A convertible debenture (CD) is a security which can be exchanged or converted into common stock under stipulated terms and conditions. It has the following advantages: The dilution effect from using CD will be gradual, compared to when funds were raised by using ordinary shares of PO or PP types. The debt-to-equity ratio (D/E) will improve in the long term when bondholders exercise their rights to convert bonds into ordinary shares.

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According to the Law the issuance of convertible debentures needs to be reported to the Securities and Exchange Commission of Thailand (“Thai SEC”) in accordance with the Notification of the Capital Market Supervisory Board No. Tor.Jor. 17/2563 re: Private Placement Offering of Newly Issued Shares of Small and Medium-Sized Enterprise dated 12 March 2020 and the Notification of the Securities and Exchange Commission No. Gor.Jor. 3/2563 re: the Exemption from Filing of the Registration Statement for the Offering for Sale of the Convertible Debentures issued by Small and Medium Enterprises which are Limited Companies dated 11 March 2020, as amended.

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Besides, an issuing company must be categorized as either a small or medium-sized enterprise under the Social Enterprise Promotion Act B.E. 2562 (2019) and needs to be registered with the Office of SMEs Promotion prior to proceed with the Thai SEC. Upon closing of the offering, the Issuer is required to file a report (SME PP-issuer Report) to the Thai SEC within 15 days. All supporting documents and conditions attached to the convertible debentures need to be translated into Thai language.

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Please further noted that according to the Notification of the Capital Market Supervisory Board No. Tor.Jor. 17/2563 re: Private Placement Offering of Newly Issued Shares of Small and Medium-Sized Enterprise dated 12 March 2020, size of the company (yearly revenue and number of employee) does matter to the limitation of category of investor, number of investor as well as funding amount.

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For further information please contact us at contact@w-lawthai.com, Line ID: @wlaw, Tel. 02 624 0555

W Law International (Thailand)

999 5th Floor Gaysorn Village, Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 THAILAND

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