The Capital Law Office Limited | View firm profile
Effective on October 1st , 2022, the new definitions of Institutional Investor, Ultra-high Net Worth Investor and High Net Worth Investor under the Notification of the Securities and Exchange Commission No. Kor. Jor. 39/2564 re: Determination of Definitions of Institutional Investor, Ultra-high Net Worth Investor, and High Net Worth Investor, will be more consistent with the understanding of the nature and risk of the products to be invested, as well as the ability to take risks, in order to provide businesses and investors with access to a broader range of fundraising and investment channels.
What has been improved?
The new definition of Intuitional Investor has been revised to include the investor who has the ability to analyze and take risks on very complex or high-risk products. Examples of such an investor are:
- investment analyst;
- angel investor, who involves in a transaction relating to securities issuance in accordance with the announcement regarding the offering of securities by small and medium-sized enterprises (SMEs) or startup enterprises, or securities offered through SEC-approved crowdfunding portal providers;
- venture capital;
- private equity; and
- person familiar with the business, which includes directors, executives, employees, major shareholders and subsidiaries or associated entities of the business. In this regard, the familiar businessperson will only be classified as institutional investor in transactions relating to securities issued by such entities.
Additionally, the revision of Ultra-high Net Worth Investor and High Net Worth Investor definitions provide new principles for assessing an investor’s knowledge or experience requirements and relax the financial position requirements. To qualify as an Ultra-high Net Worth Investor or a High Net Worth Investor under this new notification, an investor must possess at least one of the following qualifications of knowledge or experience:
- a) has previous investment experience in risky assets on a regular and ongoing basis;
- b) has experience working in financial and investment management;
- c) has sufficient knowledge in invested securities;
- d) be an investment advisor or investment planner approved by the SEC; and
- e) obtained a certificate in one of the following courses:
- Chartered Financial Analyst (CFA)
- Certified Investment and Securities Analyst (CISA)
- Chartered Alternative Investment Analyst (CAIA)
- Certified Financial Planner (CFP)
- other courses announced by the SEC.
Qualifications for financial positions have been reduced to the following:
|Type of Investors||Financial Positions|
(exclude the value of property used as permanent residence)
|Shareholders’ Equity||Annual Income||Investment|
(only direct investments in securities or futures contracts)
|Ultra-high Net Worth Investor||Individual|
|not less than Bath 60 million||–||not less than Baht 6 million||not less than Baht 15 million or not less than Baht 30 million (if including deposits)|
|Juristic Person||–||not less than Baht 150 million||–||not less than Baht 30 million or not less than Baht 60 million (if including deposits)|
|High Net Worth Investor||Individual|
|not less than Baht 30 million||–||not less than Baht 3 million||not less than Baht 8 million or not less than Baht 15 million (if including deposits)|
|Juristic Person||–||not less than Baht 75 million||–||not less than Baht 15 million or not less than Baht 30 million (if including deposits)|
Who will get benefits?
The investor who understands the nature and risk of the products and meets financial positions under the requirement of the current regulation will have more opportunities to access to a diverse range of products, both onshore and offshore products. However, investor with only strong financial positions without understanding or experience with the nature and risk of the products will be limited to invest in the products that have lower risk. Meanwhile, businesses in need of funding will be able to access more open funding channels. What we will see from now until the effective date is the process to reclassify their group of clients by all brokers and fund managers, which will involve the self-assessment of the clients and will, of course, involve a lot of operational works from brokers and fund managers. However, we believe the benefit to this reclassification will be worth an investment.
When will this become effective?
The new notification will become effective on October 1st , 2022. However, until the broker’s next customer classification cycle, Ultra-high Net Worth Investor and High Net Worth Investor who a) have accounts and assets with the broker and b) were classified as Ultra-high Net Worth Investor and High Net Worth Investor at least nine months prior to the notification taking effect, shall continue to be considered as such types of investors under this notification.