Mondo Visione Worldwide Financial Markets Intelligence

FTSE Mondo Visione Exchanges Index:

Stock Exchange Of Thailand Board Approves The Establishment Of Siam DR Co., Ltd. To Cope With Depository Receipts And Waives Application And Admission Fees For Debentures Listed Before March 31, 2004

Date 06/10/2003

The SET Board of Governors approved the establishment of Siam DR Co., Ltd. to issue and sell depository receipts (DRs), and waives the application fees, admission fees and first-year annual fees for debentures traded on the bourse before March 31, 2004. Furthermore, the Board also demands that member companies comply with standards, ethics, and the meeting resolutions of ASCO, and allows them to file suit against the SET in case their membership has been revoked. The SET will also study the feasibility of buying a securities brokerage from a securities company and selling it to a new proprietor as a way of managing numbers of securities companies.

The SET President, Mr. Kittiratt Na-Ranong, disclosed that the SET Board of Governors has passed a resolution to establish a subsidiary, Siam DR Co., Ltd., to issue and sell depository receipts (DRs) to investors under SEC regulations. Siam DR Co., Ltd. will have 10 million baht worth of registered capital and be wholly owned by the SET. Executives from the SET and Thailand Securities Depository Co., Ltd. will manage the company.

Siam DR Co., Ltd. will buy underlying securities and issue the DRs at the same amount to further sell them to investors. DR investors will receive the same financial benefits derived from the underlying securities as the holders of those underlying securities. These benefits include dividends, interest income, rights to subscribe to shares in capital increase, to attend meetings, to obtain the financial statements, and tender offers. Investors in DRs will also have voting rights; this differs from NVDRs in that the NVDR holders are not eligible to vote in the shareholder's meetings.

The first DR issued and sold to investors will have common shares and convertible debentures of Bangchak Petroleum Public Co., Ltd. as underlying securities. The initial investment will be secured by the Ministry of Finance. This DR can be redeemed at the end of the 10th year at its first selling price.

The SET President said that: "The SET Board passed a resolution to waive the application fee and admission fee for debentures listed before March 31, 2004, on the secondary bond market to be set up by the SET. The annual fee will be waived for the first-year, or until June 2004, then the issuer will start paying from July 2004 onwards."

"Trading on the secondary bond market is expected to begin by this November, after all parties are ready."

The SET Board of Governors also promotes and supports collaboration amongst SET member companies in developing the securities business and capital markets to create sustainability and to benefit all. The SET will resolve additional responsibilities for the members to comply accordingly.

"The SET Board has added more responsibilities for members to encourage them to comply to standards and ethics codes in operating the securities business of the Association of Securities Companies (ASCO) and its major resolutions. Any severe violations to the responsibilities may be reason for the SET's Board to consider membership revocation. The resolution to revoke the membership requires at least three-quarters votes by the board members." "The Board's resolution also provides room for member companies whose membership has been revoked to file suit against the SET to show that the SET is fair and accountable to all related parties, as well as to promote the SET's good corporate governance. The SET will propose this to the SEC for further approval," Mr. Kittiratt said.

The SET President went on to say that: "Because of the current numbers of securities companies, competitiveness in the securities brokerage industry, and primary fact that too many securities companies are focusing on retail investors, thus the Board considers it necessary to manage the number of securities companies."

"The Board hence approved in principle for the SET to study the feasibility of buying securities brokerages on the condition that the SET can sell the businesses to a new proprietor when it sees the trading conditions in the market are ready for more operators, thus creating an acceptable amount of competition."

Presently there are 39 licensed securities companies. Thirty-seven of them are already the SET members with 35 companies currently operating.