THAILAND: Bangkok to unveil new rules for foreign investment
Law expected to limit foreign investment in response to Shin Corp uproar
South China Morning Post
Tuesday, January 9, 2007
Bangkok --- Thailand's foreign business community waited nervously yesterday as the government prepared to unveil new rules for investing in the kingdom, which could dramatically alter the way companies work there.
The military-installed government is due to consider today a revision to the Foreign Business Act, which is expected to redefine requirements for voting rights and shareholding structures of foreign companies that operate here.
Pramon Suthiwong, chairman of Thailand's Board of Trade business group, said he expected the law to limit foreign ownership in Thai companies to about 50 percent, while redefining voting rights for local subsidiaries.
"We proposed several options to the Commerce Ministry, but basically Thailand will give them a period of one to two years to adjust themselves to comply with the new law," Pramon said.
The changes come with Thailand's stock market still in a slump after the deadly New Year's Eve bombings in Bangkok and new foreign currency requirements that sparked a crash last month.
Under a long-recognized practice in Thailand, thousands of foreign companies with operations there are nominally owned by Thais, but controlled by foreigners.
The practice fell under a harsh spotlight last year when former prime minister Thaksin Shinawatra's family sold telecom giant Shin Corp to a group of investors led by Singapore's state-linked investment firm Temasek Holdings.
Following a mandatory tender offer, the Temasek-led investors ended up with a 96 percent stake in Shin Corp worth some US$3.8 billion.
Public outrage over the deal -- which gave the Singapore firm key stakes in Thailand's biggest mobile operator, a TV station and an airline -- eventually led to the military coup that ousted Thaksin in September.
Amid political pressure after the coup to find wrongdoing in the Shin Corp deal, the Commerce Ministry last year ruled that the takeover violated foreign ownership requirements.
Police have opened an investigation into the ministry's findings, which has cast doubt on the legality of the shareholding structure of thousands of local subsidiaries of foreign companies operating there.
Peter van Haren, chairman of the Joint Foreign Chamber of Commerce in Thailand, said the revised law would only add to the negative business sentiment that reigns in Thailand.
New company ownership rules might affect you
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bozzman101
- Guru
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how do we protect our little companys that we bought
The Nation published something like this too, but it said the new rule only applies to companies that deal with areas considered important to national security, or that have an impact on natural resources or Thai culture
Yet again another announcement that is fuzzled and unclear!
BANGKOK: -- Thai government will limit foreign investors to holding no more than 50 per cent of the shares or the voting rights in companies here under legal changes approved Tuesday, Finance Minister Pridiyathorn Devakula said.
"Foreign investors who altogether hold more than a 50 per cent stake in a company must lower their stake within a year," Pridiyathorn Devakula said after a cabinet meeting.
"Foreign investors who hold more than 50 per cent of voting rights must also reduce their voting rights within two years,"he added.
The 50-per cent cap will only apply to companies that deal with areas considered important to national security, or that have an impact on natural resources or Thai culture, he said.
The cabinet approved the changes to the Foreign Business Act "in principle" on Tuesday.
Surayud said the government's top panel of legal advisers would continue to work on the details of the law to ensure precision and transparency.
"The Council of State is authorized to work on the details to make the law precise and transparent, without any need to be resubmitted for cabinet approval again," he told reporters.
"It will take some time for the law to take effect," he added.
The Cabinet approved Tuesday the foreign business law amended by the Commerce Ministry.
The amended act would include the requirement on the voting rights of the board members and increase the penalty for violators.
Netpreeya Chumchaiyo, deputy government spokesman, said after the Cabinet meeting that the Council of State is assigned to review the draft amendments.
Earlier, Joint Foreign Chambers of Commerce warned that the amendment might affect their decisions to do business decision.
Commerce Ministry and Finance Ministry are scheduled to make seperate press conference at 3pm.
Earlier Finance Minister Pridiyathorn Devakul vowed to press ahead with legal change that could overhaul the way foreign companies do business here despite warnings of potentially disastrous economic fallout.
Pridiyathorn insisted that foreign companies would not be scared off by the final version of the law, which has not yet been released.
Foreign business community in Thailand has urged the government to postpone the changes for at least six months.
"Why should we withdraw it? They have not yet seen the details. If they had seen the details, I am sure that they would be happy," Pridiyathorn said.
"Why should we postpone it when we have worked on it for three months. This is Thailand," he added.
The minister was speaking after attending the cabinet meeting which will consider the changes.
Pridiyathorn said he had consulted some foreign investors about the changes to the Foreign Business Act and more than half of them had found the new rules acceptable.
"I myself will talk with them. I have held talks with many investors but they have not seen all of the details and the commerce minister cannot disclose the bill before the cabinet gives its approval," he said.
"We have a record of welcoming foreign investment. We are not hostile to them. Foreign investors have made Thailand develop and we are certainly still adhering to this policy," he said.
The revised law is expected to redefine shareholder rights and ownership structures for local subsidiaries of international firms.
Companies have traditionally set up their operations in Thailand so that the local subsidiaries are nominally owned by Thais but controlled by foreigners.
-- AFP/The Nation 2007-09-09
Yet again another announcement that is fuzzled and unclear!
BANGKOK: -- Thai government will limit foreign investors to holding no more than 50 per cent of the shares or the voting rights in companies here under legal changes approved Tuesday, Finance Minister Pridiyathorn Devakula said.
"Foreign investors who altogether hold more than a 50 per cent stake in a company must lower their stake within a year," Pridiyathorn Devakula said after a cabinet meeting.
"Foreign investors who hold more than 50 per cent of voting rights must also reduce their voting rights within two years,"he added.
The 50-per cent cap will only apply to companies that deal with areas considered important to national security, or that have an impact on natural resources or Thai culture, he said.
The cabinet approved the changes to the Foreign Business Act "in principle" on Tuesday.
Surayud said the government's top panel of legal advisers would continue to work on the details of the law to ensure precision and transparency.
"The Council of State is authorized to work on the details to make the law precise and transparent, without any need to be resubmitted for cabinet approval again," he told reporters.
"It will take some time for the law to take effect," he added.
The Cabinet approved Tuesday the foreign business law amended by the Commerce Ministry.
The amended act would include the requirement on the voting rights of the board members and increase the penalty for violators.
Netpreeya Chumchaiyo, deputy government spokesman, said after the Cabinet meeting that the Council of State is assigned to review the draft amendments.
Earlier, Joint Foreign Chambers of Commerce warned that the amendment might affect their decisions to do business decision.
Commerce Ministry and Finance Ministry are scheduled to make seperate press conference at 3pm.
Earlier Finance Minister Pridiyathorn Devakul vowed to press ahead with legal change that could overhaul the way foreign companies do business here despite warnings of potentially disastrous economic fallout.
Pridiyathorn insisted that foreign companies would not be scared off by the final version of the law, which has not yet been released.
Foreign business community in Thailand has urged the government to postpone the changes for at least six months.
"Why should we withdraw it? They have not yet seen the details. If they had seen the details, I am sure that they would be happy," Pridiyathorn said.
"Why should we postpone it when we have worked on it for three months. This is Thailand," he added.
The minister was speaking after attending the cabinet meeting which will consider the changes.
Pridiyathorn said he had consulted some foreign investors about the changes to the Foreign Business Act and more than half of them had found the new rules acceptable.
"I myself will talk with them. I have held talks with many investors but they have not seen all of the details and the commerce minister cannot disclose the bill before the cabinet gives its approval," he said.
"We have a record of welcoming foreign investment. We are not hostile to them. Foreign investors have made Thailand develop and we are certainly still adhering to this policy," he said.
The revised law is expected to redefine shareholder rights and ownership structures for local subsidiaries of international firms.
Companies have traditionally set up their operations in Thailand so that the local subsidiaries are nominally owned by Thais but controlled by foreigners.
-- AFP/The Nation 2007-09-09
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JimmyGreaves
- Legend
- Posts: 2913
- Joined: Mon Oct 17, 2005 5:06 am
- Location: HuaEireHin
It's all about the 'Objective' of your business and what List (1, 2 or 3) your business comes under, within the FBA (Foreign Business Act).
List 3 is exempt from these new rules, all of our companies would have been set up as businesses on list 3 (unless your lawyer is a nutcase). The fact that we then buy an 'office' for our business does not make us 'Land Traders' (which is on List 1).
A foreign property developer would be a 'Land Trader' though, so they will come under the new regulation.
Pridiyathorn Devakula, the finance minister and deputy prime minister, said: "Overall, only 1,337 companies are expected to have to restructure, with only 15 being companies listed on the Stock Exchange of Thailand"
Burger
List 3 is exempt from these new rules, all of our companies would have been set up as businesses on list 3 (unless your lawyer is a nutcase). The fact that we then buy an 'office' for our business does not make us 'Land Traders' (which is on List 1).
A foreign property developer would be a 'Land Trader' though, so they will come under the new regulation.
Pridiyathorn Devakula, the finance minister and deputy prime minister, said: "Overall, only 1,337 companies are expected to have to restructure, with only 15 being companies listed on the Stock Exchange of Thailand"
Burger
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JimmyGreaves
- Legend
- Posts: 2913
- Joined: Mon Oct 17, 2005 5:06 am
- Location: HuaEireHin
Burger. On company documents there are a list of objectives: General Objectives + Objectives in respect of provision of services. No mention of Lists 1,2 or 3. Is it just a case of looking at those objectives and ticking them off against the 3 lists to see where your company lies?Burger wrote:It's all about the 'Objective' of your business and what List (1, 2 or 3) your business comes under, within the FBA (Foreign Business Act).
List 3 is exempt from these new rules, all of our companies would have been set up as businesses on list 3 (unless your lawyer is a nutcase). The fact that we then buy an 'office' for our business does not make us 'Land Traders' (which is on List 1).
A foreign property developer would be a 'Land Trader' though, so they will come under the new regulation.
Burger
Jimmy,
On your companies 'Certificate of Registration' document, there is a section which says "The objective of this company is item '24' " (for example).
You then look through the long list of objectives that come with your company papers until you see item 24 which may say 'designing of landscape gardening' or 'exporting furniture' etc.
Therefore the objective of your company, ie: the business you deal in, will/should come under List 3 of the FBA.
Burger
On your companies 'Certificate of Registration' document, there is a section which says "The objective of this company is item '24' " (for example).
You then look through the long list of objectives that come with your company papers until you see item 24 which may say 'designing of landscape gardening' or 'exporting furniture' etc.
Therefore the objective of your company, ie: the business you deal in, will/should come under List 3 of the FBA.
Burger
FBA
List 1
Business that aliens are not permitted to do for special reasons:
(1) Newspaper undertakings and radio and television station undertakings
(2) Lowland farming/upland farming, or horticulture
(3) Raising animals
(4) Forestry and timber conversions from natural forests
(5) Fishing for aquatic animals in Thai waters and Thailand’s exclusive economic zones
(6) Extraction of Thai medical herbs
(7) Trade in and auctioneering of Thai ancient objects or ancient objects of national historical value
8 Making or casting Buddha images and making monk’s bowls
(9) Dealing in land.
List 2
Businesses concerning national security or safety with an adverse effect on art and culture, customs or native manufacture/handicrafts, or with an impact on natural resources and the environment.
Chapter 1: Businesses concerning national security or safety
(1) Production, disposal (sale) and overhaul of:
(a) Fire arms, ammunition gunpowder and explosives
(b) Components of fire arms, gunpowder and explosives
(c) Armaments, and military vessels, aircraft or conveyances
(d) All kinds of war equipment or their components.
(2) Domestic transport by land, water or air inclusive of domestic aviation.
Chapter 2: Businesses with an adverse effect on art and culture, customs or native manufacture/handicrafts
(1) Dealing in antiques or objects of art and works of art, and Thai handicrafts
(2) Production of wood carvings
(3) Raising silkworms, producing Thai silk thread
(4) Production of Thai musical instruments
(5) Production of articles of gold or silver, nielloware, nickel-bronze ware or laqurware
(6) Production of crockery and terra cotta ware that is Thai art or culture.
Chapter 3: Businesses concerning natural resources and the environment.
(1) Production of sugar from sugarcane
(2) Salt farming, inclusive of making salt from salty earth
(3) Making rock salt
(4) Mining, inclusive of stone blasting or crushing
(5) Timber conversions to make furniture and articles of wood.
List 3
Businesses which Thais are not ready to compete in undertakings with aliens
(1) Rice milling and production of flour from rice and farm crops
(2) Fishery, limited to propagation of aquatic animals
(3) Forestry from replanted forests
(4) Production of plywood, wood veneer, chipboard or hardboard
(5) Production of natural lime
(6) Accounting service undertakings
(7) Legal service undertakings
8 Architectural service undertakings
(9) Engineering service undertakings
(14) Retail trade in all kinds of goods where the total minimum capital is 100 million baht or more, or the minimum capital of each store is 20 million baht or more.
(15) Wholesale trade in all kinds of goods with a minimum capital for each store of more than 100 million baht
(16) Advertising undertakings
(17) Hotel undertakings, except for hotel management services
18 Sale of food or beverages
(19) Plant breeding and propagating, or plant improvement undertakings
(20) Doing other service businesses except for service businesses prescribed in ministerial regulations.
List 1
Business that aliens are not permitted to do for special reasons:
(1) Newspaper undertakings and radio and television station undertakings
(2) Lowland farming/upland farming, or horticulture
(3) Raising animals
(4) Forestry and timber conversions from natural forests
(5) Fishing for aquatic animals in Thai waters and Thailand’s exclusive economic zones
(6) Extraction of Thai medical herbs
(7) Trade in and auctioneering of Thai ancient objects or ancient objects of national historical value
8 Making or casting Buddha images and making monk’s bowls
(9) Dealing in land.
List 2
Businesses concerning national security or safety with an adverse effect on art and culture, customs or native manufacture/handicrafts, or with an impact on natural resources and the environment.
Chapter 1: Businesses concerning national security or safety
(1) Production, disposal (sale) and overhaul of:
(a) Fire arms, ammunition gunpowder and explosives
(b) Components of fire arms, gunpowder and explosives
(c) Armaments, and military vessels, aircraft or conveyances
(d) All kinds of war equipment or their components.
(2) Domestic transport by land, water or air inclusive of domestic aviation.
Chapter 2: Businesses with an adverse effect on art and culture, customs or native manufacture/handicrafts
(1) Dealing in antiques or objects of art and works of art, and Thai handicrafts
(2) Production of wood carvings
(3) Raising silkworms, producing Thai silk thread
(4) Production of Thai musical instruments
(5) Production of articles of gold or silver, nielloware, nickel-bronze ware or laqurware
(6) Production of crockery and terra cotta ware that is Thai art or culture.
Chapter 3: Businesses concerning natural resources and the environment.
(1) Production of sugar from sugarcane
(2) Salt farming, inclusive of making salt from salty earth
(3) Making rock salt
(4) Mining, inclusive of stone blasting or crushing
(5) Timber conversions to make furniture and articles of wood.
List 3
Businesses which Thais are not ready to compete in undertakings with aliens
(1) Rice milling and production of flour from rice and farm crops
(2) Fishery, limited to propagation of aquatic animals
(3) Forestry from replanted forests
(4) Production of plywood, wood veneer, chipboard or hardboard
(5) Production of natural lime
(6) Accounting service undertakings
(7) Legal service undertakings
8 Architectural service undertakings
(9) Engineering service undertakings
(14) Retail trade in all kinds of goods where the total minimum capital is 100 million baht or more, or the minimum capital of each store is 20 million baht or more.
(15) Wholesale trade in all kinds of goods with a minimum capital for each store of more than 100 million baht
(16) Advertising undertakings
(17) Hotel undertakings, except for hotel management services
18 Sale of food or beverages
(19) Plant breeding and propagating, or plant improvement undertakings
(20) Doing other service businesses except for service businesses prescribed in ministerial regulations.
Its the voting rights which will effect falangs i wouldnt leave thai partners with 51% voting rights over my 49%
Signing their voting rights over to a falang just aint gonna fly anymore as i see it i may be wrong but i doubt it
Its happened before when the thai partners have got together and voted to sell the property and the falang (who payed 100%) walked away with 49%
Now its a question of how they will enforce how hard how far ????
Signing their voting rights over to a falang just aint gonna fly anymore as i see it i may be wrong but i doubt it
Its happened before when the thai partners have got together and voted to sell the property and the falang (who payed 100%) walked away with 49%
Now its a question of how they will enforce how hard how far ????
A Greatfull Guest of Thailand
Sargeant,
List 3 of the FBA is exempt from this new regulation.
I would hazard a guess that 99.9999999999999999999% of the 'farang' companies set up to buy our 'office' are on List 3 of the FBA.
Unless someone put down their business as 'The production of armament and military vessels' or 'Mining inclusive of stone blasting', which are both on List 2
Burger
List 3 of the FBA is exempt from this new regulation.
I would hazard a guess that 99.9999999999999999999% of the 'farang' companies set up to buy our 'office' are on List 3 of the FBA.
Unless someone put down their business as 'The production of armament and military vessels' or 'Mining inclusive of stone blasting', which are both on List 2
Burger
The noose is tightening. It started with enforcement of visa rules. Next enforcement of company rules and a few new laws as well pertaining to development companies and large corporations. Then, a 30% holdback on money transferred in for investment. Now, the nominees in a government guess of 14,000 companies might be suspect. Retroactive. If you feel it might concern your company, better get some sound legal advice as there is a one or two year window in which to get yourself in proper shape.
What's next?? We have already been through chicken flu, SARS, tsunami, earthquake,Thaksinomics, coup, unusual stormy cold rainy weather and bombs.
Are we waiting the return of General Chavalit, the prime minister in 1997?
What's next?? We have already been through chicken flu, SARS, tsunami, earthquake,Thaksinomics, coup, unusual stormy cold rainy weather and bombs.
Are we waiting the return of General Chavalit, the prime minister in 1997?
Good observations ... anyone see shades of Burma happening here? God knows what it'll be like five years down the road, fasten your seat belts we're in for a bumpy ride.Nomad wrote:What's next?? We have already been through chicken flu, SARS, tsunami, earthquake,Thaksinomics, coup, unusual stormy cold rainy weather and bombs.
Who is the happier man, he who has braved the storm of life and lived or he who has stayed securely on shore and merely existed? - Hunter S Thompson
