The Establishment of Equity Crowdfunding in Thailand & the Strengthening of Thai SMEs for the ASEAN Single Market


The Importance of Equity Crowdfunding in Thailand

On 16 May 2015, the notification of the Capital Market Supervisory Board such as the notification no.:

  • TorChor. 7/2558 regarding regulations on offer for sale of securities through electronic system or network
  • TorChor. 8/2558 regarding rules, conditions and procedures for offering for sale of shares by shareholders of limited companies
  • KorChor. 3/2558 regarding exemption from filing of registration statement for securities offered through provider of electronic system or network

These new regulations will come into effect to facilitate the establishment of equity crowdfunding in Thailand.

In many countries in Asia, including Thailand, the idea of crowdfunding is still relatively new. But it is inevitable that crowdfunding can be a good mechanism for economic development.

The International Organization of Securities Commission (IOSCO) considered crowdfunding as one type of market based finance for the Small and Medium Enterprises (SMEs) which may have significant role for economic development due to the reason that crowdfunding can help innovative startups raise funding to grow.

Admittedly, the situation in Thailand for SMEs, is very important in the context of economic development; however, the most difficulty for SMEs is that SMEs have had difficulty in borrowing money from a financial institution. The statistics provided by the Thai Securities and Exchange Commission (SEC) indicate that SMEs are the most significant source of employment and job growth in Thailand generating 78% of total employment. SMEs in Thailand also accounted for 37.1 % of GDP. Additionally, on the export side, SMEs accounted for 28.4 % of a total amount of exports from Thailand.

As stated in the government published document, the Thai SEC proposal on crowdfunding supervision requested a public hearing in the end of last year because they sought to allow the businesses to use funding portals as an economic catalyst with its lower cost in offering the sale of shares and debt.

The Thai SEC hopes that investment crowdfunding will play a significant role to strengthen the ability of SMEs to remain competitive in a domestic and in a global market. In other words, appropriate regulations and policies regarding crowdfunding are needed for SMEs and the associated economic development of Thailand. Moreover, crowdfunding may create an opportunity for any individual to become a business owner by providing access to capital – they just need a compelling business concept.

Correspondingly the protection of investors is also a concern of the Thai authorities.

The Lack of Appropriate Regulations

The Thai SEC document published regarding regulations for crowdfunding supervision outlines the reasons for drafting the proposal are provided in the introductory part. The main reasons which provided may be grouped as follows;

  • Lack of appropriate definition and regulation for the Funding Portal (FP).
  • The disclosure duties of issuing company is a heavy burden for SMEs and
  • Lack of appropriate regulations for protecting investors.

Hence, the Capital Market Supervisory Board issued many notifications which are directly related to equity-based crowdfunding which will be discussed herein.

New Regulations regarding Equity Crowdfunding in Thailand

The Qualification of being Crowdfunding Portal

The requirements for becoming crowdfunding platform under Thai law provided in chapter 3 clause 12 and 13 of the notification no. TorChor. 7/2558 that

  1. filing an application with the SEC Office in accordance with Form 35-FP together with the documents specified in the application
  2. being incorporated under Thai law
  3. having paid up registered capital not less than five million Baht (around 0.15 million USD)
  4. not having a reasonable ground to believe that the applicant has financial condition problems or has any deficiency and/or not appropriate for being crowdfunding platform
  5. the person who are the directors, managers should not be prohibited by the rule regarding personnel in the capital market business
  6. having the place for operating crowdfunding platform business
  7. in cases that the applicant is a company having operated other businesses, other businesses shall not have conflict of interest with the crowdfunding portal platform.

In the above mentioned rules, the capital requirement of being crowdfunding platform in Thailand is quite different from many Asian countries, for instance, the minimum capital requirement for being crowdfunding platform in Taiwan is 50 million TWD (around 1.6 million USD).

This indicates that it may be easier to establish  crowdfunding platform in Thailand; however, if compare to other countries, not only countries in Asia but also western countries, the minimum  capital requirement of crowdfunding platform under Thai law is significantly lower than other countries as well. Some legal scholars have expressed concern about the risk of crowdfunding platform business failing and the risk of investors due to the low capital requirement.

The Disclosure Duties of Issuing Company

For the offer for sale of newly issued securities, the duties to disclose information concerning issuance or offering for sale of securities are provided in notification of the Capital Market Supervisory Board No. TorChor. 28/2551 regarding application for and approval of an offer for sale of newly issued shares in accordance with section 35 of the Securities and Exchange Act B.E.2535 which gave the power to the Capital Market Supervisor Board to specify in the notification.

Basically, the notification no. TorChor.28/2551 provides that a public limited company that desires to make an offer for sale of newly issued shares to the public has the duty to disclose information by filling related documents and complying with the procedure specified in this notification; however, there is new regulation which is notification of the Capital Market Supervisory Board No. KorChor 3/2558 which provided the exemption for filing the registration statement for a public limited company in case that the value of securities that offered to retail investors is not more than twenty million baht ( 600,000 USD ) during twelve months from the first offer and not more than forty million baht ( 1,200,000 USD ) as from the first offer; however, the value of securities that offered to each retail investor shall not exceed fifty thousand baht ( 1,500 USD) for each company.

For the offer for sale of newly issued shares by a limited company under the Civil and Commercial Code, section 34 in accordance with section 56 of the Securities and Exchange Act B.E.2535 and the notification of the capital market supervisory board no. TorChor. 44/2556 a limited company shall prepare the financial statement and related document specified in section 56 of the act. In brief, the duties of a limited company are less than the duties provided for a public limited company; however, there is no regulations to exempt the disclosure duties for an issuing company in case the issuing company is a limited company.

The Limit for Securities Offerings

Basically, for a limited company, the limitation of value of an offer for sale of securities to retail investors is limited to twenty million Baht per 12 months from the first offer and a total value shall not exceed forty million Baht as from the first offer. The offer for sale to each investor shall not exceed 50,000 Baht according to the notification of the Capital Market Supervisory Board No. TorChor. 7/2558 clause 7.

Additionally, in the case of the sale of shares through a crowdfunding portal offered by shareholder of a limited company under Section 34 of the Securities and Exchange Act B.E.2535, the notification of the Capital Market Supervisory Board No.TorChor. 8/2558 provides the type of investors as follows;

  1. Individual Investors
  2. Institutional Investors and/or
  3. the shareholders of that limited company ; however, it not allow the public announcement of the offer for sale of shares by shareholder of limited company.

In case of sale of securities through a crowdfunding portal offered by a public limited company, this is not governed by the notification no. TorChor. 7/2558. This means that for a public limited company that offer for sale of newly issued shares specifically to limited investors or to the public, we do not need to consider the limitation for secuirities offering in notification no. TorChor.7/2558 but have to consider the general regulation which is the notification no. TorChor. 28/2551 for approval of offer for sale of newly issued shares; however, clause 9 of notification no. TorChor. 7/2558 provides the presumption that an offer for sale of newly issued securities by a public limited company via crowdfunding portal in the manner of clause 7 (similar to the limit for securities offerings in case of a limited company) shall be deemed to have been approved by the SEC Office.

The Future of Equity Crowdfunding in Thailand

Due to the reason that Equity-based crowdfunding has just launched in Thailand, it will take some time to fully comprehend the practical challenge of regulations just enacted. But this must be viewed as a good beginning for the Thai crowdfunding sector and as a positive and important catalyst in the development of SMEs and the economy in Thailand prior to the ASEAN Single Market at the end of 2015.

*This article is also posted on Crowdfund Insider at


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