Listed companies that fail to rectify their financial statements within the period required by the Securities and Exchange Commission (SEC) will in the future be considered for possible delisting 30 days after expiry of the SEC deadline.

The regulation, approved by the Stock Exchange of Thailand (SET) board of governors, takes effect next Wednesday.

SET executive vice president Suthichai Chitvanich yesterday said the shares of such firms would be suspended from trading and given an "NC" (non-compliance) sign. If the companies fail to submit amended financial statements within a further 180 days, the stocks may be delisted.

However, they will be allowed to trade for another 30 days before being delisted, in order to give minor shareholders a chance to sell their shares.

To be released from consideration for possible delisting, companies will have to turn in both their amended financial statements and their financial statements for the next two consecutive quarters within the time allowed by the SET.

The financial statements must be endorsed for compliance with generally accepted accounting standards by auditors and not attract disclaimers of opinion.

"At present, almost all listed companies are able to submit financial statements without any amendments by the deadline. In the case of financial statements for 2006, amendments were required from only 1 per cent of listed companies," Suthichai said. "Postponement of submission of financial statements or turning in financial statements without an auditor's endorsement might be a warning sign that those companies have problems in their operating performance."

Meanwhile, the SET board also approved a relaxation of regulations in favour of the inauguration of exchange-traded funds (ETFs).

To be listed on the SET, an ETF must have market makers to raise trading liquidity.

The board also approved the eligibility of ETFs for short sales and decided to allow brokers to execute ETFs in the form of basket orders and programme trading, Suthichai said.

An ETF combines the outstanding features of both open-ended funds and stocks. It is similar to a mutual fund in that it holds a basket of stocks, giving a diversified portfolio with just one purchase. But unlike a mutual fund, it is traded on exchanges and can be bought and sold throughout the day like stocks.

The SET will conduct a hearing involving brokers and relevant parties before forwarding the relaxed regulations to the SEC for final approval.

Siriporn Chanjindamanee

The Nation