Several listed companies are conducting a feasibility study to buy back their shares and delist from the stock market once their corporate income tax-reduction privileges expire.

"Listed companies having strong cash flow and financial position, but with stock prices lower than book value, think the necessity to maintain their listing status is lessened after the tax incentive expires," a source, in touch with the executives of many listed companies, said.

The source said, "If the share price declines significantly, and they have enough cash flow, the companies would want to buy back their shares to delist from the stock market."

The source blamed too-stringent regulations of the stock-market authorities and unfavourable market sentiment as the main factors for the delisting plans.

Companies that started listing from 2002 were entitled to a corporate income-tax reduction from 30 per cent to 25 per cent if they are listed on the Stock Exchange of Thailand (SET) and 20 per cent if listed on the Market for Alternative Investment (MAI) for a period of five accounting years after their debut on the stock market.

The privileges for companies that listed in 2002 would be terminated

from the start of the 2008 accounting year.

More than 100 companies listed on both the SET and the MAI have received corporate income-tax privileges.

More than 480 companies are now listed in the two stock markets with a combined market capitalisation of over Bt5 trillion.

SET president Patareeya Benjapholchai said the SET was monitoring the issue and wanted the listed companies to understand that the tax reduction was just one  incentive for listing on the stock market.

"The tax issue is not such an important issue because they can receive many benefits by being listed on the stock exchange, particularly raising funds from the public. I would like them to realise this benefit as well," Patareeya said.

Siriporn Chanjindamanee

The Nation