Thread: Voting rights to determine foreign firms

Voting rights to determine foreign firms Compliance schedule still under discussion

PHUSADEE ARUNMAS
Voting rights will be used as a key criterion in defining foreign ownership under a planned revision to the 1999 Foreign Business Act. A Commerce Ministry committee chaired by Pramon Sutivong finalised the new definition yesterday. Mr Pramon, who also chairs the Thai Chamber of Commerce, said the revised law would say that companies controlled by foreigners in terms of voting rights would be classified as foreign, even if their direct shareholdings were in a minority.

''The new criteria could affect a number of companies that would now be in violation of the Foreign Business Act,'' he acknowledged.

The Commerce Ministry had previously only used direct shareholdings in assessing compliance with the Foreign Business Act, which limits foreign shareholdings to 49% in a number of key service sectors.

But the ministry's Business Development Department, which oversees corporate registrations, ruled earlier this year that Singapore's Temasek Holdings was allegedly in violation of the Foreign Business Act through the use of nominee structures to hold shares of the telecom giant Shin Corp.

A later investigation of more than a dozen other large companies found widespread use of nominee companies ostensibly owned by a Thai majority, but which were actually controlled by foreign owners.

The foreign business community is watching this case closely, as thousands of foreign joint ventures could be forced to restructure their shareholdings under a new nominee definition.

Mr Pramon said the drafting committee proposed several options to allow companies time to comply with the rule.

One option would be to have companies in breach of the new rule immediately register as foreign companies with the Commerce Ministry. Another proposal would allow foreign companies one or two years to sell down shares to a minority stake before they are considered Thai according to the Foreign Business Act.

''Larger companies might take longer than that, but we will leave this to [Commerce Minister Krirk-krai Jirapaet] to decide,'' Mr Pramon said. The recommendations will be forwarded to Mr Krirk-krai this week.

A third proposal would be to allow foreign companies under the new definition to continue to operate in ''List 3'' sectors, which comprise services such as construction, law and accounting. These companies could continue, but would have to register with the ministry.

Foreign companies would still be banned from ''List 1'' sectors, which involve businesses such as media, rice farming and forestry, as well as ''List 2'' sectors, which involve culture and handicrafts.

Mr Pramon said the committee considered that services such as finance and securities, insurance and tourism would be bound under separate laws.

For the retail sector, the committee agreed that foreign companies operating in Thailand should have explicit permission from the commerce minister and operate under a new retail law. Retailing is now classified under List 3 for operations with capital of less than 100 million baht.

Mr Pramon said companies that violated the law would face penalties up to three years in jail and/or 100,000 baht in fines.

time to get rid of all those farangs

"Cat amongst the pigeons"

"Shit hits the fan"

etc

etc

etc.


Who's going to say "I told you so!" first?