It is increasingly popular for companies to offer their own securities to existing employees as part of their incentive programs. Not only does this help generate loyalty and motivate employees to feel that they are also owners of the company, but employee stock plans also provide a benefit which does not affect a company’s cash flow. Often, foreign parent companies also offer securities of its company to the directors or employees of its subsidiaries in Thailand. Foreign employee stock plans of this nature are subject to regulation by the Securities and Exchange Commission of Thailand (SEC).
Under Thai law, foreign parent companies offering such programs to the employees and directors of their subsidiaries in Thailand must make filings with the SEC. PriceSanond assisted the SEC in preparing some of the initial report forms when these requirements were first implimented. A report on sales and grants must be filed with the SEC within 15 days from the close of the offer period or from close of each calendar year, depending on the types of securities. Where stocks or warrants are offered, the sale must be reported within 15 days from the close of the offer period. For options, the company is required to report the exercise within 15 days from close of each calendar year.
The legal cost for filing reports of sale or exercise of securities under the employee stock plans is usually minimal. But when there is a late filing, this often causes administrative difficulties and could potentially lead to substantial fine. A violation of the reporting obligations may be subject to a fine not exceeding 300,000 Baht and a daily fine at the rate of 10,000 per day throughout the violation period. Although in practice, the SEC generally does not impose fine on first-time offenders and when a reasonable excuse is provided for a violation, it is still highly advisable for companies to strictly adhere to the rules in order to avoid the costs and potential liability associated with a violation.