Private Placement: A Fundraising Opportunity for Private Companies in Thailand

Pursuant to the Civil and Commercial Code of Thailand, new shares issued by a private company must be offered to its existing shareholders on a proportional basis. This legal restriction makes it difficult for a private company to raise capital from external investors, especially in the case of SMEs or startups for which funding from institutions, venture capitals or private equity investors are vital. To address this limitation, the Securities and Exchange Commission (“SEC”) has introduced a private placement scheme to facilitate access to capital for private companies, enhancing their opportunities to raise funds through the capital markets and reduces certain regulatory burdens while ensuring compliance with disclosure standards.

This private placement scheme allows certain types of private companies, as defined in the relevant regulations, an opportunity to raise funds in Thailand's capital markets through equity or convertible debentures without the need to submit an application for approval or a filing (i.e. a formal submission of full disclosure reports and prospectus) to the SEC. Normally, the offering of shares or convertible debentures (CDs) is considered as a securities offering under the Securities and Exchange Act B.E. 2535 (1992) (as amended), and is therefore regulated by the SEC. As a safeguard for the investors, the offerings can be made to a limited types or number of investors and an issuing company is still required to prepare a factsheet summarising key details including their business operations, financial status, type of securities, and associated risks, to ensure investors receive adequate information.

Eligible Private Companies

The scheme is limited to certain types of private companies:

  • Small Enterprises include those in manufacturing with no more than 50 employees or annual revenue not exceeding THB 100 million, or those in services/wholesale/retail with no more than 30 employees or annual revenue not exceeding THB 50 million.
  • Medium Enterprises include those in manufacturing with 51 to 200 employees or revenue between THB 100–500 million, or those in services/wholesale/retail with 31 to 100 employees or revenue between THB 50–300 million.
  • Large Enterprises are those that exceed the above thresholds and do not qualify as Small or Medium Enterprises.

Only Small and Medium Enterprises must be registered under the Capital Market Fundraising Promotion Project for SMEs (PP-SME) with the Office of Small and Medium Enterprises Promotion.

Permissible Offering Structures

The scheme allows different types of private companies to offer securities to specific investor categories:

  • Small Enterprises may offer to institutional investors and to directors or employees (ESOP) with no limit. However, they may not use the PP10 route (private placement to no more than 10 investors with a total offering value not exceeding THB 50 million).
  • Medium Enterprises may also offer to institutional investors and under the ESOP structure. In addition, they may make PP10 offerings, subject to a cap of 10 specific investors and a total offering size not exceeding THB 50 million.
  • Large Enterprises may only offer to institutional investors, which include institutional investors, venture capital firms, private equity, and angel investors, as defined by the SEC.

ESOP offerings can be made to directors or employees of the issuing company or its subsidiaries, including legal entities (SPVs) established to hold shares on behalf of such individuals for share allocation purposes.

Post-Offering Reporting Obligations

At the end of the offering period, the company must report the results of the offering—including any issuance of shares or CDs—to the SEC within 15 days. For convertible debentures, the company must also report any exercise of conversion rights within 15 days of the exercise date.

Conclusion

The private placement scheme offers a much-needed fundraising avenue for smaller private companies, easing access to capital while maintaining important investor protections through disclosure requirements. It provides a strategic opportunity for SMEs and startups to grow via Thailand’s capital markets.

This document is solely intended to provide an update on recent developments in Thailand’s legislation and is not purported to provide a legal opinion, or a legal advice to any person. Stakeholders are advised to seek professional legal counsel for specific legal guidance related to the above issue.