1.

The history of Thai NVDR Co., Ltd.

ANS:  

Under Thai laws, there have been the limitation of foreign ownership imposed to some of business area for companies listed in the Stock Exchange of Thailand. During the financial crisis in 1997, Thailand had to encounter the situation where the liquidity in the market was dramatically diminished and it was believed that the problem might be solved by the investment from overseas but at that time that was hardly possible due to the above limitation.

As a result, Thai NVDR Co., Ltd has been established in 2000 to become an alternative investment vehicle. The objectives are to stimulate the investment and drive for a higher degree of liquidity by being another choices of investment for foreign investors who are interested in Thai securities especially those with the condition on foreign ownership restrictions. .

2.

What are the advantages of investing through NVDRs?

ANS:  

Foreign investors are able to invest in Thai securities via NVDR without any concerns on foreign ownership limitation. The NVDR holder will obtain all financial benefits in the same manners as ordinary shares holders except that NVDR holder will have no voting rights.

Will Thai NVDR Company Limited cancel trading NVDRs?

No. NVDRs will be traded as normal. The investors can order the participants to trade NVDRs on the stock market as usual as they do with other securities and they will generally obtain NVDRs as ordered. However, the participants will have a little change on their trading procedure and coordinate with Thailand Securities Depository Company Limited to assure that the investors will obtain NVDRs.

According to NVDR prospectus, it specifies that converting NVDRs must be conducted through trading system of The Stock Exchange of Thailand. If the investor holds foreign shares, the investor must convert foreign shares to local shares first. Then, the investor can convert to NVDRs by submitting Trade Report order on the trading system. Please note that the investor will obtain more beneficial rights by holding foreign shares, including voting rights.

Can you clarify the procedure for converting NVDRs to foreign shares?

NVDR holder who would like to convert NVDRs to foreign shares can request his participants to conduct via Post-Trade system. If the foreign limit of that particular security is available, that participant can convert to foreign shares immediately. However, if the foreign limit is full, the investor can request his participants to queue up NVDRs to foreign shares in Post-Trade system.

Which name would appear on the Shares register book, is it Thai NVDR Company Limited or the holders of NVDR?

8.

ANS:    

ู้No, they can purchase or sell NVDRs via brokers at any time by specifying in the order form that they are purchasing or selling NVDRs.

9.

On which trading boards can investors purchase or sell NVDRs?

ANS:  

They can purchase or sell NVDRs on the main board. The price of NVDRs is equal to the price of the underlying securities.

10.

Can the investors request their brokers to convert local shares on the main board to NVDRs? How much is the commission?

ANS:  

Yes. Investors who wish to convert local shares to NVDRs must request their brokers or custodians to do this by executing Trade Report (sell local shares and buy NVDRs at the same time). Investors must pay an NVDR commission equal to that of the underlying securities.

11.

When purchasing / selling NVDRs on the main board or via The Stock Exchange of Thailand (SET)’s Trade Report, when do investors receive NVDRs?

ANS:  

They will receive NVDRs on the second consecutive business day following the trading day (T+2) as per the clearing and settlement regulations governing the underlying securities.

12.

How long does it take to convert NVDRs to foreign securities?

ANS:  

NVDR holders can request their brokers or custodians to put their NVDRs into TSD’s system. If the foreign investment limit for the firm whose securities have been purchased has not been reached, the NVDRs will be converted to foreign securities immediately. However, when the foreign investment limit for that particular listed company has been reached, NVDRs will be queued for conversion to foreign securities, so that investors can receive the same financial benefits during the queuing.

13.

Will NVDR holders who are queuing to convert NVDRs to foreign securities receive all the financial benefits while the NVDR register book is closed, including the right to receive dividends (XD : Exclude Dividend) and to subscribe for additional NVDRs (XR : Exclude Right) ?

ANS:  

NVDR holders who are queuing to convert NVDRs to foreign securities will receive the full financial benefits attached to the security of the relevant firm.

14.

If there are some NVDR’s trading errors occurred, can a broker correct those transactions? And how to adjust?

ANS:  

Yes, the broker can adjust the error transactions.

1) If NVDR trades are not due for clearing & settlement;

     1.1 Through trading system
Broker is able to correct an error within the same trading day by designating an order as an NVDR trade and this correction have to be completed no later than 5.00 p.m. on that trading day (T).

     1.2 Through clearing house system
Broker is able to adjust transaction covering the NVDR’s purchase or sale by using NVDR Adjustment function in clearing house system by referring to transaction’s deal number as per below

•  NVDR’s purchase order can be adjusted from trade date until settlement date and the adjusted transaction must be recorded in the system no later than 11.30 a.m. on the settlement date.
•  NVDR’s sale order can be adjusted from trade date until settlement date and the adjusted transaction must be recorded in the system no later than 1.15 p.m. on the settlement date.

The effective date will be on April 20, 2020 (settlement date) onward.

2) If NVDR trades are already due for clearing & settlement

Broker is able to adjust the transaction in the clearing house system by referring to transaction’s deal number which have taken place over the last three months from the date of seeking correction. If there has been a book closing of that NDVR in the last three months, the broker need to refer the transaction’s deal after the book closing date.

15.

Are there any limitations on the amount and price of securities in changing a trading transaction using SET’s Trade Report to convert the securities on the main board to NVDRs?

ANS:  

The procedures under the regulations covering Trade Report in full details are available at www.set.or.th under Supervision & Regulations: Notifications & Regulations – Trading of Securities.

16.

How does the system operate if investors have orders to sell NVDRs but cannot deliver them by the settlement date?

ANS:  

If an investor does not deliver the NVDRs by the settlement date (T+2), the system will debit the same amount of the underlying securities as the NVDRs due from the portfolio clearing account of the investor’s broker.

17.

Who can attend and vote in shareholders' meetings on behalf of NVDR holders?

ANS:  

Thai NVDR reserves the right to attend shareholders’ meetings but will not vote unless the
meeting has been called specifically to consider delisting.

18.

Do NVDR holders receive the right to subscribe for additional NVDRs if a listed firm grants Thai NVDR the right to subscribe for new shares (XR : Exclude Right) ?

ANS:  

Yes. NVDR holders will receive the right to subscribe for additional NVDRs. The allotment and price depends on those of the underlying security.

19.

Where a listed company grants the right to subscribe for new shares (XR : Exclude Right) to their primary shareholders, can the investors indicate their intention to subscribe for additional NVDRs ?

ANS:  

No, they cannot. To subscribe for new shares is a right derived from holding primary shares. If investors hold shares, they have the right to subscribe for new shares. However, if investors hold NVDRs, they have the right to subscribe for additional NVDRs.

20.

What capital gains tax are non-resident companies and registered partnerships liable for in Thailand?

ANS:  

Non-resident firms and registered partnerships, established pursuant to a foreign law and not doing or deemed to be doing business in Thailand, must pay 15% withholding tax. Furthermore, investors must inform their brokers of costs. However, a non-resident firm and registered partnership, established pursuant to a foreign law and not doing or deemed to be doing business in Thailand and having a reciprocal tax treaty with Thailand, is exempt from having to pay withholding tax.

21.

If investors buy/sell NVDRs and/or underlying shares, thereby increasing/decreasing the number of NVDRs/underlying shares by any multiple of five percent of the total number of voting rights of securities, must they notify Thai NVDR of three (3) business days following such an event, using the form Thai NVDR stiplulates? What happens if NVDR holders don’t follow this procedure?

ANS:  

Yes, NVDR holders must report acquisition or disposal of NVDRs representing shares, either separately or in combination with the shares (if any) using Form 246-2-NVDR, to Thai NVDR. In addition, NVDR holders are, with respect to the underlying shares, still required to comply with the reporting requirements of Section 246 (Form 246-2). Thus, if they don’t report their acquisition, disposal or holding as mentioned in conditions 3.2.1 and 3.2.2, they are subject to a penalty as specified in sections 298 and 275, respectively, of the SEC Act.

22.

Who does the actual reporting of acquisition/disposal of NVDR and underlying shares (if any) (on Form 246-2-NVDR) to Thai NVDR: the brokers or NVDR holders? How is this information publicly disseminated?

ANS:  

NVDR holders themselves must report the acquisition/disposal within three (3) business days following the date of such event in the form stipulated by Thai NVDR if, as a result of their holding, they would increase or decrease the number of NVDRs and underlying shares by any multiple of five percent of the total number of voting rights of securities. Thai NVDR will disseminate the information on www.set.or.th/nvdr.

23.

Should investors report acquisition or disposal of NVDRs and underlying shares to SET or SEC if their holdings have reached any multiple of five percent, even though they have previously reported acquisition or disposal (using Form 246-2-NVDR) to Thai NVDR?

ANS:  

In this case, investors need only report acquisition or disposal of NVDRs and underlying shares to Thai NVDR. However, if investors hold underlying shares, excluding NVDRs, which total any multiple of five percent of the total number of voting rights of securities, the investor must report to SEC under Section 246 (on Form 246-2).

24.

Are there any investment limitations on NVDRs held by each investor ?

ANS:  

Each investor is allowed to hold any combination of NVDRs and shares totaling less than 25 percent of the total number of voting rights of securities of the target company. Investors must includeNVDRs and underlying shares of related persons under section 258 of the SEC Act. Moreover, every NVDR holder must report the acquisition or disposal of NVDRs and/or underlying shares, on a combined basis, whenever the combined holding (treating one NVDR as equivalent to one underlying share) reaches any multiple of five percent of the total number of voting rights of securities, within three (3) business days of such acquisition or disposal of NVDRs and/or underlying shares. If investors hold NVDRs and/or underlying shares totaling of 25 percent or more of the total number of voting rights of securities of the target company, Thai NVDR will compel the redemption of the excess NVDRs from NVDR holders immediately.

25.

Are there any limitations on underlying shares when selling NVDRs?

ANS:  

No, there are not.

26.

Can investors convert Thai Trust Fund (TTF) investment units into NVDRs via SET’s Trade Report?

ANS:  

No. Investors cannot convert these units into NVDR via SET’s Trade Report Trading. However, NVDR holders can exchange TTF investment units for NVDRs by processing the transaction (selling the investment units and buying the NVDRs) via SET’s Automatic Order Matching System (AOM).

27.

Which underlying securities can NVDR holders invest in?

ANS:  

NVDR holders may invest in four types of underlying securities as follows:
1. Ordinary shares
2. Preferred shares
3. Warrants
4. Transferable Subscription Rights (TSRs)

28.

Will NVDR holders who exercise NVDRs representing warrants receive NVDRs or the underlying securities?

ANS:  

NVDR holders who exercise NVDRs representing warrants will receive NVDRs based on the type of the underlying securities.

29.

Are NVDR holders allowed to invest in property funds?

ANS:  

No, because SEC does not allow Thai NVDR to invest in property funds which it regards as unit trusts.

30.

Is the ISIN (International Securities Identification Number) code of NVDRs the same as that of the underlying securities?

ANS:  

No, the ISIN code of NVDRs is different from that of the underlying securities because of the variety of securities. You can obtain more detail on ISIN codes at www.set.or.th/nvdr.

31.

What is the calculation method for the right to subscribe for additional NVDRs (XR : Exclude Right) ?

ANS:  

The method of calculation for the right to subscribe for additional NVDRs (XR : Exclude Right) is separate to that of the underlying securities because they are considered as different types of securities.

32.

How will the members of Thailand Securities Depository Co., Ltd. (TSD) register NVDR holders and shareholders’ names by the book closing date for transmission to TSD?

ANS:  

TSD members must separate the lists of NVDR holders and shareholders by the book closing date because they are considered as holding different types of securities.

33.

Do NVDR holders receive the right to receive dividends (XD : Exclude Dividend) or the right to subscribe for additional NVDRs (XR : Exclude Right) directly from Thai NVDR?

ANS:  

Yes, they do. Thai NVDR receives financial benefits from listed firms and then allocates them to NVDR holders whose names appear in the NVDR register book on the book’s closing date.

34.

What kind of payment are the payment instead of dividends ?

ANS:  

The payment instead of dividends are considered as income under Section 40(4)(g) so NVDR holders will be unable to claim any refund or credit of the payment instead of dividends.

35.

Will Thai NVDR issue tax deduction certificates for payment instead of dividends to NVDR holders?

ANS:  

Thai NVDR will issue tax deduction certificates for payment instead of dividends to NVDR holders like dividend payments from listed companies.

36.

Will NVDR holders receive the tax benefits promoted by the Board of Investment (BOI) from underlying securities that are invested in by Thai NVDR?

ANS:  

Dividends paid to those who invest in companies promoted by BOI are exempt from income tax on those
dividends. However, Section 34 of the Investment Promotion Act (B.E. 2520), which grants these exemptions, applies only to those who directly invest in the promoted firm. Since
individuals or juristic persons who have bought NVDRs are not direct investors, they are not entitled to the exemptions.

37.

Can NVDRs be pledged as collateral like underlying securities?

ANS:  

Yes. they can.

38.

Does the credit balance system assign an initial margin for trading or collateral of NVDRs as with underlying securities?

ANS:  

Yes.

39.

Must NVDR holders apply to use the e-Dividend service if they have previously applied to use the service for transferring underlying securities’ dividend payments into their bank accounts?

ANS:  

No; their previous application to use the service will also apply to their NVDRs.

40.

Are there any conditions and/or concerns for NVDR holder to apply e-Dividend mentioned in No. 37?

ANS:  

41.

Can NVDR holders receive payment instead of dividends in a foreign currency?

ANS:  

Yes, NVDR holders resident outside Thailand can receive payment instead of dividends in a foreign currency by requesting their broker or custodian bank to apply to Thai NVDR via the program on the depository system (PTI) before the NVDR’s book-closing date. Payment in the designated currency will cover every security or NVDR held by the given investor until the broker or custodian bank is requested to change the currency.

42.

Can investors order the purchase or sale of NVDRs if the underlying securities are being delisted from the Exchange and Thai NVDR has not invested in those securities?

ANS:  

Investors can regularly order the sale of NVDRs but can not order purchases. If, in this case, investors order a purchase of NVDRs, they will receive the underlying securities instead.

43.

In case, the investors would like to change the payment method since the cheque they received from unallotted NVDRs or Tender Offer Delist has expired,
or the investors do not have bank account in Thailand. How should the investors do?

ANS:  

The investors could request to issue a new cheque or transfer via SWIFT
by submitting the form named "Application for the Amendment/Issuance of Cheque or Other Cash Benefits" to Thai NVDR Co., Ltd.
Thai NVDR Co., Ltd. has cancelled to issue drafts since June 30, 2021 onwards.

44.

Do Thai investors who have been holding NVDR before April 1, 2024 have a limited holding period?

ANS:  

After April 1, 2024, such Thai investors can still continue to hold NVDR. However, they are not allowed to purchase or to get the transfer for more NVDRs.

45.

How many ways can we convert NVDR to Local, if such NVDR has had trading orders for over 3 months?

ANS:  

Please contact the broker where each investor has an account in which the transactions can be made (by Trade Report method).

46.

In the case that Thai investors who hold NVDR have received the rights to subscribe, will they still be able to exercise their rights

ANS:  

Yes, in this case, Thai investors can exercise their rights.

47.

Do Thai investors who have bought NVDR have to convert to local stocks? Within what date? Is there a deadline?

ANS:  

Thai investors are not forced to convert. Thai investors can continue to hold and receive benefits as usual.

48.

As for Thai investors who have received NVDR credit via warrants conversion, are they eligible to have the NVDR?

ANS:  

Yes, they have the rights to receive the NVDR on the book closing date as usual.

49.

If an NVDR holder wishes to transfer one’s own NVDR to one’s own account at another Depositors, is it possible to do so?

ANS:  

Such NVDR holder can transfer and can be transferred due to the fact that this action will not enable Thai investors to hold more NVDRs. Please have the related documents available for verification.

50.

Can the NVDR be transferred from the Custodian to Private Fund, which is a transfer from the same investor but a different account?

ANS:  

Yes, it’s possible to do so. Please have the related documents available for verification.

51.

What should foreign investors do if they want to buy NVDR via asset management companies in Thailand?

ANS:  

Since Thai asset management companies cannot send orders to purchase NVDR, NVDR must be purchased as Local in the trading system. If the transaction is for foreign investors who want to buy NVDR, the transaction can be adjusted to NVDR in the clearing house system (SET CLEAR system). Related documents must be kept for verification that it is a transaction of a foreign investor.

52.

If there is an amendment in the Thai NVDR prospectus, how will this be announced?

ANS:  

The prospectus has been disseminated via the Thai NVDR website, and has been notified via TSD Corporate Mail to the depositing members (brokers, custodians, etc.) since April 1, 2024.

53.

In the case of transferring NVDR to a different (not the same) Thai investor due to inheritance, or order of legal authority, is it necessary to prepare evidence documents for the SEC to examine?

ANS:  

Yes, such transfer documents must be kept for a certain period as specified by the SEC.