CFCL Investment regulation – Thailand
Reference
Regulatory structure
Please refer to the CBL Market infrastructure – Thailand for the complete information about the regulatory structure.
Holding restrictions
Disclaimer
The information contained in the Holding Restrictions is based on the legal opinion obtained by CBL that was issued on 8 November 2019. CFCL believes the information to be correct as of that date but disclaims any responsibility as to the accuracy and completeness of the information after that date. In the case of discrepancy between the information provided by CFCL and the local laws and regulations, the latter shall prevail. The Holding Restrictions do not constitute legal advice and Clients should seek advice from independent professional counsel.
Clients are responsible for ensuring compliance with the holding restrictions and agree to indemnify and hold harmless, CFCL, for any loss, expense, liability, damage, or claims, whether direct or indirect, against or incurred by CFCL arising out of or resulting from such non-compliance.
Holding restrictions – Register Market - Thailand
Restrictions on clients
- There is no explicit regulation that restricts local Thai citizens from safekeeping Thai securities with a foreign institution. However, Thai citizens should note that THB cash proceeds attained from sales or corporate action events on these securities cannot be transferred from the foreign institution's NRBS account to their resident account as this type of transaction is not allowed by the Bank of Thailand.
Certain funds may impose specific restrictions on investor domicile. Customers must refer to and abide by the restrictions (if any) contained in the fund prospectus before entering into transactions.
Restrictions on settlement
Clearstream Banking’s, Clearstream Fund Centre S.A. (“CFCL”)’s exclusive sub custodian, cash account no. 00100869378 with Standard Chartered Bank (Thai) Public Company Limited is a Non-Resident Baht Account for Securities (NRBS) account. Client cash accounts with Clearstream Banking are considered to be NRBS accounts.
Clients must ensure that clean payments to fund settlement transactions are paid to the Clearstream Banking NRBS account.
Clients withdrawing their THB cash balances attained from sales or corporate action events can only instruct their NRBS account and must ensure that the receiving cash account is a designated NRBS account. Payments from the NRBS account to a Non-Resident Baht Account (NRBA) account are not permitted by Bank of Thailand and will fail at market level.
Clients are strongly requested to comply with the regulations as CFCL cannot be held liable for failed or late payment execution due to non-compliance with the aforementioned regulations.
More information can be found on the Cash Services – Thailand page and Other services - Thailand.
Restrictions on holdings
No more than one-third of the total mutual fund units can be held by one ultimate beneficial owner or his related persons.
Holding restrictions – CSD Market - Thailand
Please refer to Investment regulation - Thailand for complete information on holding restrictions for Thailand.
Disclosure requirements
Introductory information and categories
This section provides general information about the disclosure requirements for fund securities holdings with which Clearstream Fund Centre must, according to the information available at the time of the present publication, comply with each of the domestic markets and fund markets covered by the Disclosure Requirements.
Fund securities that are held remotely are usually not disclosed by CFCL. A disclosure request received by CFCL regarding such a holding will be forwarded to the relevant client without assessing its validity and the CFCL Client shall handle the request on a voluntary basis.
Disclosure Requirements are only available for those countries where CFCL has a link to the respective domestic market or direct access to local domiciled funds that are held in Clearstream’s name on the register.
For fund securities holdings where CFCL has no such link or direct access to the register, clients must be aware that local laws might provide for mandatory disclosure. A disclosure request in this regard will be forwarded to clients without assessing its validity. Clients commit not to unreasonably withhold their consent to such a request and agree to indemnify CFCL for damages resulting directly from non-compliance with mandatory local disclosure requirements.
In most cases, the obligation to disclose is based on the domestic equivalent of a Companies Act, relevant investment funds act or anti-money laundering act and covers all security types.
In some instances, the obligation to disclose is based on stock exchange laws or regulations and only applies to listed domestic and foreign securities.
The Disclosure Requirements do not constitute legal advice and the Clients should seek independent professional advice in relation to fund securities deposited with CFCL, especially as, for those jurisdictions in which no disclosure obligation falls on CFCL, there may be separate disclosure requirements that apply directly to clients of CFCL, shareholders and beneficial owners.
Please note that CFCL is not always given comprehensive information or advised of changes affecting local disclosure requirements.
It remains the sole responsibility of the Client to ensure compliance with local disclosure requirements. If a requirement is not met, it is the Client who will be liable to any related penalty. Clients are therefore advised to seek independent legal advice on the existence and interpretation of local disclosure requirements.
In the case of a discrepancy between the general information contained in this document and the information provided by CFCL for a specific market, as applicable (irrespective of whether this information has been obtained from an agent of Clearstream Fund Centre, or, as the case may be, a foreign regulator of a branch of CFCL), the information provided by CFCL for the specific market as applicable, shall prevail.
N.B.: In all countries, if it is suspected that a disclosure obligation has been breached (for example, that a threshold of holdings under custody has been crossed without being reported), the regulators and the authorities may have the power to investigate. Moreover, in all countries, disclosure obligations might be triggered by enforceable judgements of the competent jurisdiction of the country in question.
Disclosure categories
Clearstream Fund Centre classifies disclosure scenarios according to the following market categories:
Category 1
Markets where disclosure by Clearstream Banking as a custodian of Clearstream Fund Centre to issuers, investment fund managers and/or to regulators or market authorities is mandatory under applicable law;
Category 2
Markets where disclosure by Clearstream Banking as a custodian of Clearstream Fund Centre of account holders to issuers, investment fund managers and/or foreign regulators or market authorities is a legal obligation in respect of securities in specific circumstances;
Category 3
Markets where there is no obligation for Clearstream Banking as custodian of Clearstream Fund Centre to disclose account holders to issuers, investment fund managers and/or regulators, notwithstanding any disclosure requirement falling directly on clients of Clearstream Fund Centre, shareholders and/or beneficial owners or notwithstanding disclosure necessary to obey an enforceable judgement of the country in question.
Disclosure requirements – Register Market - Thailand
Disclosure Category: 2
Clearstream Fund Centre (“CFCL”) may be required, under the laws and regulations of Thailand, to disclose the identity and holdings of clients and/or ultimate beneficial owners, upon request, in the case of holding Thailand investment funds.
Consent
In order to comply with the local legislation, clients holding Thailand investment funds or entering into transactions in the Thai market must consent and are hereby deemed to consent to the required legal disclosure. Such consent includes the appointment of the requestor (for example, the Fund Manager, Transfer Agent, Regulator) as their attorney-in-fact, under power of attorney, to collect from CFCL the required information to be disclosed. Clients who do not grant such authority cannot hold such investment funds or financial instruments in their accounts with CFCL.
Disclosure Requirement
Clients are advised that the local laws and regulations oblige CFCL to disclose the requested information on CFCL clients and ultimate beneficial owners to the party that is entitled by law to receive such information.
Fund management companies are allowed to request for a disclosure of underlying clients. Thus, CFCL must deliver the information requested from CFCL in relation to both CFCL and CFCL’s clients and ultimate beneficial owners as owners or holders of fund units in the relevant investment fund.
Background and legal basis
In the case of holding Thailand investment funds, CFCL is obliged under the following legislation to disclose the identity and holdings of clients and/or ultimate beneficial owners.
- SEC Act
- Anti-money Laundering Act
Sanctions
Subject to changes in Thailand laws, sanctions and other consequences may be applied for non-compliance. Non-compliance will not constitute any penalty on CFCL or the ultimate investors. However, it may result in the application being rejected by the fund management company, or in the case of on-going Know Your Customer (KYC) or Customer Due Diligence (CDD), the fund management company may need to report such non-cooperation to the relevant authorities.
Disclaimer
The information contained in the Disclosure Requirements is based on the legal opinion obtained by CBL acting as a sub-custodian for CFCL that was issued on 8 November 2019. CFCL believes the information to be correct as of that date but disclaims any responsibility as to the accuracy and completeness of the information after that date. In the case of discrepancy between the information provided by CFCL and the local laws and regulations, the latter shall prevail. The Disclosure Requirements do not constitute legal advice and Clients should seek advice from independent professional counsel.
Clients are responsible for ensuring compliance with the disclosure requirements and agree to indemnify and hold harmless, CFCL, for any loss, expense, liability, damage or claims, whether direct or indirect, against or incurred by CFCL arising out of or resulting from such non-compliance.
Disclosure requirements – CSD Market - Thailand
Disclosure category: 1
According to the Bank of Thailand Act, B.E. 2485 [as amended by the Bank of Thailand Act (No. 4), B.E. 2551], Clearstream Fund Centre S.A. (“CFCL”) falls under a legal obligation of disclosure in the case of holdings of Thai issued debt securities.
CBL may also be required under the Financial Institution Business Act (FIBA) B.E. 25511 to disclose to the issuer the identity and holdings of clients who are shareholders of local Thai financial institutions as defined in FIBA B.E. 2551.
Consent
In order to comply with the legislations as mentioned above, clients holding Thai issued debt securities or shares of local Thai financial institutions or entering into transactions in the Thai domestic market, must consent and are hereby deemed to consent to the required legal disclosure. Such consent includes the appointment of the requestor (for example, the relevant issuer or the Bank of Thailand, as appropriate) as attorney-in-fact of such clients, under power of attorney to collect from CFCL the required information to be disclosed. Clients not willing to give this consent cannot hold such securities/shares in their accounts with CFCL.
Disclosure requirements
Clients are advised that, under local regulations, the Bank of Thailand (“BOT”) and the issuing company are entitled to require CFCL, through its local custodian, on request and/or on a regular basis, to disclose information or documents relating to the ultimate beneficial owners of Thai issued debt securities and/or shares of local Thai financial institutions held in omnibus accounts maintained by CFCL with its local custodian.
Background and legal basis
The monthly disclosure for Thai issued debt securities is made in accordance to Section 10 of the Bank of Thailand Act, B.E. 2485 [as amended by the Bank of Thailand Act (No. 4), B.E. 2551] to BOT. Under these regulations, BOT is entitled to require CBL and/or its clients on a monthly basis, the disclosure of any data, information or document related to the positions recorded with the local custodian by CBL. This obligation of disclosure covers, without being limited to, the identity and holdings of clients, as well as the identity of the beneficial owners of such recorded positions.
Meanwhile, the FIBA B.E. 2551 states the requirements for disclosure to the Bank of Thailand of shareholdings in any local Thai financial institution and the obligation to report threshold crossings in any public listed company derives from Section 246 of the Securities and Exchange Act (SEA) B.E. 25352 (amended in 2551).
Please refer to Disclosure Requirements – Thailand for complete information on the disclosure requirements for Thailand.