INVESTMENT FOREIGN BUSINESS ACT
Rival versions of law being studied for possible compromise
PHUSADEE ARUNMAS
The Commerce Ministry hopes to reach a compromise with the National Legislative Assembly (NLA) this week on the issue of voting rights in the draft Foreign Business Act (FBA). ''We are proposing some changes in the draft FBA prepared by a group of NLA members,'' said Skol Harnsuthivarin, the secretary to Commerce Minister Krirk-krai Jirapaet.
He said the focus would be on the NLA's proposal that would allow a foreign entity holding less than 50% of a company's shares to carry on business even though its voting rights are more than 50%.
According to Mr Skol, the NLA version would permit such activity if the business operates on a ''good faith'' basis, with proof of sources of funds and qualifications of the investment that benefit the Thai joint venture, and voting practices not on a proxy or nominee basis.
''We see the verification of such issues (as proposed by the NLA) as impractical and the verification process should be removed and decided by the court,'' he said.
The cabinet approved the Commerce Ministry's version of the FBA amendments in January despite stiff opposition from foreign business groups.
The ministry's version would automatically define as foreign any company in which foreign entities hold more than 50% of the shares or control more than 50% of the voting rights.
Rules and penalties for nominee shareholdings would also be strengthened, and companies would be required to register their status and adjust their legal structures within one or two years.
The criticism of the ministry's draft prompted the NLA to propose changes that are potentially more friendly to foreign-owned joint ventures. Business groups have roundly criticised the draft.
The cabinet has has said it would decide by mid-April whether to use the NLA's alternative version or find ways to merge it with the ministry's version.