SET warns of dilution effect
Bangkok Post (8 October 2007)
Bangkok Post (8 October 2007)
Investors should exercise caution and monitor listed companies closely for new share issues, warrant issues and employee stock-option programmes (Esop) that could lead to a dilution effect for existing shareholders. Officials of the Stock Exchange of Thailand noted that an increasing number of companies have been raising new capital through private placements of shares priced below market prices, placing existing shareholders at a disadvantage. Warrant issues and Esop offerings with unfavourable pricing for shareholders was also growing increasingly common, the SET warned. Supakit Jirapraditkul, a SET senior vice-president, said such practices placed minor shareholders at a clear disadvantage, with the benefits instead going to major shareholders or management. ''We have tried to pressure listed companies issuing new shares or Esop shares to clarify their pricing strategies and the impact on existing shareholders,'' he said. ''But we can only raise questions with the listed companies. At the end of the day, it depends whether shareholders approve the offering or not.'' The SET also noted that accounting fraud and misstatements had increased among listed companies over the past several quarters, with 10 companies singled out by regulators for possible wrongdoing. According to the Securities and Exchange Commission, since the beginning of the year, 26 companies have approved Esops worth a total of 9.3 billion baht, including Adamas Incorporation, Loxley, Bliss-tel, Tanayong, Live Incorporation, Salee Industry and Vinythai.
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