On June 1, 2024, Thailand's Securities and Exchange Commission (SEC) issued four notifications amending existing regulations to recognize sustainability-related tokens and institute specific measures for regulating them. These tokens are intended to offer diverse sustainability-related products to ESG funds in Thailand and drive the growth of a sustainable digital economy in the country.
The key points in the notifications are summarized below.
Definitions
Under the notifications, sustainability-related tokens are classified into four types:
- Green tokens: Digital tokens specifically intended to incentivize or fund projects that promote environmental sustainability.
- Social tokens: Digital tokens specifically intended to support and fund initiatives that contribute to social welfare.
- Sustainability tokens: Digital tokens intended to support projects that enhance both environmental and social welfare through funding and incentives.
- Sustainability-linked tokens: Digital tokens intended to fund activities that promote sustainability. This includes tokens that have adjustable returns based on the performance of the issuing entity or its affiliates in meeting specified sustainability-related goals or outcomes.
The offering of sustainability-related tokens is subject to Thailand's general requirements for token offerings: (1) approval from the SEC and (2) filing the registration statements and the draft prospectus with the SEC before marketing and offering the sustainability-related tokens to public investors in Thailand, unless exempted. The sustainability-related tokens must be offered through an SEC-approved ICO portal, which will assume a role similar to that of a financial adviser and an underwriter in a public offering of securities.
Sustainability-Related Token Offerings
In addition to complying with the general requirements for token offerings, sustainability-related token offerings must comply with the following measures:
- Issuer disclosure: The issuer must disclose certain sustainability information, both before and after the offering, according to standards comparable to those of nationally or internationally recognized green, social, and sustainable bonds (GSSBs) and sustainability-linked bonds (SLBs)—such as the principles of the International Capital Market Association. This includes arranging for a qualified external independent reviewer to certify or provide an opinion on the sustainability of the project.
- Disclosure on the ICO portal: The ICO portal must enter into an agreement with the issuer that obliges the issuer to disclose the information prescribed by the SEC to investors through the ICO portal's platform, and to continue to disclose such information throughout the duration of the project.
Fee exemption
From June 1, 2024, until May 31, 2028, issuers of sustainability-related tokens are exempt from paying the application fee, the fee for filing the sales offering statement, and the fee for filing the draft prospectus for sustainability-related tokens.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.