Download FINANCIAL INSTRUMENTS CHECKLIST

Tips
Topics
Common
Stock
TSR
Warrant
Convertible
Bond
Stock
Dividend
If the company still
has an accumulated
loss, no dividends
(either cash or
stock) shall be paid.
Financial status
Treasury
Stock
The company has high cash/
financial liquidity enough and
has no need for fund raising as
the regulations do not allow a
capital increase while it is
conducting the treasury stock
project.
Capital Reduction
ESOP
The company can
reduce paid-up capital
by 75% or more only if
done to compensate for
accumulated loss.
Issuance of treasury stock must
not make the company’s free
float less than the specified
criteria (15% of all stock and
150 retail shareholders).
Free Float/
Stock liquidity
EJIP
The company has enough
free float and stock
liquidity.
Dilution Effect
➙ Price Dilution
➙ Control Dilution
Discount
offering price
PO and PP
✔
If exercised
If exercised
The company
should pay stock
dividends together
with cash dividends
to cover the 10%
withholding tax.
Tax burdens/
Tax issues
Others
If converted
The company can seek a capital
increase using a general mandate.
The company
must comply
with the
conditions to
adjust rights on
the events that
specified in
prospectus.
Capital gains from reselling
shares from a treasury stock
program are not subject to tax.
If the company has
accumulated profit,
capital reduction to
shareholders is taxable
income.
Those receiving
ESOP will have to
pay taxes if there is
a gain from the offer
and market prices.
The company have to
notify creditors to
know the shareholders’
resolution to reduce
capital and allow them
to state their objection
within 2 months from
the date of notice.
If any person is
given more than 5%
of the total approved
securities, such a
step requires
permission from the
company’s
remuneration
committee.
- EJIP participants must
pay personal income tax on
the amount contributed by
the firm.
- The company can save its
corporate income taxes, as
its contribution is counted
as employee remuneration.
The company should review accounting
standards when preparing financial
statement.
62 The Stock Exchange of Thailand Building, Ratchadapisek Road, Klongtoey, Bangkok 10110
FINANCIAL INSTRUMENTS
CHECKLIST
Guidelines for choosing financial instruments
Common
Stock
TSR¹
Warrant
Bond
Convertible
Bond
Stock
Dividend
- Increase/keep cash/financial liquidity
✔
✔
✔
✔
✔
✔
- Implement financial restructuring
✔
✔
If exercised
- Boost stock liquidity
✔
✔
✔
Topics
Par
Change
Treasury Stock
Capital Reduction
ESOP²
EJIP³
1. Objectives/Benefits
Benefits for company
✔
If converted
✔
✔
Stock split
Reverse
stock split
- Make share price reflect its fundamental value
✔
Benefits for shareholders
- Have option of either exercising rights or selling
them
✔
- Get more return
✔
✔
✔
✔
Benefits for employee
- Have incentive for participation through sense of
ownership /Be an alternative type of compensation
✔
✔
2. Key procedures
- Ask board of directors to pass resolution
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
- Ask shareholders’ meeting to pass resolution
✔
✔
✔
✔
✔
✔
✔
If the company dose not specify in its articles
of association or share repurchasing is > 10%
✔
✔
In case non-executive directors are
allowed to join the program
≥ 3/4
≥ 3/4
≥ 3/4
≥ 3/4
≥ 3/4
≥ 3/4
≥ 3/4
> 1/2
≥ 3/4
≥ 3/4
≥ 2/3 of total votes of shareholders
attending the meeting
➙ In meeting of shareholders with voting rights
➙ Veto right (%)
- Submit filing for SEC approval
- Appoint financial advisor / representative to
manage program
PP at < 90%
of the market
price (10%)
PP at < 90%
of the market
price (10%)
- If offering price is < 90% of market price; needs 10%
voting against to veto.
- If offering price is < 90% of market price & new
shares offered > 5% of paid up capital, needs 5%
voting against to veto.
- If the company allocates shares to any one director
and/or any one employee > 5% of total issued shares,
must ask for approval on individual basis; needs 5%
voting against to veto.
PO
PO
PO
PO
In case of asking for a waiver to report
using Form 59-2
FA in case of
PO
FA in case of
PO
FA in case non-listed
company issues PO
FA in case non-listed
company issues PO
Broker is a representative to buy shares in
the stock market.
1. TSR : Transferable Subscription Rights 2. ESOP : Employee Stock Option Program (Common Stock and Warrant) 3. EJIP : Employee Joint Investment Program
* This document is meant to only give a broad overview in choosing financial instruments. Before finalizing any decision, please study the matter in detail.