Firms told to check nominees

[William]

Firms told to check nominees

All companies with foreign partners should conduct a "health check" of their shareholder structure to ensure clear and smooth operation after the Foreign Business Act is amended, PricewaterhouseCoopers said yesterday.



"The best way to prevent a problem is to inspect your own structure well in advance," Siripong Supakijjanusorn, partner and head of legal services of the international accounting and consulting firm, told a seminar on the act.

The act will focus on inspecting nominee structures. Foreign-invested companies should review and change their ownership structure in accordance with the act, he said.

Property and services companies should rid their structure of nominees as they are on the list of protected businesses.

A Commerce Ministry committee is revising the draft amendment bill after the National Legislative Assembly proposed its own draft to the ministry and the Council of State made several recommendations. The government has said the amended act should be finalised within its term.

About 60,000 companies registered here have foreign owners. The Business Development Department is starting random inspections of them for any breaches of the act.

Siripong said the government should not change too many details of the law as that would destroy the investment environment of the country. Stringent control of foreign ownership would harm Thailand's competitiveness, while neighbouring countries are offering better regulations to attract foreign investors.

Malaysia and Vietnam recently announced that they would allow 100-per-cent foreign ownership of certain businesses.

He advised the government to make the amended act clearer and provide better conditions to draw and maintain foreign investors.

For instance, the government should free up more businesses listed under Annex III of the act and eliminate clauses on voting rights and management control.

Varavudh Meesaiyati, a legal adviser, said the amended act might place a greater financial burden on companies that have to restructure their shareholding structure.
A shareholder decreasing a stake in a company and making a profit from the sale would be subject to capital gains tax, he said.

Petchanet Pratruangkrai
The Nation

[YellowTrip]

LOL !

What a bowl of rotten cherries

[RDN]

So does this mean all those Thai companies, set up with foreign share holders with house and land bought for the company (and yet occupied by the foreigner) will have to become Thai controlled, i.e. Thai voting rights outnumber the foreigner's?

[William]

^it depends mate. We need to see what they actually pass. At this time though: no, it doesn't mean this as this is an amendement to the FBA, not the Land Code. The definition of "foreinger" in the Land Code remains the same, i.e. shares issued.

Where the concern comes is if the company has, an objetive, something that falls within the FBA. In which case they can easily avoid this by changing their company objectives.

[RDN]

OK, keep us informed. This is clearly of interest to a certain group of foreigners - not me, yet (or ever, maybe) - that are sitting in Thai company owned houses built on Thai company owned land and yet farang "controlled" .