Thailand To Limit Foreign Stake In Firms To 50 Per Cent

[george]

Thailand to limit foreign stake in firms to 50 per cent

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

[tuky]

"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.

That is an interesting statement.

Cabinet: Ok we will pass the law now but you must promise to cc us when you work out what it is.

[Mid]

"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.

SET is bleeding as we talk ....................

hallo anybody home ??

[george]

Thai stocks tumble on approval of new business rules

BANGKOK: -- Thai share prices were down 2.03 percent in Tuesday afternoon trade following the announcement that the Cabinet had approved new regulations on foreign businesses here, dealers said.

Under rules approved "in principle" by the cabinet, foreign investors will be limited to holding no more than 50 percent of the shares or the voting rights in companies, although the law will not take effect immediately.

Analysts fear the revised law could force foreign companies to sell off huge amounts of stock to Thai investors who might not be able to absorb a large number of shares over a short period.

The Stock Exchange of Thailand (SET) was down 12.84 points to 620.98 while the blue chip SET 50 index fell 9.28 points to 431.89.

--AFP 2007-01-09

[george]

Business law passes, market drops

BANGKOK: -- The Cabinet on Tuesday approved in principle changes to regulations on foreign businesses, setting off immediate reaction even though the law still must go before a panel of legal experts for revisions.

"They approved in principle the Foreign Business Act but the Council of State will study the legal details for proper implementation,'' said Netrpreeya Chumchaiyo, deputy government spokeswoman said.

The amended law will, from now, go to the Council of State which will fine-tune it before it is submitted to the National Legislative Assembly for debate.

The amended law imposes new restrictions on foreign ownership in the country. Investors were rattled at the new regulations, which come two weeks after a bungled attempt to impose capital controls.

A maximum of 15 Thai-listed companies will be affected by the tighter foreign business ownership rules, Stock Exchange of Thailand President Patareeya Benjapolchai said.

Singapore state-owned investment company Temasek Holdings Pte will be among those affected by the changes, Finance Minister Pridiyathorn Devakula said. Loopholes under which foreigners invest through nominees will be tightened, he said.

The law redefines "alien" to mean "foreigners and their Thai nominees," who must reduce combined ownership to less than 50 per cent, M.R. Pridiyathorn said.

The benchmark SET Index slumped another 2.4 per cent. Yields on 10-year notes fell to the lowest in three weeks after the Cabinet approved revisions to foreign investment laws.

The new rules are generally seen as another blow to investor confidence in Thailand, already dented by a September coup and last month's decision to impose capital controls.

"Companies that already invest and use the nominee structure will have to liquidate or find a partner within one year," said Ekachai Chongvisal, who helps oversee the equivalent of $2 billion at Tisco Asset Management Co in Bangkok.

"Given the strict timeframe of 12 months I doubt many Thai investors will be able to absorb all this liquidation."

Prime Minister Surayud Chulanont's cabinet met for nearly five hours Tuesday to consider the changes, which could redefine shareholder rights and ownership structures for local subsidiaries of international firms.

The foreign business community has warned of potentially severe economic fallout from the mooted changes and urged the government to delay the new measures by six months.

Companies have traditionally set up their operations in Thailand so that the local subsidiaries are nominally owned by Thais but controlled by foreigners.

Immediately after the Cabinet's decision was announced, the stock market reacted by falling 10.6 points or 1.64 percent. The index plunged further by 14.45 points to 617.43 points before it rebounded to 620 points.

Analysts fear the revised law could force foreign companies to sell off huge amounts of stock to Thai investors, who might not be able to absorb a large number of shares over a short period.

-- Bangkok Post 2007-01-09

[Mid]

A maximum of 15 Thai-listed companies will be affected by the tighter foreign business ownership rules, Stock Exchange of Thailand President Patareeya Benjapolchai said.

and to hel_l with the unlisted ones...................??

[SeanBangkok]

what were the previous laws?

[Mai Krap]

We have made a new law which may or may not effect you or you business. It may or may not become effective and it may or may not be written more strongly or more weekly depending on this trial balloon which may or may not hold air and may or may not be released. Please continue to carry on business as usual while we may or may not decide to activate or deactivate this new legislation, believe me when you actualy see the way its written you fill very confident about, till that time which may or may not ever happen please hold your breath and try to relax, There may or may not be more information soon or you may or may not ever hear about this again after this pre trial balloon possible release public notice of the possibility of action or inaction concerning every person who may or may not have money.

I am happy to announce that internet gaming will not be effected by current legislation so those who are wasting their lives by burning out their brains playing anime golf and ragnarook can continue to live in a fantasy world where all stories end well.

[Mid]

We have made a new law which may or may not effect you or you business. It may or may not become effective and it may or may not be written more strongly or more weekly depending on this trial balloon which may or may not hold air and may or may not be released. Please continue to carry on business as usual while we may or may not decide to activate or deactivate this new legislation, believe me when you actualy see the way its written you fill very confident about, till that time which may or may not ever happen please hold your breath and try to relax, There may or may not be more information soon or you may or may not ever hear about this again after this pre trial balloon possible release public notice of the possibility of action or inaction concerning every person who may or may not have money.

many thanxs for the sorely need laugh

cheers

mid

[PeaceBlondie]

The Minister of Finance was quoted, "Why should we postpone it when we have worked on it for three months. This is Thailand," he added.

[robint]

50:50 control?????????????

As a retired moderately succesful sole trader businessman I air my humble opinions as follows.

a) No one can possible understand how it is to run a business untill he has actually owned and run a business personally.

Any ###### fool can gamble and pontificate on someone else's money

c) Any ###### fool can run a monopolistic business successfully

If you are a proposing to go into business as an equal partnership with joint several liability, and you go along a bank and ask for an unsecured loan, the manager will likely throw you out of his office, but more kindly he might explain that a 50:50 business relationship funadamently cannot work and the statistically probability of failure within a year is greater than 90%.

Of course if one partner has significantly more realisable firepower than the other, then who needs balance sheets. I could set up a mutlibillion enterprise with my housemaid (do I need to elaborate?)

So watch this space for investor confidence. BTW SET down -9% since new year

Such naivety is astounding

Edited January 9, 2007 by robint

[astral]

Watch the baht in the coming days and months............

[tuky]

What are the possible benefits for Thailand?

[SeanBangkok]

how many bowls of sum tum did they go through in those five hours?

[SeanBangkok]

The Minister of Finance was quoted, "Why should we postpone it when we have worked on it for three months. This is Thailand," he added.

Can someone expound on what he means when he says that?

[yeti]

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.

That's the important part, no?

[Mid]

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.

That's the important part, no?

Thai culture could be very broadly interpreted , and for that matter so could national security .......................

[puipuitom]

The Minister of Finance was quoted, "Why should we postpone it when we have worked on it for three months. This is Thailand," he added.

My reply: and I CAN LEAVE this country, takeing with me: my money and my business.

Go to Vietnam, China, or ... Mezo America for my tropical foods. Company has already a second site: xxxxxxx Fill it in with ... coocnut milk from Sri Lanka, Vietnam, Sumatra (In), rice from Vietnam, instant noodles + canned fruits like pineapple/lychee/mango, sweet chili sauce, soya sauce etc from China, canned fruits + vegetables from Costa Rica, Guatemala, Nicaragua, and la gong, popgan chat na , Muang Thai

[Cyberstar]

Thailand to limit foreign stake in firms to 50 per cent

...

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

My company isn't a subsidiary of any international firm ... so should I worry?

[ray23]

This is Thailand, could mean if you don't like it take a hike, but be sure and leave yuor money before you go. But , worse yet some will

[Jaonghais]

Thailand to limit foreign stake in firms to 50 per cent

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 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

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.

Doesn't this mean everything!

[puipuitom]

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.

That's the important part, no?

Thai culture could be very broadly interpreted , and for that matter so could national security .......................

It just opens a way to receive an all-paid, incl pocket money ... study tour to....Paris / Amsterdam / London .. or Miami / Boston .... together with a lady being NOT his wife

[King Dong]

Watch the baht in the coming days and months............

[bkkmadness]

The Minister of Finance was quoted, "Why should we postpone it when we have worked on it for three months. This is Thailand," he added.

Can someone expound on what he means when he says that?

Well it translates as 'So <deleted> you'.

[Gongchime]

That's O.K. Let them do whatever they want. When the entire economy collapses, then even someone with only moderate means will be able to buy the whole country for pennies on the dollar. Just biding my time...

[Arkady]

We have made a new law which may or may not effect you or you business. It may or may not become effective and it may or may not be written more strongly or more weekly depending on this trial balloon which may or may not hold air and may or may not be released. Please continue to carry on business as usual while we may or may not decide to activate or deactivate this new legislation, believe me when you actualy see the way its written you fill very confident about, till that time which may or may not ever happen please hold your breath and try to relax, There may or may not be more information soon or you may or may not ever hear about this again after this pre trial balloon possible release public notice of the possibility of action or inaction concerning every person who may or may not have money.

Yes, what they announced is still very vague and subject to be changed by the Council of State and the NLA. The latter has some loonies and farang haters like Chamlong and Purachai in it, so anything might happen. What a pathetic way to handle and crucial piece of legislation. I see the zinc mining company Padaeng crashed 12% today on the SET. This is owned and controlled by a Belgian mining company who have done a lot to develop the business. I believe the Ministry of Finance is also a shareholder must have given its blessing to the structure. The Belgians must be furious. All this because of the greed and stupidity of Thaksin and Temasek.

What is clearly missing is any comment of what are the benefits to the Thai economy and the majority of Thai people of restricting foreign ownership.

[pipchatel]

Hi Guys. All very interesting. I have been holding back moving a large amount of cash from the U K. Watching:

Bad polotics, Bombs, Army take overs, bad stock market management by the Gov, The south going up in smoke.

But no! still the baht strong. Any thoughts on this latest crap, will it weaken the baht and let me move my cash!

Happy new year from France

pip

[dabiff]

As farangs are forced to sell large amts of stock at ever lower prices and taking losses, rich Thais will be grabbing up the bargins. Yup, it translates "bend over and touch your toes, I'll show you where the wild goose goes!

[rexall]

Tue 09 Jan 07, 7:01 p.m.

I though the current laws only allowed 49% foreign ownership of Thai corporations. How did I get that wrong? What am I missing?

[LivinLOS]

Your missing the fact that 49% share owners could hold the majority of voting shares.. That way they could still control and manage thier investment safely.