Thailand: the SET silent period and the 90% price test

Thailand permits a market-referenced price and then prices the consequence. A private placement struck at or above 90% of market price lists and trades at once; struck below it, the shares carry a silent period of one year from first trading, and shares delivered on warrants or debentures in the same package are caught as well.

Key takeaways

• Market price has a definition. The weighted average price of the shares traded on the Exchange over not fewer than 7 and not more than 15 consecutive business days before the pricing decision.
• Ninety per cent is the line, and the lock runs a year. At or above it the additional shares trade on listing; below it the silent period attaches from first trading, with up to 25% saleable after six months.
• The lock follows the package. Where shares are issued with warrants or convertible debentures and the combined offering price falls below 90% of market price, the shares delivered on exercise or conversion are caught too.
• The vote is a supermajority. Not less than three-fourths of the votes of shareholders attending and entitled to vote, with objections below 10%, plus an independent financial adviser's opinion where the price is below market.
• The lock has published exceptions. Relief exists in defined cases, including a rehabilitation plan and placements to institutional investors within the SEC's definition. Establish first whether a subscriber is inside it.

Thailand does not ban the discount; it charges for it

Most markets that dislike deeply discounted issuance write a pricing rule: a floor, or a capped discount. Thailand did something else. A Thai board may agree a price below the market and the Exchange does not stop it; what it takes away is the liquidity that made the discount worth having. The mechanism is the silent period, a phrase the Exchange uses in English. In Singapore the negotiation is how deep a discount the rules allow; here the rules allow whatever shareholders approve, and the question is whether the investor can hold locked stock for a year.

How market price is computed, and against what

The reference is not a closing price and not a single day. It is the weighted average price of the issuer's shares traded on the Exchange over a window of not fewer than 7 and not more than 15 consecutive business days ending before the price is set. Where the shares are too illiquid for that average to mean anything, Notification TorJor 28/2565 pushes the issuer to a book-building price, failing which to a fair price from a qualified financial adviser. Because the window runs to the pricing decision rather than to each conversion, the PP, as Thai practitioners call it, is priced once per tranche.

The silent period follows the package

This is the provision that catches foreign investors. The Exchange applies the 90% test to the offering as a whole. Where ordinary shares are issued with warrants or a หุ้นกู้แปลงสภาพ, a convertible debenture, and the combined offering price is below 90% of market price, the shares delivered later on exercise or conversion are themselves subject to the silent period. Splitting the economics between a cheap share and a cheap warrant does not escape it.

For a capital provider whose model depends on selling as it converts, that is decisive. A deeply discounted Thai convertible does not produce free stock; it produces locked stock at a discount. The version that works elsewhere is set out in dilution and conversion mechanics.

The lock is not absolute, and its exceptions are where a foreign investor should spend its diligence. The Exchange has published relief in defined cases, including a rehabilitation plan under which creditors accept shares for debt, and placements to institutional investors within the SEC's definition. The scope of that carve-out decides whether the silent period reaches a subscriber at all, and it belongs in the diligence before a price is agreed.

The vote you cannot size around

Every private placement of newly issued ordinary shares needs a resolution passed by not less than three-fourths of the votes of shareholders attending and entitled to vote, with objections amounting to less than 10% of those votes. Where the price is below market, an IFA opinion goes into the meeting pack. A drawdown facility therefore arrives at the meeting fully specified, because there is no mandate to fall back on.

What changed on 1 July 2023

Notification of the Capital Market Supervisory Board No. TorJor 28/2565 took effect on 1 July 2023 in place of TorJor 72/2558, moving listed-company private placements away from prior approval by the SEC Office. It left the supermajority and the silent period untouched, changing how long the paperwork takes without changing what the deal is worth.

Related markets and reading

• All markets
• Convertible debentures
• Private placements
• Rule 144

Primary sources

• SET — capital increase and the silent period
• SET — listing shares issued for a capital increase
• SEC Thailand — Securities and Exchange Act and notifications
• SET — rules and regulations

Financing a SET or mai issuer: frequently asked questions

Can a SET-listed company issue a convertible debenture with a discounted conversion price?

It can, but the discount decides what the investor receives. Where shares are issued with warrants or convertible debentures and the combined offering price is below 90% of market price, the shares delivered on exercise or conversion are caught by the silent period. A deep conversion discount does not produce sellable stock; it produces stock that cannot be sold for a year.

How long is the silent period and when does it start?

One year, running from the first trading date of the additional shares. Up to 25% of the locked holding may be sold after six months, and the balance is released at the end of the year. For a convertible the lock runs from the day the investor comes to own the shares, so a later conversion starts a later clock.

What shareholder approval does a Thai private placement need?

A resolution of at least three-fourths of the votes of shareholders attending and entitled to vote, with objections amounting to less than 10% of those votes. Where the offering price is below market price an independent financial adviser's opinion is also required. That supermajority cannot be dispensed with, so a facility needs its full authorisation before it can be drawn.

Did the 2023 rule change make private placements easier?

It made them faster to authorise, not cheaper to price. Notification TorJor 28/2565 took effect on 1 July 2023 in place of TorJor 72/2558 and moved the regime away from prior approval by the SEC Office. It touched neither the three-fourths vote nor the silent period, which is where the economics of a discounted placement are decided.