Q&A

Q : When does the TSR term of 2 months start and end ? A : The term starts from the TSR issue date, which is when the Thailand Securities Depository deposits TSRs into securities trading accounts of shareholders, and ends on the TSR exercise date. The entire period must not exceed two months. Q : What key issues make a TSR offering and issuance successful ? A : The firm should provide knowledge and understanding for shareholders. If they do not have an adequate understanding on TSR, shareholders may not approve the proposed TSR issuance and offering. Thus, the ordinary shares of the company could be affected, or the TSRs price on the Exchange may not reflect its fundamental value. The company should also encourage TSR holders to exercise their rights within the deadline. Generally, shareholders using the scrip system may not closely monitor the companys news, and may lose opportunities to trade their TSRs or exercise their rights. As a result, the firm may not be able to raise funds as planned. Thus, the company may take special care to inform this group of shareholders about the TSR issuance. Q : What are the costs for TSR issuance and offering ? A : Apart from the fees of any financial advisors, other costs include expenses in holding a shareholder meeting, and TSD service fees. The Exchange has waived its fees for TSR listings.

TSR

Transferable Subscription Rights : TSR

TSR

: Transferable Subscription Rights

Definition of TSR: A TSR is an instrument a listed company issues to all shareholders when it increases capital through a rights offering (RO). Shareholders receive TSRs in proportion to their shareholding.
For example: A firm will give its current shareholders the right to buy 1 new share for every 10 shares. Thus, any shareholder hold 10 shares now will receive 1 TSR according to the rules that 1 TSR can subscribe for 1 new share.

What is the difference between issuing TSRs and an a rights offering?

Shareholders are permitted to transfer subscription rights of capital increase shares to others by trading them on the Exchange. Holders of TSRs who wish to subscribe to capital increase shares are able to do so. If TSR holders prefer not to subscribe to the capital increase shares, their rights can be transferred to others.

The TSRs which the company issued in August 2010 reduced volatility normally caused by capital increase shares. The impact of dilution effect also had been reduced efficiently, as existing shareholders had been (partly) compensated by the returns from TSR sales on the exchange. In the meantime, new investors may acquire capital increase shares at lower than market prices (depending on the combined TSR exercise price and TSR bidding price). However, the company should inform existing shareholders about TSRs to prevent the shareholders from losing their rights Ms. Napatsorn Kitaphanich Director and Vice President for President Office Somboon Advance Technology PCL. (SAT)

Benefits of TSRs
Company

The firm is able to proceed with fund-raising as needed.

Shareholders

Relevant notifications
www.set.or.th > Rules and Regulation > Regulations > Regulations by Subject > TSR

Shareholders have the option of either exercising their subscription rights or selling them. Issuing TSRs enhances the liquidity of the companys securities

joins with Kim Eng Securities (Thailand) Pcl.,

62 The Stock Exchange of Thailand Building, Ratchadapisek road, Klongtoey, Bangkok 10110

Listed Company Development Department, The Stock Exchange of Thailand

Transferable Subscription Rights : TSR

TSR issuers: Listed companies
Companies seeking to increase capital through a rights offering should issue TSRs, clearly stipulating a term of not more than 2 months, a trading period on the Exchange of not less than 7 business days and the subscription period of not less than 15 days before the last subscription date. The exercise ratio shall be 1 TSR per 1 ordinary or preferred share. Companies issuing TSRs must not be in the process of delisting its ordinary shares, resolving such an event, reorganizing its business under bankruptcy laws, or be having its listed securities suspended from sale or purchase due to causes which seriously affect the rights and privileges of shareholders. The company is allowed to offer TSRs within one year following the date on which shareholders have resolved to increase capital without needing to file for SEC approval and are able to conduct the TSR offer without using financial advisor (FA) if the firm so desires. The company must clearly specify in written how it will compensate TSR holders if it is unable to provide sufficient newly-issued shares to support TSR holders wishing to exercise their rights. The company must submit a copy of the shareholders resolution authorizing a capital increase, a report on the results of offering new shares, and supporting documents to the SEC.

Transferable Subscription Rights : TSR

Procedure to issue and offer TSRs
Report the board of directors resolutions to SET
- Disclose the resolutions immediately or no later than 9:00 a.m. of the following business day.

Hold a shareholder meeting

- The capital must receive approval from at least 3/4 of shareholders who have voting rights and attend the meeting in person or by proxy - Offer to those who were shareholders on the closing date of the share registry - Allocate to existing shareholders in accordance with their shareholding proportion - TSRs will be offered under the scripless system - TSR term is no longer than 2 months - Issuing and offering TSRs does not require permission from the SEC*

Issuing and offering TSRs

Best practices for listed companies in issuing TSRs

1. The firm should clearly specify details about the capital increase, conditions, offering price, and subscription and payment periods, the closing date of the share registry to determine the rights to subscribe to the share increase, and the board of directors resolutions. These steps will ensure that all relevant procedures are conducted on a timely basis, without confusion. 2. As the TSR must be valid for two months or less, the company should credit the entire amount of TSR to the scripless system. 3. When seeking shareholder approval to issue TSRs, the company should Specify payment methods allowed in the notice calling the shareholders meeting and state that all TSRs will be registered using a scripless system. Inform in the shareholder meeting for shareholders better understanding about payment methods and the minutes of the shareholder meeting must state the payment methods allowed. Inform all eligible shareholders of their right to receive TSRs in the notice calling the shareholders meeting.

Submit for listing TSRs to SET

TSR trading period on the Exchange (SET)

- Trading on the Exchange is not less than 7 business days

TSR exercise period

- An exercise period of not less than 15 days

TSR trading on the Exchange

TSR shall be traded on the Exchange with a symbol of the stock symbol of the issuing company followed by -T#, e.g., XXX-T1. The TSR symbol must not exceed eight spaces (including -). TSRs are allowed to be traded on the main, odd lot, and big lot boards. The ceiling and floor prices of TSRs shall be set in the same manner as those for warrants, with a change either upward or downward not exceeding 30% of the firms last trading price for ordinary shares, multiplied by the number of rights subscribed to in a one-time exercise of TSRs. On the first date that the XR sign is posted, the ceiling and floor prices of the issuers listed stock will be limited to a change either upward or downward of 30% or less of its price minus benefits from the TSR. The Exchange will suspend trading of the firms TSRs for three days prior to the ordinary share subscription and payment date in order to obtain the name list of TSR holders who are eligible to subscribe to the newlyissued shares.

Report of TSR exercise results

- Report TSR exercise results to the Exchange (Form 53-5)

Register the capital increase with the Ministry of Commerce (MOC) Trade shares from the capital increase on SET

- Register the increase in paid-up capital within 14 days

- Submit an application to list the shares from the capital increase to SET

* Note : A listed company must report TSR and share offering results and supporting documents to the SEC within 15 days after the end of the subscription period.

Listed Company Development Department

The Stock Exchange of Thailand