In periods of market volatility, the share price of fundamentally sound listed companies may decline to levels that do not reflect their underlying performance or long-term prospects. In such circumstances, share buyback programs – the repurchase and holding of a company’s own shares as treasury stocks under Thai law – are widely recognized as an effective tool to support share prices, manage excess liquidity, and reinforce investor confidence.
Thai law has long permitted listed companies to conduct share buybacks, subject to specific legal and regulatory requirements. However, under the previous regulatory framework, procedural constraints limited companies’ ability to deploy share buyback programs in a timely and commercially effective manner, particularly during prolonged or repeated market downturns.
Recognizing these limitations, Thai regulators have recently introduced key amendments to the treasury stock regulations. These changes are intended to enhance flexibility, improve market responsiveness, and enable listed companies to use share buyback programs more strategically in volatile market conditions.
This article provides:
- background on share buyback programs and their practical value for Thai listed companies;
- an overview of the key legal requirements;
- an explanation of the limitations under the previous rules; and
- how the recent amendments help unlock those limitations.
Why Share Buyback Programs Matter
A share buyback program allows a company to repurchase its own shares and hold them as treasury stocks. By reducing the number of shares in circulation, such programs may improve key financial metrics, including earnings per share (EPS), and return on equity (ROE).
Beyond financial ratios, share buybacks often serve as a signal of management’s confidence, indicating that the company believes its shares are undervalued. As a result, announcements of share buyback programs are commonly met with positive market reactions and may help stabilize share prices during periods of uncertainty.
For Thai listed companies, share buyback programs are therefore not merely a financial technique, but a recognized capital management tool that can support long-term shareholder value when used appropriately.
Share Buybacks under Thai Legal Framework
Under Thai law, public companies are permitted to repurchase their own shares for two primary purposes:
(1) Dissenting shareholder –to repurchase shares from shareholders who do not approve amendments to the Articles of Association relating to voting rights or dividend entitlements; and
(2) Excess liquidity management – where the company has accumulated profits and maintain a financially sound position.
Limitations under the Previous Regulatory Framework
Under the previous rules applicable to share buyback programs for liquidity management, companies faced 2 key limitations.
First, companies were required to observe a six-month waiting period before completing, cancelling, or allowing a share buyback program to expire before launching a new program. This restriction limited companies’ ability to respond promptly to market volatility or repeated downturns.
Second, treasury shares were required to be disposed of within three years from the completion of the share buyback program. If the shares were not disposed of within this period, the company was required to reduce its registered capital. In prolonged weak market conditions, this requirement often forced companies to dispose of treasury shares at commercially undesirable prices.
Together, these restrictions significantly reduced flexibility and limited the role of share buyback programs as an effective market stabilization tool.
Key Enhancements under the New Regulations
The recent amendments to the share buyback regulations represent a meaningful shift in regulatory approach by removing rigid procedural barriers and enhancing corporate flexibility.
The key regulatory changes are summarized as follows:
| Subject Matter | Previous Regulation | New Regulation |
|---|---|---|
| Waiting period between share buyback programs | A six-month waiting period was required following the completion, cancellation, or expiration of a previous share repurchase program. | The six-month waiting period has been eliminated. Public companies may commence a new share buyback program immediately, provided that total treasury shares held do not exceed 20% of total issued shares. Any excess must be disposed of within three months, failing which a capital reduction is required. |
| Disposal period for treasury shares | Treasury shares were required to be disposed of within three years from completion of the buyback, prior to a new share issuance, or otherwise be subject to capital reduction. | The disposal period may be extended to up to five years (an initial three years plus an additional two years), provided that (i) the 3-month volume weighted average market price prior the board’s approval to convene a shareholder’s meeting remains below the average buyback price, and (ii) the extension is approved by shareholders before the end of the initial 3-year period. |
Why the Amendments Matter
These amendments materially enhance the ability of listed companies to use share buyback programs strategically and responsively. By eliminating the mandatory waiting period and extending the permissible holding period for treasury shares, companies are better positioned to navigate volatile or prolonged market downturns without being constrained by technical timing requirements.
From a broader market perspective, the revised rules promote market efficiency, strengthen investor confidence, and reinforce share buyback programs as a legitimate and effective tool for long-term value creation, rather than one-off defensive measure.
Disclaimer
This article is intended to provide general information on recent legal developments relating to share buyback and treasury stock regulations in Thailand. It does not constitute legal advice and should not be relied upon as such. The information contained herein is of a general nature and may not reflect the specific circumstances of individual companies or the latest regulatory interpretations.
Readers are advised to seek independent legal or professional advice before taking any action based on the information contained in this article.