Read this together with “Business Groups and Tunneling: Evidence from Private Securities Offerings by Korean Chaebols” (Link)
SEC, stock exchange to plug private placement loopholes
THE NATION January 13, 2015 1:00 am
THE STOCK EXCHANGE of Thailand and the Securities and Exchange Commission are looking for ways to plug loopholes in regulations regarding private placements. SET president Kesara Manchusree said listed companies seeking to increase their capital had issued more shares through private placements (PP) last year, which was in line with the overall market situation. PP is a channel for listed firms to find strategic partners to help enhance their potential.
Regarding an observation that some firms had conducted many private placements geared towards the same groups of investors, Kesara said the SET had to consider whether such transactions were appropriate to the objective of enhancing the firms’ future potential.
“If so, the PP is all right and not unusual,” she said.
The SET and SEC are discussing ways to close loopholes to prevent retail investors from being taken advantage of, and putting them on an equal footing with public investors. The bourse and the commission hope to be able to finalise the measures as soon as possible, Kesara said.
Regarding a concern that PP could be used as a method for conducting a hostile takeover, Kesara said the SET was not worried about that, since private placements had to be approved by the shareholders.
Nevertheless, reports suggested earlier that the SEC was considering enhanced measures to prevent issuing private placements at a low price and selling off the shares quickly afterwards, through setting a minimum number of days that PP investors could hold the shares, or through setting a silence period.
The SEC reportedly wanted listed companies to include in their PP filing information about the objectives of their capital raising such as how they would use the proceeds.