What are NVDR, (F) shares, and (L) shares?

Thailand has a regulatory framework that limits foreign (non-Thai) ownership of listed company shares to a maximum of 49%, except in the banking and finance sector where the limit can be as low as 25%.

Within this framework, the following three types of share are made available to a foreigner trading on the Stock Exchange of Thailand (SET):

  • Local (Ordinary) shares (L)
  • Foreign quota shares (F)
  • Non-voting depository receipts (NVDR)

A foreigner may buy and hold (L) shares, but he or she is not entitled to receive any of the dividends or other rights (including the right to vote) that arise from those securities.

In contrast, a foreigner who buys (F) shares, or has his or her existing holding of (L) shares or NVDR converted to (F) shares, is entitled to receive all of the rights arising from those securities, including the right to vote. The hitch is that buying, or converting to (F) Shares, is a cumbersome process handled by your broker. Delays can arise if the foreign quota for a particular security is already full and the buy order, or application to covert, must be queued.

To stimulate foreign trading activity, the SET addressed the above mentioned problem by creating non-voting depository receipts. A foreigner holding NVDR is entitled to all dividends and other benefits arising from the underlying security, but he or she cannot vote, thereby addressing any regulatory issues regarding foreign control.

NVDR are automatically listed on the main board of the SET and trade at the same price as (L) shares. A foreigner investor can buy NVDR via his or her online trading platform. NVDR stock codes include a (-R) suffix. For example, the NVDR for the underlying company share Jasmine International (JAS) is JAS-R.

As a final point, please note that the underlying security for a NVDR does not always have to be an ordinary share. A NVDR can also be issued for a preference share, transferable subscription right (TSR), or warrant. For example Jasmine International (JAS) issued a call warrant with the stock code JAS-W3. A NVDR version of that warrant, JAS-W3-R is also listed on the SET.