed company may be delisted as securities. Furthermore, the ‘NC’ (Non-Compliance) sign will then be posted on the listed securities of the listed company in addition to the SP sign. The SET may also consider taking further action regarding the delisting of ordinary shares of a listed company. In such case, the SET will allow the shareholders of the listed company to trade their shares for seven days before the effective date of the delisting.

In summary, the new regulations take measures against listed companies that have incomplete free-float requirements. This includes posting a cautionary sign on the securities of the listed companies, prohibiting the purchase of such securities and eventually delisting their shares.

Please note that the conditions under which a listed company is required to pay the additional annual fee due to non-compliance with the free float requirement have been repealed by such new regulations, and the sanctions as prescribed above will be implemented instead.

This is intended merely to provide a regulatory overview and not to be comprehensive, nor to provide legal advice. Should you have any questions on this or on any other areas of law, please do not hesitate to contact the following:

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