Market Profiles

FII Market Entry Requirements for Thailand - For Thai Bonds

RBC IS operates a fully segregated account structure in this market.

RBC IS operates a segregated account structure under RBC Investor Services Trust only for accounts trading in Thai Bonds. For equities, RBC Investor Services Trust only supports Omnibus account structure.

Please refer to 'Market Account Opening Requirements' for information on the market requirements. Clients are requested to refer to the requirements for information purpose only.

For further information or support around accessing this market, please contact your RBC IS representative.

The Stock Exchange of Thailand (SET)
The SET operates under the regulatory framework of the Securities and Exchange Act (SEA), which in 1992 replaced the SET Act (1974). The SEA establishes the Securities and Exchange Commission (SEC) as the sole supervisor of the entire securities industry.

As defined in the SEA (1992), the SET's primary roles are:

• To serve as a centre for the trading of listed securities, and to provide the essential systems needed to facilitate securities trading.
• To undertake any business relating to the Securities Exchange, such as a clearing house, securities depository centre, securities registrar, or similar activities.
• To undertake any other business approved by the SEC.

Trading at the SET began on April 30, 1975 and the exchange has never closed since then. The SET is Thailand's main exchange and is not linked to any other exchanges for cross-listing purposes. It is a non-profit organisation and, as a government agency, is funded out of the country's annual budget.

The SET's board of directors is made up of no more than eleven people. Five are appointed by the SEC and five elected by the SET's members (i.e. brokers). The SET President is appointed by the board, and is an ex-officio member of the board. The board also formulates the SET's policies and supervises the exchange's operations, however, the SEC must also approve certain rules and regulations prescribed by the board.

The SET has operated fully computerised trading since April 1991, through the "Automated System for the Stock Exchange of Thailand", or ASSET, which enables trading to be efficient, equitable and fluid. Foreseeing the needs to respond to rapidly changing business demands and to accommodate the trends in financial processes in the world markets, SET has upgraded to the new trading system called "Advance Resilience Matching System" or "ARMS" in August 2008. ARMS also features higher risk management efficiency and improved system redundancy.

On September 3, 2012, SET has introduced the new trading system called “SET CONNECT” in order to cope with the expansion of Thai capital market, The new trading system also increases trading efficiency, ease market access with international standard protocol, and cover new products and other trading innovation.

In this trading system, two principal methods of trading are available:

1. Automatic order matching trading (AOM): 
AOM trading performs the order matching process according to price, then time, priority, without human intervention. After brokerage houses electronically send buy or sell orders from their offices to the SET mainframe computer, SET  CONNECT system queues the orders and arranges them according to a price-then-time priority. This means orders are first grouped according to price, with the best price taking precedence. Then, within each price group, orders are arranged according to time. In terms of the matching process, there are two methods: continuous order matching and Auction method.

• Continuous Order Matching procedures operate during the regular trading sessions. SET CONNECT continuously matches the first buy and sell orders in the queue, and at the same time, confirms each executed transaction via the member's (broker's) terminal.
• The Auction matching is utilised in calculating the opening and closing prices of a security at the opening and closing of the trading hours. This method allows brokers to enter their orders to be queued for matching at a specified time at a single price that generates the greatest trading volumes for that particular stock.

AOM trading is categorised by the types of securities as follows:

• Trading for common stocks, preferred stocks, warrants and unit trusts (previously called main board)
• Trading for stocks registered under foreigners' names (previously called foreign board)
• Trading for odd lots (odd lot board)

1. Trade Report (TR) Trading (previously known as Put Through (PT)
   SET CONNECT also allows brokers to advertise their buy or sell interests by announcing bid or offer prices. Members may then deal directly with each other, either on behalf of their clients or for themselves. Prices may be adjusted during the negotiation; hence, the effective executed price may not be the same as that advertised and may not follow the price spread rules. After concluding negotiations, dealers must send details of the result(s) to –SET CONNECT for recording purposes.
   
   TR trading is categorised into four types:

• TR for big-lot trading, for trading with at least one million units in the amount of securities traded or at least equivalent or more than THB 3 million.
• TR for foreign securities trading
• TR for off-hours trading
• TR for buy-in

Monday to Friday

* There are random opening times between 09:55 and 10:00 for calculating opening prices in the morning trading session, and between 14:25 and 14:30 for calculating opening prices in the afternoon trading session. Closing time varies between 16:35 and 16:40 for the calculation of the days closing process.

Off hours trading starts from the random closing time until 17:00.

ISIN: Yes

Other: The stock’s alphabetical abbreviations are also used by SET and market participants. (e.g. BBL for Bangkok Bank Pcl).

Market surveillance of the securities market is conducted by the Stock Exchange of Thailand (SET), which is in turn supervised by the Securities and Exchange Commission (SEC). The Bank of Thailand (BoT) supervises the banks and finance companies. Ultimately, the Ministry of Finance (MoF) supervises all aspects of the Thai financial markets.

Stock Exchange of Thailand (SET): The SET lays down regulations and guidelines for brokers' conduct and responsibilities and can impose fines and suspension in case these are flouted. The SET has systems to track and investigate malpractices such as insider trading. After initial monitoring, it would pass on its findings to the SEC for legal action. The SET's stock watch and surveillance system can detect any irregular patterns of price and volume movements. The computerised system is closely watched by trained analysts.

Securities and Exchange Commission (SEC): The SEC focuses mainly on primary market supervision, and leaves the SET to do day-to-day supervision and surveillance of the secondary market. The SEC is headed by the Finance Ministers and its board of directors includes five to six other members including the governor of the BoT. The SEC regulates the equities as well as the bonds market. The main piece of securities regulation is the Securities Exchange Act (SEA) of 1992. Under the SEA, the SEC is also responsible for regulating the primary market. A company wishing to issue new securities or offer more securities to the public must first obtain the SEC's approval and comply with its filing requirements. The SEC is required to carefully review the financial status and operations of the company before allowing the firm to issue securities to the public.

Ministry of Finance (MoF): The MoF regulates every aspect of Thailand's banking and financial services industry, but it delegates routine supervision and administration of the securities market to the SEC, and that of the banking sector to the central bank the BoT. 

The Bank of Thailand (BoT): supervises the banks and finance companies under theBank of Thailand Act B.E.2485 act on the Undertaking of Finance Business, Securities Business and Credit Foncier Business B.E. 2522.

Listed companies fall under the supervision of the Ministry of Commerce.

*Commercial Paper: The most common form of commercial paper are the Bills of Exchange (BE), which are short term baht-denominated interest bearing or discounted instruments. BE are issued in bearer or registered form by banks, companies and other financial institutions. Typical issue sizes range from THB 5-250 million and tenures vary between one month and one year.
Short term Negotiable Certificates of Deposit (NCD): NCDs are physical, bearer and discounted instruments issued by commercial banks and finance companies in minimum denominations of THB 500,000, with tenures ranging from three months to one year.
Promissory Notes (PN): PNs are physical, bearer instruments issued by banks and other financial institutions. PNs are issued on a discounted basis with tenures ranging from one month to one year.
Treasury Bills: Treasury Bills are discounted instruments with maturities ranging from 7 to 182 days issued in minimum denominations of THB 1000. They are issued through competitive bidding via the BOT on a weekly or fortnightly basis depending on the demand for short-term capital.

In the Thai market, securities are allowed to be held in scripless (book entry) or physical certificate. 

Shares can be registered in:

• The name of ‘Thailand Securities Depository Company for Depositor’ in English language for scripless foreign shares.
• The name of ‘Thailand Securities Depository Company for Depositor’ in Thai language for scripless local shares, NVDR, and fixed income.
• The client's name or held in street name for physical shares.

Shareholders are able to deposit their securities through TSD member companies, and such securities do not need to have the TSD as the registrar. The TSD will dematerialise the physical share certificates and records the total number of securities deposited in a scripless system, and then transfer the names of the depositors to the "Thailand Securities Depository Company Limited for Depositors". In this process, the TSD also acts as a nominee for the shareholders.

Price movements, as prescribed by the SET for securities trading, vary according to each market price level as follows :

Trading of unit trust and ETFs do not applied tick size as specified in the above table. Its tick size is 0.01 baht

Floor and Ceiling Limits

The SET allow prices of a stock traded on the Exchange to fluctuate within a range of 30 percent of the previous closing price on the local stock (previously called “main board stock”). However, if the calculated daily price limit is less than +1 Price spread, stock prices may fluctuate within a range of +1 Price spread. The price limit on foreign shares (previously called “foreign board stock”) can be within a range of 60 percent of the previous closing price of the local share.

In addition according to the SET’s announcement on trading rules adjustment on July 20, 2012, for equities and investment units, the ceiling will be set at 300 per cent (three times) of IPO price, while the ceiling for warrants, DWs, and TSRs must be no more than double the previous closing price of their underlying security multiplied by the exercise ratio, Floors of all mentioned securities must be no lower than THB 0.01 of IPO price.

The launch of T+2 Equities settlement cycle is effective on March 2,2018.

THB

In Thailand, only corporate bonds and government bonds are traded on an OTC basis via the Thai BMA. The dealers (financial institutions holding debt securities license granted by the SEC), are required to report all bond transactions to the Thai BMA. 

The Stock Exchange of Thailand (SET) clears all stock exchange transactions through the Thailand Clearing House Co., Ltd. (TCH) clearing & settlement system called Multilateral Netting System. The settlement cycle is trade date (T) plus two(T+2). Purchase and sales are settled on a net clearing basis for both cash and securities as follows: 

The trade settlement process is as follows:

1. Investors place securities trading order though its Thailand licensed broker on TD (trade date).
2. Broker executes trade in the market and sends back broker/trade confirmation to the investors by T+1.
3. Investors send settlement instruction to its global broker dealers / custodian bank, i.e. DVP, RVP, DF, or RF. Global broker dealers/ custodian bank further send settlement instruction via MT54X to its sub custodian bank in Thailand by 9.00 hours on -T+1 or SD-1.
4. Upon receipt clients’ instruction, sub-custodian banks (in Thailand) will further perform a pre-matching process by releasing a SWIFT message or uploading a file to the Pre-Settlement Matching System (PSMS) of the Post Trade Integration (PTI) system.

Previously, pre-matching was done over the phone against counterparties. However, since the new Pre-Settlement Matching System (PSMS) went live in Thailand on 24^thAugust 2015, the pre-matching is performed automatically as a part of local clearing system under the PSMS. The time frame for pre-matching usually runs from the morning of SD-1 up until the early morning of actual settlement date (SD).

Matching criteria in Thailand are as follows:

Type of trade (i.e. delivery or receipt and against payment or free of payment)

Settlement amount(for against payment trade)
Settlement Date

Securities Volume (Quantity)

Securities ISIN
Client Settlement Account (Omnibus)

Depository-Client Account opened in the PTI system (Customer Account Level) - For bond settlement instruction

Apart from the above matching criteria, with the implementation of PSMS, bond settlement instructions need to include the counterparty’s depository account number which is a mandatory matching field for bond settlement instruction. It is necessary that clients provide the safekeeping account number at the TSD to their counterparties as well.

On SD

• In the morning of SD itself, the local subcustodians check that accounts are well funded to avoid any overdrawn position.
• The SET clears all stock exchange transactions through the Thailand Clearing House Co. Ltd (TCH)’s clearing & settlement system call Multilateral Netting System. Purchases and sales are settled on a net clearing basis for both cash and securities.
• Under the Multilateral Netting System operated by the TCH, all inputs by participants (custodian banks and local brokers) into PSMS must be completed in the TSD terminal on -T+2 by 11.30local time. PSMS will auto matched the trades and subsequently settled them in the market. Once the trade is confirmed in the TCH system, no cancellation or amendment can be made without mutual agreement of the delivering and receiving parties
• In the event that the buyer has fail to deliver securities in the net settlement on SD , the Pending Settlement obligation ( PENR) will be credit to sellers, PENR position will be advised to TCH’s participants  at 15.00
• On -T+2, at 11:00, the TCH reports net position of securities and cash to its participants. The TSD moves securities between participants' accounts between 13:30 - 13:40. At 13:40, the TSD reports the final position of securities.
• For participants who have the net purchase position, payments need to be made to the TCH's cash account maintained with the BOT via BAHTNET by 14:00. Brokers who are net buyers make payments through any of the five settlement banks, i.e. Siam Commercial Bank PCL, Bangkok Bank PCL, Krung Thai Bank PCL,Citibank N.A,Bangkok, and Standard Chartered Bank (Thai) PCL.
• For participants who have the net sell position, TCH makes payment to the participants' cash account via BAHTNET at 14:15. Similarly, payments to brokers are made through settlement banks via BAHTNET.
• The TCH PTI system facilitates the transfer of securities between members on a net basis. The movement between member accounts can be seen via a computer link with the TCH and is final at 14:15 on SD. This system has reduced counterparty risk and the fail trade rate.
• Settlement confirmations are provided at 15.00 
• In addition; there are still some listed shares maintained in certificates by the investors. Upon trading them, certificates should be endorsed by the transferor to the transferee and be physically delivered to the TSD for re-registration prior to record date or on record date before 12:00 in order to receive corporate actions entitlement.

Cash settlement 
Regarding the cash settlement process, TCH has applied the centralised system of the Bank of Thailand (BOT), called Central Settlement System (CSS).

Under CSS, the TCH will inform CSS of the cash netting position at 13:45. CSS will then check for the availability of funds in member banks' cash accounts at the Bank of Thailand (BoT) between the submission time (14:00) and settlement time (14:05). The settlement (debits and credits) of funds will occur at 14:05, once the availability of funds in the net purchasers' accounts has been established. CSS helps to reduce the 15 minute period that the funds were previously held within the TCH's cash account.
If above deadline is missed for late instructions, settlement is still possible but this is done outside Multilateral Netting System on a gross basis, subject to an agreement with the counterparty. There are two sessions for settlement outside Multilateral Netting System as follows: 

• First session: all inputs by participants (custodian banks and local brokers) must be completed, i.e. initiated by 13:00, verified and confirmed by 13:30. Fund transfer/cash settlement normally completed through BAHTNET. The cut-off time for BAHTNET is 15.30   However, there is very few cases where counterparty make payment via cheques.  SCBT only accept house cheque, where both payer and payee shall have THB cash account with SCBT.  This is to avoid bounce cheque and one day cheque clearing is not required, we can credit good fund in payee account same day.  Please note that securities will only be released after receiving cheque payment.
• Second session: all inputs by participants (custodian banks and local brokers) must be completed, i.e. initiated by 14:15 hours , verified and confirmed by 17:00 hours. In terms of cash settlement, it would be the same as mentioned in the first session.

Fixed Income
Scripless fixed income securities are normally settled on T+2 under gross settlement, transaction by transaction through Post Trade Integration (PTI) system.

For physical government bonds, clearing and settlement could be done as follows:

• The Bond Registry System, whereby dealers must endorse on the back of the certificates at the BOT. For the ownership transfer, the transferor and transferee should personally submit the original written instructions, and scrip certificate to the BOT.

As for the payment, the buyer is required to make payment through the BOT's BAHTNET system. Title to the securities passes on T+2, when the proceeds are credited to the seller's cash account.

A member may conduct a short sales only on the following securities specified by the Exchange:

• Stocks in the SET100 Index (effective from January 1, 2011, onwards)
• Exchange Traded Fund (ETF) units
• ETF-linked funds

NB this is except in the case of a short sale by a market maker whereby short sales of the securities listed as that the market maker’s responsibility may also be made. 
Penalty: Not more than THB100, 000 per transaction. Please note that naked short selling is not allowed in the market.

Same day turnaround is possible. Both the buy and sell parts of the transaction must be advised before 16:00 one day before the settlement date (SD-1) for turnaround trades to be effected. Funds from such transactions will become available on settlement date. Note that if receiving leg fails, delivering leg will fail too.

Effective on September 11 ,2017 , The Thailand Clearing House Co., Ltd (TCH) completed the enhancement of PSMS  to cater on auto –matching  of Turn-around transactions , this initiative is to  reduce human intervention on sending settlement transaction into the market system and to reduce the operational processing time by promoting Straight-through Processing (STP) to move toward the shorten settlement and clearing cycle

PSMS cater on auto-matching of Turn – around transactions by:

• Indicating the following fields for Turn- around transaction
  • Sequence E               22F: SETR//TURN
  • Sequence A1             20C: POOL//16x
• PSMS validate the match transaction with “ALL or None” Logic – Match only if all related transactions indicated  proper codeword being submitted to system
• The validate and matching Turn- around transactions will be performed until SD-1. If there are still any unmatched transactions, the market system will revert the transaction status from “Approved” to be “Pending for Approved” for further manual pre-matching

Not applicable

The Thailand Securities Depository Co. Ltd (TSD) 

The Thailand Securities Depository Co., Ltd. (TSD), is Thailand’s sole depository of equities (ordinary & preferred shares, unit trusts, warrant, derivative warrants and transferable subscription rights), and fixed income securities ( including BOT and Government bonds), traded through The Stock Exchange of Thailand (SET), the Market for Alternative Investment (mai), and Bond Electronic Exchange (BEX) and Thailand Futures Exchange (TFEX).

The TSD is a subsidiary of the Stock Exchange of Thailand (SET) was established on November 16, 1994, and officially began operations on January 1, 1995. TSD’s main function is to develop and promote back-office system for the after-trade services provided for all types of equities and debt instruments in Thailand in order to attain the highest efficiency and meet international standards. 

As for services provided by the TSD for its member companies, they are divided into three main services; namely, Securities Depository, Securities and Fund Registration, and Broker Operation Services:

• Securities Depository Services: acts as the central securities depository for stocks and bonds using a secured and efficient scripless system, provide services for securities deposit, withdrawal, transfer, pledge, and revocation. Investors can conduct the transactions through depository participants.

Securities Registration Services: acts as a registrar for common and preferred stocks, offers service which mainly covers the functions of preparing and maintaining the Register Book that contains correct and complete information, and also responsible for managing the foreign holding proporation of the securities traded on the main board and foreign board of the Stock Exchange of Thailand to comply with related rules and regulations. 

Our service is executed through the cutting edge and efficient computer system that has been developed to have a direct linkage to that of the Securities Depository Center. On the system-wise, we also have secured data storage and processing system with the corresponding back-ups ready for securing the continuity of our service. Also, our vault and data management systems have been in place to secure the rights of the securities holders and for verification and risk minimizing purposes.
Persons which may be permitted by TSD to be depositors are as follows:

• the Bank of Thailand;
• securities companies;
• financial Institution under the law governing financial institution businesses;
• life or non-life insurers under the law governing life or non-life insurance;
• juristic persons operating a business as a mutual fund trustee, representative of debenture holders, custodian of securities, and issuer of depository receipts;
• juristic persons operating a business as a depository center, both domestically and/or internationally;
• juristic persons operating a business as a depository center, both domestically and/or internationally;
• juristic persons operating a business as a clearing house, both domestically and/or internationally;
• juristic persons operating a business as a bank established under a foreign law and having no branch office or representative in Thailand;
• juristic persons having an agreement to execute the following acts:
  • sell, distribute, dispose, transfer or exchange securities to a buyer or transferee related to the aforementioned juristic person as its staff member, employee, securities holder or other persons with similar characteristics, and such juristic person is assigned to be a custodian of the securities of the buyer or the transferee under any one of th conditions which TSD deems appropriate that services provided by TSD shall be used; and
  • provide loan to the buyer or the transferee for the purpose of buying or taking the transfer of securities under (10.1);
• juristic persons established by a specific law; and
• other juristic persons as prescribed by TSD.

TSD may specify additional rules for depositors who are juristic persons in (6) to (8) operating the business in foreign countries.

Since the implementation of PSMS or Pre-Settlement Matching System on 24 August 2015, account structure that sub custodian bank opened at TSD is segregated, i.e. Global custodian and its multiple sub safekeeping accounts (but still under 312 umbrella which is SCBT’s participant number/id) to help boosting STP and automation in PSMS.  However, beneficiary owner disclosure is not required, sub custodian bank only mirror clients’ account structure opened on sub custodian’s book on to TSD system (i.e. PTI).

Scripless clearing & settlement is mandatory for securities trading on Exchanges, however, investors can opt to keep it in physical form and convert it into book entry when you wish to trade.  Turnaround time to convert book entry to physical securities is approximately 30-45 days with cost at THB65+VAT7% per certificate, while converting share certificate into scripless or book entry, takes only 1 business day.  Please note that the following documents are required to support share certificate conversion and re-registration:-

• Notarized & Consularized POA
• Notarized & Consularized Certificate of Incorporation
• Notarized & Consularized Copy Passport of the POA signer
• Notarized & Consularized Company Authorized signer list which reflect POA signer name and signature specimen.

*Please note that these 4 documents must be notarized and consularized every 12 months.

Clearing House
The Thailand Clearing House Co., Ltd (TCH)
The TSD, who had acted as clearinghouse for equity and bond since January 1, 1995, has transferred clearing and settlement functions for equities and bonds to The Thailand Clearing House Co. Ltd. (TCH) from February 15, 2010 onward. Therefore, TCH will become the integrated clearing house for all financial products.

The Thailand Clearing House Co. Ltd. (TCH), the subsidiary of The Stock Exchange of Thailand (SET), was established on August 9, 2004, with a registered capital of THB 100 million (USD 2.85 million). During 2004-2009, TCH acted as a Clearinghouse or a center for clearing Derivatives traded in Thailand Futures Exchange (TFEX). 

The TCH is governed by the Securities and Exchange Act B.E. 2535 (1992) for equity and bond and the Derivatives Act B.E. 2546 (2003) for derivatives and is under the supervision of the Securities and Exchange Commission (SEC). 

As a clearinghouse for all securities and derivatives traded on the SET, MAI, BEX and TFEX, TCH’s most important role is to serve as the central counterparty to all trading activities on those exchanges. TCH will guarantee clearing and settlement for a concerned party no matter whether any counterparty may break the commitment or not. This is a crucial mechanism to lessen counterparty risks. 

Right after a trading transaction is matched and those exchanges have confirmed the matching transactions with their members, the TCH, as the direct central counterparty (CCP), will become a buyer to every selling member and a seller to every buying member. Therefore, a member who has bought or sold the securities has obligation not to the party on the other side of the transactions, but to the clearinghouse, just as the clearing house has an obligation to the member, This called a novation process.

TCH is act as CCP , therefore, with effective on on 6 November 2017, TCH will still act as a central counterparty but it will no longer take the debit balance on itself in the event of failure in securities delivery of net sell members. Instead, TCH will allocate securities to receiving brokers and/or custodians using a set of allocation criteria as elaborated below.

First: Oldest Pending Receive Position

Second: Highest Price

Third: Smallest Quantities

Fourth: Random

The brokers or custodians, who are unable to get the securities after TCH’s allocation, will be in Pending Receive (PENR) position.

Securities borrowing and lending (SBL) and buy-in mechanisms will be used as tools to prevent losses from failed settlement. In the event that is still insufficient securities for delivery by the last day of buy-in, Pending Receive (PENR) position holders will receive cash compensation calculated using a pricing method detailed below:

Cash Settlement received from PENR Position will be the higher of:

• Buy-in price; or
• 130% of mark-to-market price of the previous business day of cash settlement date; or
• 130% of mark-to-market price of the previous business day of Ex¬Date (this additional criteria only applies if the cash settlement in is the period between Ex¬Date and Record Date); or
• 130% of the highest high price of such security, counting from the trade date of the original default trade until the previous business day of cash settlement date.

Cash Compensation for SBL will be the higher of:

• 130% of mark-to-market price of the previous business day of cash settlement date; or
• 130% of the highest high price of such security, counting from the borrowing date until previous business day of cash settlement date.

In addition , TCH will not guarantee the payment and securities delivery for gross settlement transaction i.e. Put-Through trading (Trade Report) or OTC. The TCH acts as an intermediary of cash clearing between buyers and sellers. There are two methods of the payment depending on the types of clearing members: 

1. General members or Clearing fund member i.e. brokers will send/receive the payment to/from their settlement banks, which are Siam Commercial Bank Pcl., Bangkok Bank Pcl., Krung Thai Bank Pcl. and Citibank N.A., Bangkok, and Standard Chartered Bank (Thai) PCL (fifth settlement bank since February 2015)

2. Settlement agent i.e. custodian banks, Commercial banks, Government bank, Finance company, and Securities company will send/receive the payment through the Bank of Thailand’s BAHTNET system.

In terms of securities settlement, the TSD, as the appointed settlement agent, will transfer securities in the clearing member’s accounts using the book entry through the TSD’s securities depository system according to the information from TCH.

BIS is an international organisation which fosters cooperation among central banks and other agencies in pursuit of monetary and financial stability. The Committee on Payments and Market Infrastructures (CPMI) uses three common structural approaches, or models, to categorise the links between delivery and payment in a securities settlement system.

Thailand’s settlement model follows BIS Model 3: a system where the net settlement of securities and cash is undertaken on T+3, but not simultaneously. The settlement of securities is done through the TCHs multilateral netting system with the cash settlement undertaken through the Bank of Thailand’s Automated High Value Transfer Network (BAHTNET) payment system. TCH acts as central counterparty for both cash and securities settlements.

Scripless or Book-Entry Form: Securities held at the depository are transferred automatically on settlement date.

Scrip or Physical Form: Re-registration of physical securities is accomplished by issuing new certificates or by endorsing old stock certificates. Positions out for registration cannot be sold. Registration timeframes vary from two to four weeks (where TSD acts as registrar) and four to six weeks (where companies act as their own registrar).

The TSD acts as the sole registrar for all listed companies on the SET and mai, and also for some unlisted companies that the TSD is responsible for maintaining the shareholder’s book by using a modern computer system with a high capacity link to the depository system, keeping the shareholders’ records accurate, complete and up-to-date.
However, some companies also act as their own registrars.

Share registration is not required for physical certificates. However, shares have to be registered in order to be entitled to dividends and corporate actions. All listed stocks that are traded are scripless and registration is automatic on transfer.

For physical shares, changes of ownership are accomplished either by endorsing the old share certificates or by issuing new ones. The process takes about 3-4 weeks in which the shares cannot be sold. Scripless shares can be sold at any time while queuing for registration in the TSD system. 

Conversion of local shares and NVDRs into foreign shares is subject to foreign ownership limit (FOL) availability. Subcustodian always place our Local shares on queue for foreign share conversion through TSD portal on SD+1, however, if SD is a Record Date, Sub custodian will convert Local share to Foreign share on SD if FOL is available.  However, for NVDRs, we are required to place SI with sub custodian because once NVDRs have been converted into foreign share, it cannot be converted back to local share, unlike local shares where foreign shares can be converted back to local line any time.

Securities and Exchange Act B.E. 2535

Any person who acquires or disposes of shares which results in holding of voting rights of the business in the amount that reaches or exceeds 5% and any multiple of 5% must file Form 246-2 to the SEC with additional copy to the SET.

Failure to comply with the reporting requirements in this market may lead to penalties and / or other sanctions.

In accordance with Section 246 of the Securities and Exchange (SEC) Act B.E. 2535 and the Notification of the SEC No. Kor. Kor. 3/2538, the SEC requires any person who acquires or disposes shares of public companies that are listed in the SET, which results in the holdings reaching the threshold of any multiple of 5% of the total voting rights of a company, is required to submit a Report of Acquisition or Disposition of Securities of a Business (Form 246-2) to the SEC or Thai NVDR Co.,Ltd by T+3. In cases where the submission cannot be made within the time frame specified, such person must submit the report via facsimile on T+3. However, the originals must be submitted to the SEC within 6 business days from the trade date (T+6 latest) or by mail within T+6.  The postal stamp date is regarded as the submission date.

Convertible Securities (share warrants, transferable subscription rights, convertible debentures and other convertible securities)

Separately, any person who acquires (not applicable to disposal) of convertible securities must report their holdings of convertible securities whose amount of the total underlying shares reserved for conversion reaches or crosses +5% of the total voting right of the company by filing Form 246-2 to the SEC. A copy also must be sent to the SET. The percentage holding of convertible securities shall be calculated as Total voting rights of shares acquired if convertible securities are fully exercised multiply by 100 and divide by Total number of voting rights of the business. 

With effective date September 16^th, 2011, the SEC has improved criteria for Substantial Shareholding Reporting under Section 246 of the Securities and Exchange (SEC) Act B.E.as follows;

• The report shall be submitted only for LISTED securities when acquisition/disposal reaches any multiple of 5% of the total voting rights of a company.
• The report only needs to be submitted to the SEC and a copy of the report to SET is not required.
• Reporting requirements will be extended to changes in holding of entities defined under Section 258 of the SEC Act, and parties acting in concert.
• Reporting will be included derivative warrant.

It is a market requirement that the registered shareholder on record shall file the required reporting to the regulators. However, the SEC fully understands that in most cases, the registered shareholder on record may not be the ultimate beneficiaries particularly if they are global custodians, international broker/dealer or other intermediaries. 

The SEC has advised that under such circumstances; so long as the global custodian or international broker/dealer does not hold shares for their proprietary holdings, the ultimate beneficial owners of the securities are required do the necessary reporting. It is to be noted that the local subcustodians have no reporting obligations under the law to report to the SEC, or Thai NVDR on behalf of clients / end-clients.

In addition; with effective date September 16^th, 2011, the submission of the report will be exempted for:

• The borrowers and lenders of Securities Borrowing and Lending (SBL) transactions and the securities as collateral in SBL transaction.
• Person who receive the shares through right offering.
• The acquisition or dispositional of securities of Depository Receipt (DR) issued by a subsidiary of the Stock Exchange.

Failure to comply with the above report requirements may lead to penalties. In case where the submission cannot be made within the timeframe required (3 business days after the date of acquisition or disposition) such person must submit the report via facsimile on T+3. The original form must be followed submitted within 3 and 6 business days from the trade date (T+3, T+6 latest) or by mail to the Thai NVDR and SEC respectively. The postal stamp date is regarded as the submission date. 
The penalties for non-disclosure would depend on SEC judgment. However, there are penalty specified in SEC Act that any person who contravenes or fails to comply will be liable to imprisonment for a term not exceeding 2 years or a fine not exceeding THB 500,000 (approximately USD 16,100) and a further fine not exceeding THB 10,000 (approximately USD 320) for everyday during which the contravention continues, or both. 

Acting in concert
Those persons, who have relationship or have an objective to consolidate or co-operate to use their voting right in such company in order to jointly control and/or manage the business of such company together, shall be deemed to be "acting in concert", in which case they will be required to report to the SEC by combining all relevant concerted parties and to comply with section 258, similar to those requirements applicable to the substantial shareholding reporting described above.

Frustration Action
The SEC Act will now protect a tender offer from any action or omission of action that may be taken by the target company in a manner that may interrupt or disrupt the tender offer if such tender offer has already been announced to the market. Such action or omission of action can be taken by the target company only if it is approved by an appropriate resolution passed by a shareholders' meeting.

Monthly reporting requirement on fixed income
BOT issued a notification to require all local financial institutions (FI), including custodian banks, to report the outstanding Thai debt securities holding at the non-resident (NR) ultimate beneficiary owner (UBO) level. The clients of a global custodian or an international broker are identified as the UBO. For fund type of NR investors, the UBO declaration will stop at the fund level, not individual unit holders.

The NR UBO reporting is an extension to the existing BOT monthly report submitted by subcustodians on outstanding debt securities held by NR investors. There are five specific information of end beneficiary owner that BOT required to be included in the NR UBO report:
• End Beneficiary Institutional Sector (mandatory)
• End Beneficiary Country Code (mandatory)
• End Beneficiary Legal ID (optional)
• End Beneficiary Legal Unique ID Type (optional)
• End Beneficiary Full Legal Name (optional)

The optional information can be kept blank. If preferred, it is sufficient to provide lump sum figures for the separate institutional sector types and country domiciles of the end beneficiary owners. In enhancing the reporting requirements, BOT has announced that the last three optional fields will become mandatory with effect from the October 2019 reporting.

Failed deliveries are subject to next day buy-in with same day settlement of -T+3. TCH will start buy-in procedures on T+3at 10:30am for any securities that fail to settle on the settlement date of -T+2. Successful buy-in transactions will therefore be settled on -T+3. 

If the same day buy-in settlement is not successful, TCH will continue the buy-in attempt for another three days (excluding the buy-in date, i.e. until -T+5). After that period, the transaction will be settled outside the system. The associated buy-in broker fee will be passed on to the defaulting party.

The bid price of the first buy-in date will be five spreads plus either the stock’s previous closing price or best bid, whichever is higher. If the buy-in is not fulfilled, an additional two more spreads will be added to the bid price of the previous buy-in price, closing price, or best bid (whichever is highest) of each session. 

The TCH imposes the following penalties on the seller for late delivery of shares: 

Minimum fine of THB300 (USD 10) per trade.

In addition, the SET imposes a penalty on brokers of  THB 1,000 (approx. USD 30) per day per securities for late delivery of securities and THB1,000 per day for overdue of cash, which may be passed on to clients.

In addition to the mandatory buy-in process enforced by TCH on T+3 or SD+1 against default selling brokers, SET has introduced a member buy-in facility as an option for member brokers, to use on T+3 morning with same day settlement to cover their short positions in clearing with TCH.

The price of the member buy-in will be five spreads plus either (i) the stock’s previous closing price or latest trading price from previous session, or (ii) previous buy-in price, or (iii) best-bid price, whichever is higher.

Buy-in arrangements are also applied to corporate and government securities traded on Bond Electronic Exchange (BEX) on T+3 with same day settlements. The fail rate is the same with equities. However, buy-in on bonds market is very rare case. Buy-in arrangements are not available on government securities and corporate bonds traded OTC.

Securities Borrowing and Lending (SBL) for settlement coverage

Securities Borrowing and Lending (SBL) is allowed in Thailand. On April 2, 1992, SBL was introduced by the Thailand Securities Depository (TSD) in order to minimize the securities clearing and settlement failure in the market. Currently, Thailand Clearing House (TCH) will act as a lender and borrower on behalf of its general clearing members.

The SBL for settlement coverage service is to find securities from depository members who has sufficient amount of securities for lending. Collateral must be placed to ensure lenders that their lending securities are to be returned within the lending period which is not more than 6 business days. Clearing house will charge the service fee from both lender and borrower at 10% of lending fee. In the case that there are no securities available for borrowing, Clearing house will initiate buy-in on the market and default member must be responsible for all expenses occurred.

Borrower and Lender Qualifications

• Borrowers must be general members of the Clearing House
• Lenders must be depositors of TSD, as the central securities depository specified by TCH rules. They must have computers connected to TSD’s securities depository.

Placement of Collateral
In order to ensure the lenders that their securities are to be returned, collateral must be cash only and valued 130% of loan value. TCH will return the collateral to the borrowers after all securities are returned to the lender.

Securities Return

• TCH will deduct the securities from the borrower’s Clearing Account and return them to the Lending Account of the lender.
• In case the securities in the borrower’s Clearing Account are insufficient, it will be considered as default for the shortage amount and the securities need to be consecutively borrowed.
• TCH will compensate the lender in cash at the shortage amount which is not less than 130% of the lending amount.

Commercial SBL

TSD has introduced a commercial SBL facility via its lending pool to its participants since 27 May 2013, whereby TSD acts as principal counterparty to both borrowers and lenders. 
Both lender and borrower can look at the lending pool and post their order (both borrowing and lending) in the lending pool, system will match these orders in FIFO basis. Once transactions i.e. lending and borrowing, are matched – TSD will come in and act as a contractual counterparty of lender and borrower. Initially, eligible securities will be limited to SET50 stocks. If the security is removed from SET50, system will automatically revoke SBL contract. 
TSD members can be potential lenders, but for those who do not have SBL license can only lend securities in their proprietary portfolio. Borrowers of this service must be general members of the Thailand Clearing House, but for those who do not have SBL license can only lend securities in their proprietary portfolio. However, this facility is only available to local participants at this stage.

There are two guarantee funds as follows:

(i) Clearing Fund 
The clearing fund was established in March, 1996 with the purpose of preventing any damages from clearing and settlement defaults. The clearing fund consists of contributions from the SET and the fund members which are general members of the clearing house. 

In case that a fund member defaults on securities clearing and settlement, fail to meet the scheduled time for securities settlement of delivery, the fund manager might use fund money for the Clearing House to cover such defaults. 

Contributions to the fund by members are as follows;

• initial contributions at THB 900,000
• Ongoing contributions are calculated as a percentage of each participant’s monthly net value of payment and acceptance of payment of securities. Such rate shall be determined from the level risk exposure arising from the act of each broker to the clearing system (Minimum of THB 1,000 per month).

(ii) Securities Investor Protection Fund (SIPF) 
SIPF originated from cooperation between the SET and some of its members firms who volunteered to join the fund. Its purpose is to create confidence among investors who trade securities on the Exchange. Investors who are clients of SIPF members can receive their assets back or be compensated from this fund under the conditions outlined below.

Investors Protection
SIPF provides protection to investors who fail to receive returns on their asset or compensation for the price of assets from SIPF members if:

• Any member broker of SIPF is adjudicated bankrupt
• Any member broker of SIPF fails to comply with an arbitral award requiring them to return the assets or compensate for the price of asset to investors.

The protection does not include losses incurred from price decreases due to the securities trading.

Compensating to Investors
The investors shall be entitled to compensation for assets or compensation for the price of assets from the Fund not exceeding the actual damage incurred to them and each investor will get no more THB 1 million per one SIPF’s member broker. Investors are automatically protected when they open a trading account as long as their broker remains a SIPF member. Moreover, investors need to apply for this protection or pay anything,

In 1999, Thailand enacted a law called "Money Laundering Prevention and Suppression Act B.E. 2542 (1999)". A key provision of the law is that banks and financial institutions are required to report cash transactions and property transactions involving cash in excess of certain amounts to the Anti-Money Laundering Office of Thailand.

Please refer to the Terms & Conditions for Global Custody or contact your RBC Investor Services' Client Manager before making portfolio investments.

Account Structure
The Bank of Thailand (BOT) revoked the Unremunerated Reserve Requirement (URR) on short term capital inflows, effective March 3, 2008. The URR was introduced in December 2006 to reduce short term inflows and speculation in the Thai Baht (THB). 

As part of the revocation of the URR the BOT now allows non residents to operate under two types of non resident accounts:

1. Non Resident Baht Account for Securities (NRBS) – for investment in securities and other financial instruments in Thai market.

2. Non Resident Baht Account (NRBA) – for general purpose (non securities related) such as direct investment, trade and services. 

THB can only be transferred between the same type of account e.g. NRBS to NRBS or NRBA to NRBA.

• Under the Alien Business Act, the aggregate foreign ownership limit for listed companies (other than banks and financial companies), is set at 49% of the total voting shares.
• Forproperty funds the Asset Management Company (AMC) can not allocate more than 49% of the total sold investment units of the property fund to foreign investors at any time. One foreign investor may not hold more than 33% of the total sold investment units of the property funds. The foreign investor who holds more than 33% must reduce the holdings to be within 33% limit. The excess of 33% will not entitle to any corporate action benefits.
• Aggregate foreign ownership in banks and financial institutions is restricted to 25%, but the limit can be raised to 100% if BOT’s approval is obtained.
• Aggregate foreign ownership limit in life and non-life insurance companies has been increased from 25% to 49% with the approval of the Office of the Insurance Commission (OIC) on a case-by-case basis. Furthermore, the OIC is empowered to allow foreign investors to own up to 100% of the shares in an insurance company that faces financial difficulties.

In general, foreign investors can buy the same shares as the local investors on the Main, Special and Big Lot Boards. Once the foreign ownership limit has been reached in a particular stock, foreign investors can either purchase "foreign shares" on the SET's Foreign Board (usually at a premium) or purchase "local shares" on the other boards (but forego the right of registering them in their name). Foreign investors cannot buy local shares in the primary market (i.e. IPO). Foreign shares are distinct from the local shares, and have separate ISIN numbers from those of the corresponding local shares.

Local shares and NVDRs can be converted to foreign shares, subject to the foreign ownership limit being available. Foreign shares can be readily converted to local shares at any time since local shares have no ownership limit. Standing instruction is in place with our subcustodian to automatically queue local shares for conversion to foreign shares whenever there is FOL room. Clients are required to send specific instruction should they wish to convert NVDRs to foreign shares. In Thailand, subcustodians are unable to convert local or foreign shares to NVDRs. Investors will need to instruct their local brokers to sell the local or foreign shares and buy back NVDRs in the market.

An investor acquiring NVDRs will be able to hold the NVDRs separately or in combination with the ordinary shares in an amount of not more than 25% of a company’s total issued share capital. If an investor is holding more than the limit set, the Thai NVDR Co. Ltd is entitled to buy back the excess number of NVDRs at the prevailing market price at the time of buy-back.

Special restrictions on shareholding in local Financial Institutions (FI)
Under the Financial Institution Business Act B.E. 2551:

No person (whether individual or juristic person) may hold directly or indirectly more than 10% of the total amount of a financial institution's shares (i.e. commercial bank, finance company, and credit fancier) sold unless an approval has been obtained from the Bank of Thailand (BOT) as per the Act. In addition, the Act specifies that no commercial bank shall purchase or hold securities in any other commercial bank, except those acquired as a result of a debt settlement or a guarantee in respect of credit granted, provided that such shares shall be disposed of within six months from the date of acquisition or where the acquisition has been permitted by the Minister with the advice of BOT. Shareholders who are holding more than 10% must reduce the holdings to be within 10% limit. Those who are holding shares as a nominee in excess of 10% should register the legitimate shareholders' names with the registrar as soon as the threshold is reached as all records need to be correctly reflected by the commercial bank in question so full compliance to the Financial Institution Business Act can be achieved. 

In this regard, should the registrar not have the information registered, the concerned commercial bank will have the responsibility to obtain the beneficial ownership breakdown from the nominee holder in order to prove to the BOT that no individual shareholder exceeds the specified threshold. The concerned bank is obligated to furnish this information to the BOT in order to seek approval for the shareholding in excess of 10% in the case of a nominee structure exceeding the limit as a whole but not exceeding when considering individual beneficiary breakdown. Ultimately, the commercial bank will approach the agent bank acting as custodians for such nominees for the breakdown information.

BOT requirements state that the daily ending balance of an NRBS account or an NRBA account must not exceed THB 200m per non-resident (NR) per type of cash account across commercial bank in Thailand (with exceptions stated below). This is done on a legal entity basis at market level e.g. RBCIS Trust and RBC IS Bank. Therefore, to ensure that this limit is not breached, RBC Investor Services require all THB balances to be repatriated.

BOT allows NR to maintain day end balance more than THB 200 million in NRBA or NRBS account in the below cases:

1. Cheque clearing
2. Public holiday of such currency or the country that NR resides
3. NR has an obligation to pay THB to a Thai resident on the next day
4. NR has an obligation to pay the excess THB for trade and investment on the next business day with underlying matched with the excess

NR has to regularize the account balance within the next day.

To prevent Thai Baht speculation, BOT also implemented the following:

• Revise the rule for domestic financial institutions to borrow Thai Baht from NR by reducing the limit for transactions without underlying trade or investment for all maturities to no more than 10 million baht outstanding balance per group of NR, so as to limit channels of speculation.
• Revise the rules regarding the provision of Thai Baht liquidity by domestic financial institutions to NR by expanding each institution’s limits for transactions without underlying trade or investment to no more than 600 million baht outstanding balance per groups of NR per bank so as to increase demand for purchases of foreign currencies and two-way flows.

BOT allows NR to maintain day end balance more than THB 200 million in NRBS account for one business day in the event of Pending Settlement.

Non-resident investors allow to use cash settlement and/or financial benefits  resulted from the Pending Settlement as a foreign exchange (FX) underlying to support THB repatriation for either next day or same day value. This means that if non-resident investors receive cash settlement or financial benefits resulted from the Pending Settlement today, they may book the FX rate today for FX settlement value next day or they may wait to book FX the next day for same day value of FX settlement.

The Bank of Thailand (BOT) has announced supporting measures to help manage the capital inflows after the lifting of the 30% Unremunerated Requirement Reserve (URR) regulations regarding foreign exchange transactions, which are:

• Purchase and sell THB against foreign currency for all value dates must be furnished by underlying FX, i.e. broker confirmation, settlement instruction, etc., except SPOT value (T+2). FX could be done up to the underlying value.
• Purchase THB without underlying support (except SPOT) can be done up to THB 200 million per group of non-resident per bank. Please also note that this limit would be shared with the aforementioned overdraft limit. For example, if today ABC&Co. purchase THB 100 million for same day value without underlying and ABC&Co. also leave a short balance of THB 200 million at the end of the day, this exceeds THB200 limit per group of non-resident per bank. Please note that this circumstance also applies to ABC&Co’s subsidiary, branch, affiliate, etc, which are considered as ABC&Co group according to the rules.
• On the other hand, selling THB without underlying support (except SPOT) can be done up to THB 10 million per group of non-resident per bank.

There are three main payment systems in Thailand, which are all provided for and supervised by the Bank of Thailand (BoT):

• Cheque payments
• BahtNet payments (real-time electronic transfer), which are routed via the banks' accounts with the BoT
• Media Clearing or SMART –System for Managing Automated Retail Funds Transfer (off-line electronic transfer executed overnight designed for Retail Fund transfer with amount less than THB500,000).

BahtNet and Media Clearing payments are good funds. Cheques take one day for clearing in the Bangkok Metropolitan area but may take longer for up-country.
On October 1, 1997, custodian banks joined the Thailand Securities Depository's (TSD) Net Clearing and Settlement System. This system was previously only available to brokers. It allows for netting of securities and cash between the TSD and each individual member. This new system largely replaced the previous system, where settlements were made against the respective counterparty. The 'old' system remains however in place, and can still be used for exceptional cases (late settlement) and fixed income securities settlements.

On September 8, 2000, the TSD introduced securities payment by cheque with electronic funds transfer through the settlement banks and the Bahtnet system of the BoT, instead of using cheques. Through this process, custodians can make payments via the Bahtnet system; whereas brokers can pay for their securities via their settlement banks, currently there are five settlement banks which are the Siam Commercial Bank Public Co Ltd, the Bangkok Bank Public Co Ltd, the Krung Thai Bank Public Co Ltd., the Citibank N.A. Bangkok, and Standard Chartered Bank (Thai) PCL. The TSD will therefore act as an intermediary in the securities clearing and settlement between settlement A, settlement B and the custodians through the Bank of Thailand's Bahtnet system.

Brokers send/receive the payment to/from their settlement banks, which will send/receive that payment to/from the TSD through the Bahtnet system. Custodians will send/receive the payment to/from the TSD through the Bahtnet system.

On October 22, 2007, the TSD launched the Post Trade Integration (PTI) system for equities and fixed income . The current use of the Securities Depository Center (SDC) system for listed equities and corporate bonds has been terminated and fully replaced by PTI. As such, PTI is now the sole settlement and clearing system for all scripless securities in Thailand. 

Please note that now the TSD transferred clearing and settlement functions for equities and fix income to The Thailand Clearing House Co. Ltd. (TCH) from February 15, 2010 onward. Therefore, TCH will become the integrated clearing house for all financial products.

Permitted but subject to THB 200 million per group of non-residents per bank. The limit is to be shared with purchasing THB without underlying transaction. Overdrafts shall not be used as a regular source of fund for daily trade settlement or other securities related transactions or payment.  NR shall regularize its THB EOD balance by next business day.

Dividends are paid on a semi-annual or annual basis. Thailand Securities Depository Company Limited (TSD), securities registrar, will retrieve eligible shareholder list through PTI system in the morning of book closing date (using securities entitlement position as of EOD of Record Date). The TSD, in turn, provides this information to the issuers to calculate the entitlement. The TSD acts as the paying agent for all listed stocks on the Stock Exchange of Thailand. All dividends will be paid via Bulk Payment - Credit Transfer.

The payment date falls approximately one month after the annual general meeting at which the dividend payment is announced. Ex-date is three days prior to book-close date. Dividends are paid on the basis of registered ownership as of record date.

Foreign investors holding local shares are not eligible for any corporate action entitlement including dividend payments.

Non Voting Depository Receipts (NVDRs)
The Thai NVDR Co., Ltd is the registered owner of the underlying shares and will receive the dividend from the underlying companies based on its holdings as of record date. The Thai NVDR Co., Ltd will in turn distribute these benefits to the underlying investors one day after the payment date via check.

Semi-annually or annually

Semi-annual or annual
The interest entitlement is calculated based on holdings as of record date. Payment details are announced about one month before the payment date. Ex-date usually falls 14 calendar days before payment date and book-close date falls -two business days after ex-date. Interest income is paid net of withholding tax.

Actual/365-day basis (366 on a leap year).

The deadline for receipt of instructions on discretionary corporate actions is one working day prior to the expiration of the offer, except for proxy voting which requires two days before the meeting and for conversion of warrant’s instruction deadline is two days before the last conversion date.

Protection of rights is not applicable in Thai market. However, in the event that due either a settlement or registration complication, Shareholders do not receive dividend or interest income due, as per market practice subcustodian will immediately file claims against the counterparty and pursue the matter until the claims are met.

Entitlement is determined by reference to trade date. Stock with trade date on or after ex-date will not be entitled to corporate action process. Market practice is to check your outstanding trade that cannot be settled on record date and automatically claim the total entitled position from the counter party immediately if you are entitled to the outstanding trade.  Please note that selling securities on Ex-date, seller of securities will get corporate action entitlement.

NVDR holders have no voting rights with respect to their underlying shares.

Split voting and partial voting is allowed for subcustodian’s use at a shareholders meeting of public companies.

TSD has developed an e-Proxy Voting platform for Custodians which have been appointed by clients as an attorney via Proxy Form C to submit their clients' votes through the new platform from May 5, 2020 onwards. This service is optional to the issuing companies.

No

Provided in English. Annual general meetings and extraordinary general meetings are announced three to seven weeks in advance.

Available on meeting date +1, where subcustsodian will inform us via MT568-.

On request, subject to availability.

Documentation requirements:

• Power of Attorney (notarised and consularised)
• Certificate of Incorporation (notarised and consularised)
• Company Authorised Signatory List which reflect POA signer name and signature specimen (notarised and consularised)
• Copy of PoA signer’s passport (notarised and consularised)

Please note that according to the Thailand Securities Depository Co, Ltd (TSD) ), these documents are required to submit for notarized and consularized every 12months, however, some issuer may require this set of documents to be renewed notarized and consularized stamp for every 3-6months.

Foreign investors holding local shares are not entitled to all corporate actions including voting rights. Only foreign registered shares carry voting rights. Foreign investors holding NVDRs are entitled to all corporate actions except voting rights.

10% withholding tax

Effective August 20, 2019, non-resident investors will be subject to 10% withholding tax on dividends (profit sharing distributions) from mutual funds other than fixed income mutual funds.

Standard withholding tax rate is 15% (unless Double Tax Treaties stated otherwise), tax exempted for bonds issued by government, state agencies, or financial institutions under specific law for agricultural, commerce and industrial lending. Effective August 20, 2019, 15% tax will be withheld from interest income received from income funds while retirement mutual funds and provident funds will remain tax-exempted. Withholding tax on both dividend and interest income are withheld at source.

Standard withholding tax rate is 15% for both equities and fixed income (unless Double Tax Treaties stated otherwise).    

Effective 20 August 2019, non-resident investors will also be subject to 15% tax on capital gains derived from the disposal of mutual fund units (unless Double Tax Treaties stated otherwise). The tax will not be levied at source, so the unit holder will be responsible to pay the capital gains tax on the disposal of mutual fund units.

According to Section 70, Clause 2 of the Revenue Code, interest income derived from government and the BOT bonds will be exempted from 15% withholding tax.

Purchasing of bonds issued by government, state agencies, or financial institution under specific law for the agricultural, commerce and industrial Lending before October 13, 2010, withholding tax on capital gain is exempted.

Purchasing of the aforementioned bonds on or after October 13, 2010, please follow the below summary:

Thailand does not recognise the nominee concept, as a result of this it is the global custodian’s domicile that determines tax implications. The domicile of underlying clients does not impact or change the application of capital gains tax (CGT) in this market.

RBCIS’ subcustodian will calculate the withholding tax on applicable CGT using the Average Cost methodology applied across all relevant transactions under RBCIS omnibus securities account or respective segregated client account. The withholding tax will be deducted from RBCIS cash account on SD+4 for remittance to the Thai revenue department by the 7th of the following month on behalf of RBCIS clients.

Under the Luxembourg-Thailand tax treaty that covers RBC IS Bank S.A., all gains from securities sales in Thailand (except for those being exempted as mentioned above) are subject to 15% CGT.

Under the Canada-Thailand tax treaty that covers RBCIS Trust, gains from selling of shares or comparable interests in an enterprise with assets consisting wholly or principally of real property in Thailand (referred hereafter as REIT in general) are subject to 15% Thai CGT.

Clients selling REIT positions in Thailand will be subject to 15% CGT, regardless of the location of their tax domicile. Since the Thailand Revenue Code does not specify which of the listed shares fall under this category, RBCIS’ subcustodian will use the below web link of the Stock Exchange of Thailand’s (SET) and select the sector classification as Property & REITS and Property Development to further calculate CGT in case we have sell trade over securities which listed under these sectors.   Please refer to the following link for your information on how sub custodian locate securities listed in the Property & REITS and Property Development sector; https://www.set.or.th/dat/eod/listedcompany/static/listedCompanies_en_US.xls sort column E only Property & REITS and Property Development.  Once completed, we map this file with ISIN code in this ISIN file (https://www.set.or.th/data/tsd/isin/ISINCode_20231009_EN.xlsx) https://www.set.or.th/en/tsd/information/isin-cfi-fisn

Stamp duties are assessed for both foreign and Thai transferors of share and debenture certificates. The duty is assessed based on the value of the paid-up shares or transferred instruments at a rate of one baht for every one thousand baht in value. The stamp duty is exempt for transfers of registered securities where the TSD is the registrar. Transfers of government bonds, state enterprise bonds and unit trusts are also exempt from stamp duties.

Tax Issues Relating to SBL
The Revenue Department of Thailand published revenue ruling no. Gor.Kor.0706/10946 in April 2006. The ruling, dated December 30, 2005, states that a securities lending transaction is considered to be a service under Section 77/1(1) of the Revenue Code. As such, fees arising from a securities lending fee are classified as income from a tax standpoint, and are treated in a similar way to the taxation of interest income.

The ruling outlines that the lending fee would be subject to 7% VAT plus WHT since the fee is regarded as interest income (for example, if the recipient is off-shore entity, 10% or 15% WHT would be applied depending on the Double Tax Treaty and as to whether or not the recipient is a Financial Institution).

This tax ruling applies to the lending fee arising from transactions in which one or both of the counterparts are on-shore entities.

The tax ruling does not provide any interpretation for offshore transactions between off-shore non-Thai entities. In line with general Thai tax law, where both lender and borrower are off-shore non-Thai entities, and neither carry on business in Thailand, the lending fee would not be subject to Thai tax.

Thailand Holiday Calendar

• Stock Exchange of Thailand set.or.th
• Bank of Thailand bot.or.th
• Ministry of Finance mof.go.th
• Securities and Exchange Commissionsec.or.th
• Thailand Securities Depository Co., Ltd.www.set.or.th/tsd
• Thailand Clearing House Co. Ltd www.set.or.th/tch
• The Revenue Department www.rd.go.th