Thailand To Limit Foreign Stake In Firms To 50 Per Cent

[Paul MBMG]

Your also neglecting to look at the fact that Thailand may choose to examine and audit very hard those 10% shareholders.. where did they earn thier assets to put 10% into your company, when did they pay tax on that money, when were the payments made etc etc etc..

As those are not easy questions for many Thais to answer, and as those Thais will be greatly inconvenienced by being under the tax office microscope it will not be as easy to find them, they also may need more payment for such hardships..

All just more obstacles..

There are a great number of other obstacles too to just using Thai individual investors. While the basics of what Johnny outlines is feasible, it looks and sounds like nominees and it's also, in itself, not sufficiently robust. Therefore this is where you need good quality advice to ensure that you stay on the right side of the law and that your structures are more robust that relying on the goodwill, capacity and immortality of 5 Thai individuals. I think that what the proposed revisions do is highlight the need to be extremely careful and considered in all structures now (the need has always been there, but in the past it hasn't always been fully recognised).

[Mid]

perhaps you'd like to explain how you can have more than 50% of the voting rights under the new regs ............

given that they have stated clearly that foreigners will be not entitled to more ,

Dear Mid,

I'm obvioulsy not exlaining myself terribly well - I think that you need to look at the fact that control of a company doesn't neccessarily equate with shareholder voting rights: even within public companies certain individuals are able to wield disproportionate influence - how many shares in GE did Jack Welch own? Within private companies you have the scope, to a very large extent, to decide who can make what decisions on behalf of the company.

There have been in many jurisdictions structures based around 50:50 shareholdings built on the premise that you only need to 'neutralise' one vote from the remaining 50% to guarantee that your 50% is a majority.

fair enough explanation ,

would i invest on that premise

ABSOLUTELY NOT

[LPCustom69]

Basically, we don't need anyone to tell us what to do, we know what to do, we're Thai!

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?

[gharknes]

seems to me that this whole thing has been aimed at thaksin and the reclaimation of funds from shin corp sale and to recover 100% ownership back to thailand

a few hints have been dropped.

[thaigene2]

I too believe it's going to get worse. And whatever the case, the damage has certainly been done. Sorry for you guys with the house in a company name.

So what's next? Are they now going to try to stop us taking our money out of Thailand again? I think it might be time to move as much away as possible - as soon as possible! Wire transfer time!

[simon43]

In this thread there are various postings that suggest other means to structure a company so that the foreigner stll has control of the company.

But surely this is missing the point. Thai law does not allow a foreigner to have overall control of a Thai company. Whether that control is achieved by votintg rights or any other weird and wonderful means is neither here nor there. The law says that foreigners cannot have overall control of a Thai company.

So all this alternative proposals seem - in my opinion - to be just as illegal as the use of nominee Thai shareholders or different voting rights etc.

Or am I missing something here?

Simon

[Mid]

In this thread there are various postings that suggest other means to structure a company so that the foreigner stll has control of the company.

But surely this is missing the point. Thai law does not allow a foreigner to have overall control of a Thai company. Whether that control is achieved by votintg rights or any other weird and wonderful means is neither here nor there. The law says that foreigners cannot have overall control of a Thai company.

So all this alternative proposals seem - in my opinion - to be just as illegal as the use of nominee Thai shareholders or different voting rights etc.

Or am I missing something here?

Simon

agreed

[johnnyk]

But up to now voting rights with 2 share classes and nominee structures have been perfectly legal. Maybe not in the true spirit of the law but within the letter of the law.

As for Jack Welch at GE, he was a hired hand but through his acumen and nastiness controlled GE and benefitted shareholders so no pompem. Pompems came in companies like Worldcomm and Tyco where Ebbers and Kozlowski held relatively few shares but through favourable structures were able to loot the companies.

As a Canadian, I'm proud to say that former Edmonton, Canada milkman Ebbers holds the world corporate looting record! ;-)

[simon43]

But up to now voting rights with 2 share classes and nominee structures have been perfectly legal.

[\quote]

I don't agree! They certainly have been 100% legal for Thai companies with 100% Thai shareholders, or for Thai companies with Thai/foreign shareholders (where the voting right set-up does not give the foreigner control of the company).

But if these voting rights have given a foreigner control of the company - then (in my opinion), that has always been illegal...

Simon

[Bruce1]

Fancy legal footwork won't change the fact that you will not be able to have more than 50% of the company, however they choose to define that.

Why would you put your money under some else's control? Thais wouldn't do it, I'm sure, so why would foreigners?

Its very confusing. Its was said not to affect retail, but Big C and Makro are retail, so what;s going on?

And its all very well to say not many listed companies are affected, but most companies are unlisted, so what about them?

I expect many people will just decide its all too hard and go away. Result will be many thousands of Thais out of work. Very unfortunate.

[Sunbelt Asia]

I for one would really appreciate Sunbelt's take on all of this......you guys know your stuff!

Personally, I would like to know if this means I can still set up my own Limited Company, still become a Director and be in control of my business when I move to LOS?

Any advice would be greatly appreciated from the experts

Depends on a number of factors.

If you are BOI or Amity Treaty Company or an export or even a mfg company, no change. You can have 100% of the shares and voting rights as a foreigner.

In fact, no change, if you have a restaurant or other type of business on list 3. If you are not an Amity treaty company or have a Alien Business License, you still can have 99% of the voting rights even if you have 49% of the shares with preferred shares.

Where the changes are with telecommunications companies, mining companies or with property developer companies. You now can only have 49.999% of the shares and 49.999 % of the voting rights if the company is on the List 1 and List 2.

For most small companies, no change.

www.sunbeltasiagroup.com

[BKK90210]

Seems to me the current govt is moving toward “nationalist regime” policy. I just found this interesting article and would like to share with all.

Read the below article and you will see the parallels /resemblances of us “farangs- today” and the “Chineses – in 1939”, and what might be things to come (strong possibility).

Thailand Phibun and the Nationalist Regime

Source: The Library of Congress Country Studies

The promoters, both civilian and military, had given their political movement a nationalist label, but unanimity among them went no further than acceptance of the official ideology. Although it was essential for the stability of any cabinet that they work together, relations between the civilian and military factions steadily deteriorated as more civil offices went to military personnel. Sensing a tendency toward military rule that he could no longer contain, Phahon retired in December 1938. Phibun took office as prime minister, with his rival, Pridi, as finance minister.

The Phibun regime sold nationalism to the public by using propaganda methods borrowed from authoritarian regimes in Europe, and nationalism was equated with Westernization. To make clear to the world--in Phibun's words--that the country belonged to the Thai, in 1939 the name of the country was officially changed to Muang Thai (Land of the Free), or Thailand. That same year Pridi introduced his "Thailand for the Thai" economic plan, which levied heavy taxes on foreign-owned businesses, the majority of them Chinese, while offering state subsidies to Thai-owned enterprises. The government encouraged the Thai to emulate European fashions, decreeing, for example, that shoes and hats be worn in public. Betel chewing was prohibited, and opium addicts were prosecuted and, if Chinese, deported.

Although nationalism was equated with Westernization, it was not pro-Western, either politically or culturally. Thai Christians, especially those in government service, as well as Muslims, suffered official discrimination. The clear inference of government statements was that only Buddhists could be Thai patriots. At its source Thai nationalism was anti-Chinese in character. Regulations were enacted to check Chinese immigration and to reserve for the Thai numerous occupations that had formerly been held predominantly by Chinese.

Phibun's nationalist regime also revived irredentist claims, stirring up anti-French sentiment and supporting restoration of former Thai territories in Cambodia and Laos. Seeking support against France, Phibun cultivated closer relations with Japan. The Thai nationalists looked to Japan as the model of an Asian country that had used Western methods and technology to achieve rapid modernization. As Thailand confronted the French in Indochina, the Thai looked to Japan as the only Asian country to challenge the European powers successfully. Although the Thai were united in their demand for the return of the lost provinces, Phibun's enthusiasm for the Japanese was markedly greater than that of Pridi, and many old conservatives as well viewed the course of the prime minister's foreign policy with misgivings.

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Hmm....what do you all think?

Are there any connections to us at all?

[konangrit]

Hmm....what do you all think? dry.gif

Are there any connections to us at all?

No.

[bkkmadness]

They certainly have been 100% legal for Thai companies with 100% Thai shareholders, or for Thai companies with Thai/foreign shareholders (where the voting right set-up does not give the foreigner control of the company).

But if these voting rights have given a foreigner control of the company - then (in my opinion), that has always been illegal...

Simon

I disagree and was under the impression that foreigners could always legally hold the voting majority in Thai companies where they are minor shareholders? How else will they control it?

[dogleg]

I for one would really appreciate Sunbelt's take on all of this......you guys know your stuff!

Personally, I would like to know if this means I can still set up my own Limited Company, still become a Director and be in control of my business when I move to LOS?

Any advice would be greatly appreciated from the experts

Depends on a number of factors.

If you are BOI or Amity Treaty Company or an export or even a mfg company, no change. You can have 100% of the shares and voting rights as a foreigner.

In fact, no change, if you have a restaurant or other type of business on list 3. If you are not an Amity treaty company or have a Alien Business License, you still can have 99% of the voting rights even if you have 49% of the shares with preferred shares.

Where the changes are with telecommunications companies, mining companies or with property developer companies. You now can only have 49.999% of the shares and 49.999 % of the voting rights if the company is on the List 1 and List 2.

For most small companies, no change.

www.sunbeltasiagroup.com

No change meaning many were illegal before and remain illegal?

List 1 includes Land Transactions right?

[Mid]

I for one would really appreciate Sunbelt's take on all of this......you guys know your stuff!

Personally, I would like to know if this means I can still set up my own Limited Company, still become a Director and be in control of my business when I move to LOS?

Any advice would be greatly appreciated from the experts

Depends on a number of factors.

If you are BOI or Amity Treaty Company or an export or even a mfg company, no change. You can have 100% of the shares and voting rights as a foreigner.

In fact, no change, if you have a restaurant or other type of business on list 3. If you are not an Amity treaty company or have a Alien Business License, you still can have 99% of the voting rights even if you have 49% of the shares with preferred shares.

Where the changes are with telecommunications companies, mining companies or with property developer companies. You now can only have 49.999% of the shares and 49.999 % of the voting rights if the company is on the List 1 and List 2.

For most small companies, no change.

www.sunbeltasiagroup.com

is this not a direct contradiction of whats been proposed by the ' government ' ??

[simon43]

Bkkmadness, that's my point! My minimal understanding of Thai company law is that (excepting BOI, Amity companies , export, hotel management etc), foreigners are not allowed to have control of the company - by any means!

So in the case of a Thai company set up to 'hold' land, the foreign shareholder is breaking the law if he/she uses ANY corporate means/arrangements that give him/her control of said Thai company.

Simon

[bkkmadness]

What's being proposed by the govt doesn't effect those businesses on list 3, or many if any small businesses really as far as I see it. In the future though who knows, small businesses might start getting new rules as well, it's seems too unstable a country to bother setting a business up in sometimes.

[LivinLOS]

In fact, no change, if you have a restaurant or other type of business on list 3. If you are not an Amity treaty company or have a Alien Business License, you still can have 99% of the voting rights even if you have 49% of the shares with preferred shares.

Without wanting to make others do my research..

Anyone have a link for what companies are clearly in or out of 'list 3' ??

[george]

Some foreign investments to draw back after amendments

BANGKOK: -- Foreign investors are likely to withdraw a certain Thai investments which offer no attractive returns upon the Cabinet approval of amendments to the Foreign Business Act, according to the Federation of Thai Industries.

FTI Chairman Santi Vilassakdanont said the amendments will impact foreign investors, particularly new players, who will need to consider more carefully to see if they will benefit from investments.

He said he believed the foreign investors already implementing investment projects in Thailand will not withdraw their investment.

Those who decided to withdraw the investment might consider investment benefits they receive at present are not attractive. The amount of investment they opt to withdraw would not be significant.

Metha Chanchaemcharas, President of Plus Property Co, said the amendments might affect foreign investment in the property business in the short run.

It might make investors slow their investment in order to consider details of the amendments and see whether it is worth investment and the measure would be adjusted later.

He projected the investors would not withdraw an existing investment amount immediately because they had to wait and see clarity of the amended Act.

Mr.Metha said the investors had not only paid attention to a shareholding portion and managerial power, but also considered economic conditions and investment atmosphere for their decision to invest in Thailand.

He added the investors would need to take time to adjust themselves to the new regulations under the amended Act.

--TNA 2007-01-10

[Jai Dee]

Chart Thai party voices support for resolution to amend Foreign Business Act

Chart Thai Party deputy leader Somsak Prisanananthakul (สมศักดิ์ ปริศนานันทกุล) voiced support for the resolution to amend Foreign Business Act.

Following to the resolution to amend Foreign Business Act, Mr. Somsak said on behalf of Chart Thai Party that the party admires and supports the government, saying that the government has shown that it has followed its words to do for the country under self sufficiency theory.

He believes that the foreign chambers of commerce in Thailand will eventually work their way out and respect the laws in Thailand.

Source: Thai National News Bureau Public Relations Department - 10 January 2007

[BKK90210]

In fact, no change, if you have a restaurant or other type of business on list 3. If you are not an Amity treaty company or have a Alien Business License, you still can have 99% of the voting rights even if you have 49% of the shares with preferred shares.

Without wanting to make others do my research..

Anyone have a link for what companies are clearly in or out of 'list 3' ??

All I can find is this - from today Jan-10 - news from “Thairath News” thai newspaper

“สำหรับกรณีที่เป็นบริษัทไทย แต่คนต่างด้าวให้คนไทยถือหุ้นแทน (นอมินี) จะต้องมาแจ้งภายใน 90 วัน และปฏิบัติให้ถูกต้องตามกฎหมายภายใน 1 ปี

สำหรับธุรกิจค้าปลีก-ค้าส่ง บริการทางบัญชี บริการทางกฎหมาย บริการทางสถาปัตยกรรม-วิศวกรรม เป็นต้น ส่วนใหญ่ต่างด้าวจะถือหุ้นไม่เกิน 49.99% แต่มีสิทธิออกเสียงเกิน เมื่อกฎหมายใหม่มีผลบังคับใช้ ก็จะต้องมาแจ้งภายใน 1 ปี โดยไม่จำเป็นต้องปรับลดสิทธิออกเสียง เว้นแต่ว่า ธุรกิจใดมีนอมินี ก็จะเข้าเงื่อนไขที่จะต้องมาแจ้งภายใน 90 วัน และปรับโครงสร้างให้ถูกต้องภายใน 1 ปี”

Translations....

Retailing-Wholesaling

Accounting service business

Law service business

Architecture service business

Engineering service business

So basically it says….With the above companies, You still can not have shares more than 49.99% , but you can have more than 49.99% of the voting rights. However you still have to report this within 1 yr.

***Except those nominee companies, in which you have only 90 days to report and 1 yr to change the structure to comply with the new regulations***

[dogleg]

Just heard on Channel NewsAsia that Shin Corp has been exempted from all of this!!!

What the F@@@??

[Plus]

Everything started with Shin Corp and Temasek, everybody knows that, BUT they can't apply the law retroactively, so THAT case - SALE of Shin to Kularb Kaew - is exempted. Kularb Kaew still has to change its shareholding structure, but won't be sued for that.

While panic and dire predictions are to be expected, cleaning up the laws and closing loopholes will help Thailand avoid legal mess in the future.

[Dupont]

Chart Thai party voices support for resolution to amend Foreign Business Act

Chart Thai Party deputy leader Somsak Prisanananthakul (สมศักดิ์ ปริศนานันทกุล) voiced support for the resolution to amend Foreign Business Act.

Following to the resolution to amend Foreign Business Act, Mr. Somsak said on behalf of Chart Thai Party that the party admires and supports the government, saying that the government has shown that it has followed its words to do for the country under self sufficiency theory.

He believes that the foreign chambers of commerce in Thailand will eventually work their way out and respect the laws in Thailand.

Source: Thai National News Bureau Public Relations Department - 10 January 2007

Where I come from that means different to what he thinks it means. Hope he washes his tongue thoroughly before he pulls it back into his mouth.

Maybe a Freudien slip?

Edited January 10, 2007 by Dupont

[dogleg]

Everything started with Shin Corp and Temasek, everybody knows that, BUT they can't apply the law retroactively, so THAT case - SALE of Shin to Kularb Kaew - is exempted. Kularb Kaew still has to change its shareholding structure, but won't be sued for that.

While panic and dire predictions are to be expected, cleaning up the laws and closing loopholes will help Thailand avoid legal mess in the future.

"BUT they can't apply the law retroactively,.." Says who? I thought that was the whole point of this anyway..

I understood the same minister just specifically said existing telecoms companies will not have to comply.

[Sunbelt Asia]

I for one would really appreciate Sunbelt's take on all of this......you guys know your stuff!

Personally, I would like to know if this means I can still set up my own Limited Company, still become a Director and be in control of my business when I move to LOS?

Any advice would be greatly appreciated from the experts

Depends on a number of factors.

If you are BOI or Amity Treaty Company or an export or even a mfg company, no change. You can have 100% of the shares and voting rights as a foreigner.

In fact, no change, if you have a restaurant or other type of business on list 3. If you are not an Amity treaty company or have a Alien Business License, you still can have 99% of the voting rights even if you have 49% of the shares with preferred shares.

Where the changes are with telecommunications companies, mining companies or with property developer companies. You now can only have 49.999% of the shares and 49.999 % of the voting rights if the company is on the List 1 and List 2.

For most small companies, no change.

www.sunbeltasiagroup.com

No change meaning many were illegal before and remain illegal?

List 1 includes Land Transactions right?

Why do you say it was illegal? If it was, then they would have no reason to change the law now for list one or list two. List three they are saying is exempt and is legal for the foreigner to have more voting rights.

List one is trading land.

is this not a direct contradiction of whats been proposed by the ' government ' ??

No

Go back and look at the proposed laws. They state that list three is exempt from the foreigners having more voting rights.

Companies operating in industries listed in Annex 3 of the law will be exempt from the rule. Annex 3 includes rice milling, fisheries, forestry, accountancy services, the service business, legal service business, agriculture, engineering, and retail.

According to the draft amendments, companies, which operate under Annex 1 and 2 and which violate the foreign business law, will be required to revise their shareholding structure and voting rights below 50 per cent within a maximum of two years.

www.sunbeltasiagroup.com

[Mid]

Just heard on Channel NewsAsia that Shin Corp has been exempted from all of this!!!

What the F@@@??

now we've gone from the sublime to the ridiculous .............................

[Mid]

www.sunbeltasiagroup.com

many thanxs for the correction ,

so

who was this aimed at ??????????????

[slimdog]

To anyone who is confused about the new rules, this may add to the confusion:

Telecom firms won't face new rule

Deputy prime minister and finance minister Pridiyathorn Devakula said on Wednesday that many business sectors including telecommunications would be exempt from the new regulations limiting foreign ownership of Thai companies.

M.R. Pridiyathorn made a stunning U-turn from comments he made on Tuesday, telling representatives from Joint Foreign Chambers of Commerce that telecommunications companies were under a category facing the proposed restrictions.

M.R. Pridiyathorn said he had misspoken by including the telecommunications business into the categories to be affected by the law amendments.

M.R. Pridiyathorn also said that application of the planned law to limit foreigners' shareholding and voting rights in sectors deemed vital to national security to less than 50 percent would be flexible.

Full story: http://www.bangkokpost.net/breaking_news/b...s.php?id=115914