2 firms face action under foreign ownership act

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FOREIGN ACT
2 firms face action under foreign ownership act
Petchanet Pratruangkrai
The Nation

BANGKOK: -- The Business Development Department has discovered that two companies in Chiang Mai may have breached the Foreign Business Act (FBA) by allegedly having Thais act as nominees so foreigners can hold majority control.

The department uncovered this in an investigation involving 16 companies.

The firms, both in the food and beverage sector, will be further investigated by the Department for Special Investigation (DSI) before facing legal action under the FBA, department head Pongpun Gearaviriyapun said.

She pointed out that of the 16 firms investigated, seven were in the food and beverage sector, eight in tourism and one was involved in spa services.

The eight firms involved in tourism were found to have done business transparently by having foreign shareholders maintain contacts with customers, while Thais dealt with hotels and restaurants.

However, the two companies found breaching the Act were suspected of allowing foreigners hold the majority share and run the entire firm, which is against the FBA.

This year, the department is planning to investigate 198 of the 6,942 registered companies to see if any of them breach the FBA.

As per its schedule, the department will investigate companies in Chon Buri and Phuket during April and May, before moving on to firms in Prachuap Khiri Khan, Krabi and Phang Nga in June and then to Trat in July.

Firms that are under scrutiny are in six industries, namely food and beverage, tourism, property financing, real estate, car rental and spa.

Last year, the department filed a case with the DSI against 14 companies, while 362 firms were sued under the Land Ownership Act.

Thailand does not allow foreigners to hold more than 50 per cent of certain businesses such as telecommunications, rice milling, property development, media and retail and wholesale trading services. However, some foreigners have been using Thai nationals as nominees to operate such prohibited businesses.

-- The Nation 2014-03-17

[chooka]

If the farangs are investing 100% of the money and taking all the financial risks why can't they run the company. Having to take all the risks and handing over the majority of the profits to Thais is simply wrong. Why would you invest and set up a business employing thais when you will never own it.

[jonclark]

Lets hope they come down hard on the Thai Nationals who are 'selling out' their country - Bloody Traitors!!

[NongKhaiKid]

How is this act going to square with membership of the AEC ?

[Seastallion]

Nice headsup for those in Chon Buri and Phuket, and even longer head start to get matters in order for directors in those other places.

[ezzra]

Why pan an article that : a. nothing new about the content b. why state the obvious? c. there will

always be 100 ways to circumvent those silly laws as long at Thailand insist on not allowing

foreigners who have invested 100 % of the capital to own 100% own and control their business....

[tomyummer]

Is the US is the only country allowed to have its citizens open companies in Thailand without Thai shares under a special pact?

With all its resources Thailand should be a power house in the region, but as it stands will continue to lose out if they don't change their ways and catch up with the likes of Singapore.

[focus27]

6,942 registered companies - is that it? fewer than 7,000 companies in the whole country?! lmfao

No wonder the oligarchs keep control.

Still can't believe there are so few but can't find an exact figure. Maybe 7,000 just in Chiang Mai.

I thought of setting up a company when I first moved here... then thought again.

Yes, wait for the AEC to kick in and let's see how Thais are going to stop companies from ASEAN countries operating in Thailand. Then pick the best other ASEAN country and set up a company there.

[stickyrice2000]

Farangs no good. They are well aware of the 51% ownership rule and still take the chance.

[IMA_FARANG]

If the farangs are investing 100% of the money and taking all the financial risks why can't they run the company. Having to take all the risks and handing over the majority of the profits to Thais is simply wrong. Why would you invest and set up a business employing thais when you will never own it.

-----------------------

Like it or not the law is the law.

That's as true in Thailand as it is in the U.K. or the U.S.A.

An honest investor would have known about that long before they put their money into an investment in Thailand.

It would have been a basic part of their investigation into investing any funds into Thailand long before they committed funds into a Thai business investment.

Of course, there are people who are using the nominee system to get around the law in Thailand.

That is true of any country in the world .... but most honest investors do a "due diligence" search before they commit any funds into an investment ..... and they know all the rules and associated risks.

If I had money to invest .... and I don't ...... you can be absolutely sure I would double or triple check everything before I risked one Dollar.

[IMA_FARANG]

Farangs no good. They are well aware of the 51% ownership rule and still take the chance.

-------------------

How do you define "Farang".

One big reason for such laws is that the nominee system has been used illegally by foreigners to illegally purchase land in Thailand.

Often that has been Japanese, Chinese, and other Asian investors.

Are they "Farang" too?

It isn't unusual for such foreigners to use Thai firms as to hide themselves as Thas.

The Thais are also in violation of the law .... if there is money to be made.

[noitom]

The Thais want foreigners out of anything especially 'tourism" and "spa services."

[thesetat2013]

If the farangs are investing 100% of the money and taking all the financial risks why can't they run the company. Having to take all the risks and handing over the majority of the profits to Thais is simply wrong. Why would you invest and set up a business employing thais when you will never own it.

Because thai law states that ni foriegners may hold more than 49% ownership in a business. The only exception is for Americans who are permitted to invest and own 100%.

Sent from my GT-S5310 using Thaivisa Connect Thailand mobile app

[laurentbkk]

some Thai companies bought businesses in my country and got 100% of shares , what the government has to say about that ?....... Should be the same here ....

[tomyummer]

Farangs no good. They are well aware of the 51% ownership rule and still take the chance.

Get a life and grow up.

Thais no good. They prefer to screw each other without thought let alone give a darn about foreigners and still take the chance to act like a civilized country. Edited March 17, 2014 by tomyummer

[chooka]

some Thai companies bought businesses in my country and got 100% of shares , what the government has to say about that ?....... Should be the same here ....

We have Thai friends (husband/wife) who own a Thai restaurant in Melbourne Aust and they own 100% they didn't have to give 51% of their business to an Aussie. The even own the building and the "LAND" it sits on.

Edited March 17, 2014 by chooka

[worgeordie]

As if there were not much more important things to put right and

worry about for Thais,the Farang is the enemy again, I suppose

there will be selected Thai investors waiting in the sidelines to

take over the foreign investors shares at knockdown price,after

they have built the business up.

regards Worgeordie

[whybother]

How is this act going to square with membership of the AEC ?

It shouldn't change it. Thai companies still need to be Thai majority owned, BUT foreign (ASEAN) companies will be able to operate in Thailand (possibly just particular sectors though).

[NongKhaiKid]

How is this act going to square with membership of the AEC ?

It shouldn't change it. Thai companies still need to be Thai majority owned, BUT foreign (ASEAN) companies will be able to operate in Thailand (possibly just particular sectors though).

Thanks for that. I suppose AEC will have a lot of wrinkles to sort out and with the Asian face aspect it might not be too easy.

[FRR]

If the farangs are investing 100% of the money and taking all the financial risks why can't they run the company. Having to take all the risks and handing over the majority of the profits to Thais is simply wrong. Why would you invest and set up a business employing thais when you will never own it.

Because thai law states that ni foriegners may hold more than 49% ownership in a business. The only exception is for Americans who are permitted to invest and own 100%.

Sent from my GT-S5310 using Thaivisa Connect Thailand mobile app

Under the TAFTA free trade agreement Australians are also able to own 100% of companies in non restricted industries.

[kingalfred]

There should be an organisation set up by countries who place restrictions on owning property and business and other controls on Thai nationals outside of their beloved kingdom they chose to leave and have the freedoms elsewhere

Sent from my iPhone using Thaivisa Connect Thailand mobile app

Edited March 17, 2014 by kingalfred

[thesetat2013]

If the farangs are investing 100% of the money and taking all the financial risks why can't they run the company. Having to take all the risks and handing over the majority of the profits to Thais is simply wrong. Why would you invest and set up a business employing thais when you will never own it.

Because thai law states that ni foriegners may hold more than 49% ownership in a business. The only exception is for Americans who are permitted to invest and own 100%.

Sent from my GT-S5310 using Thaivisa Connect Thailand mobile app

Under the TAFTA free trade agreement Australians are also able to own 100% of companies in non restricted industries.

Didnt knowabout the aussies. The restricted businesses are simple. No agriculture or private security. At least this is what the American chamber of commerce has told me here in Bkk

Sent from my GT-S5310 using Thaivisa Connect Thailand mobile app

[MikeENZ]

some Thai companies bought businesses in my country and got 100% of shares , what the government has to say about that ?....... Should be the same here ....

We have Thai friends (husband/wife) who own a Thai restaurant in Melbourne Aust and they own 100% they didn't have to give 51% of their business to an Aussie. The even own the building and the "LAND" it sits on.

The difference is, they'd be considered Aussies, rather than Thais.... because Australia welcomes immigrants (well at least compared to Thailand)

[ukrules]

The next time I form a new company it won't be in Thailand. Not my loss.

[janpharma]

Anybody figured out where Thailand would end up when "farang"-capital flows away?...Disasterous...

[Braddockrd]

Is the US is the only country allowed to have its citizens open companies in Thailand without Thai shares under a special pact?

With all its resources Thailand should be a power house in the region, but as it stands will continue to lose out if they don't change their ways and catch up with the likes of Singapore.

555 by the time Thailand even figures out what to do, SG will have gone 50 more years in the future. Nice dream but Thailand is a dump that will never catch up with any developed country. Nice beaches though....

[chainarong]

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If the farangs are investing 100% of the money and taking all the financial risks why can't they run the company. Having to take all the risks and handing over the majority of the profits to Thais is simply wrong. Why would you invest and set up a business employing thais when you will never own it.

Like owning land, if you can't own it , why do foreigners bother to build or buy is beyond me,

[PatOngo]

Anybody figured out where Thailand would end up when "farang"-capital flows away?...Disasterous...

Who cares? Let them eat (pledged) rice.

[ppmacready]

Anybody figured out where Thailand would end up when "farang"-capital flows away?...Disasterous...

They survived before we came, they would survive if we left.

[NCFC]

Many countries welcome foreign investment, usually actively encouraging it. Not in Thailand, sadly. It would be a massive boost to investment if foreigners could own say up to one rai of land for residential our small business purposes, and own own 100% shares if employing say, a couple of Thais. While Thailand may have a genuine concern about big foreign companies buying up vast tracts of land this doesn't apply to individual or small business owner.