On June 17, the Cabinet of Thailand approved the principles of a draft ministerial regulation that establishes new criteria and procedures for share buybacks, disposal of repurchased shares, and share cancellations for listed companies, as proposed by the Ministry of Commerce. The draft will next be submitted to the Office of the Council of State for review and further action.
In parallel, the Ministry of Commerce is instructed to incorporate feedback from the Office of the National Economic and Social Development Board, sending any additional comments to support the review process by the Office of the Council of State.
Key Components of the Regulation:
1) Immediate Launch of New Buyback Programs: The regulation amends the existing rules, allowing companies to initiate new share buyback programs “immediately” after completing a previous program, without the previous requirement of a six-month waiting period.
This enables companies to better manage liquidity and adapt to fast-changing economic conditions and market volatility.
2) Listed companies in the Stock Exchange of Thailand (SET) can now extend the period for disposing of treasury shares by up to 2 additional years if share prices are at or below the average repurchase price, and another 1 year if they cannot sell all shares within the initial 2 years.
Shareholders’ approval is required for these extensions, which must be granted before the expiration of the set buyback timeframe.
The new provisions allow companies a maximum of 6 years to dispose of repurchased shares, comprising a 3-year initial period, an extension of up to 2 years under specific conditions, and a possible further 1 year. This increased flexibility helps companies navigate market fluctuations more effectively.
However, companies wishing to extend the period of repurchased shares disposition must receive shareholders’ approval first, as it would improve flexibility in the share buyback program for companies with earned surplus and excess liquidity. This will help boost market liquidity and capital market capability that will be greatly beneficial for shareholders, the market, as well as Thailand’s economy.
