Capital markets in Thailand are strictly regulated and controlled. According to the FTSE Equity Country Classification, as of March 2019, Thailand’s capital market is ranked in Tier 2, or in the ‘Advanced Emerging’ group. However, the stringent regulations do not practically create barriers to asset management firms or investors, but they are aimed at enhancing investor protection.
Securities businesses are regulated by the Security and Exchange Commission of Thailand (SEC), and their operators are required to obtain a securities license.
The Type-C securities licensees are allowed to undertake securities business in various categories, which cover all ordinary course of business undertaken by asset management firms, as follows: (a) mutual fund management, (b) private fund management, (c) securities brokerage of investment units, trust certificates of trust having similar characteristics as mutual funds, or any other securities prescribed by the SEC as securities, which have similar characteristics to investment units, (d) dealing in securities, as specified in (3), (e) underwriting of securities as specified in (3), (f) investment advisory services; and (g) venture capital management.
For a Type C license, the applicant must fulfill the following requirements: (a) Be a private or public company incorporated in Thailand, (b) Have its paid up registered capital of not less than Baht 100 million, (c) Not having reasonable grounds to believe that the applicant has financial conditions that are likely to cause damage, or any other circumstances indicating the applicant’s financial hardship. In addition, there are no reasonable grounds to believe that the applicant has any deficiency, or is not appropriate in regard to control and sound business conduct, (d) Be able to maintain capital funds, and set aside reserve capital in compliance with the laws establishing such legal entity, or the laws controlling the business undertaking of such legal entity.
Application fee for a securities business license depens on the types of securities businesses applied. Likewise, annual securities business license fees depend on the type of securities businesses and/or volume of annual transactions, which could range from Baht 25,000 to Baht 10,000,000.
There is no foreign direct investment limit or foreign ownership restrictions for a company that wishes to apply for the license.
Data from the SEC’s website shows that as of June 24, 2019, there are 26 licensed asset management firms, which are operating in Thailand. While the 2018 annual report prepared by the SEC has not been released, according to the annual report of 2017 prepared by the SEC, asset management firms accounted for a combined market share of 88%.
Athistha (Nop) Chitranukroh
Piyanuj (Lui) Ratprasatporn