Foreign Business Act: Seven firms suspected of using local nominees

[webfact]

FOREIGN BUSINESS ACT
Seven firms suspected of using local nominees
Petchanet Pratruangkrai

BANGKOK: -- Seven companies in Pattaya are suspected of breaching the Foreign Business Act (FBA) by having Thai nominees hold majority stakes, the Commerce Ministry's Business Development Department claims.

Those firms will soon face an in-depth probe by the Department of Special Investigation (DSI).

Pongpun Gearaviriyapun, director-general of the department, said two of the seven companies were in tourism-related businesses.

She said that in cooperation with the DSI and Tourism and Sports Ministry, her agency investigated 43 suspect firms in Chon Buri province, and the probe determined that seven in Pattaya were highly likely to have breached the FBA.

As part of the investigation, the Business Development Department has asked the suspect companies' shareholders to speak to the agency's legal officers. The department will also question the companies' directors and examine their documentation. If any have committed offences, their cases will be forwarded for prosecution.

If found to be breaching the FBA, foreigners and Thai nominees can be subject to fines of Bt100,000 to Bt1 million and/or three years in prison.

In cooperation with the Tourism Department and the DSI, the Business Development Department this year is closely scrutinising the travel industry, and other businesses listed in Annex III of the FBA. That annex protects certain businesses in which Thais are deemed not ready to compete directly with foreigners.

The investigation has already found one travel agency in Bangkok in likely breach of the FBA. The probe is also targeting Samui, Hua Hin, Phuket and Chiang Mai.

Pongpun said that although it is stringently examining companies' share structures, the department would relax some regulations, unlocking some businesses such as banking and insurance from Annex III.

She said most firms conducted their business in accordance with the law. To create better understanding about the FBA, the department has sent legal teams to educate enterprises on how to do business transparently.

Under the Foreign Business Act of 1999, Thailand does not allow foreign interests to hold more than 50 per cent of some types of businesses, such as telecommunications, rice milling, property development, media and tourism services. However, some foreigners have retained de facto control of such businesses by using Thai nationals as nominees.

Source: http://www.nationmultimedia.com/business/Seven-firms-suspected-of-using-local-nominees-30256675.html

-- The Nation 2015-03-25

[ColdSingha]

foreign owned property development companies.. a foreigner would never do that

LOL

[jaidam]

The use of nominees in Thailand gained popularity a decade ago when the sitting PM normalized them as his way of skirting dastardly legal rules. To clarify rules concerning the use of nominees, judging by this article, if you are a small player, you are in deep trouble. If you are a billionaire - carry on as usual.

[NongKhaiKid]

Months back Thai investors were advised the time was right for them to get into European companies that needed money urgently.

Days ago the PM told Thai companies to start selling overseas by reducing prices and undercut local firms.

Thai business practice, " we will do what we like wherever but foreigners here will be strictly controlled. "

Hypocrisy or Thainess.? Same, same.

[BSJ]

I guess their not seeing the big picture. Zenophobia must cause blindness to reason as well as fear of foreigners.

[ezzra]

If the investigators will put for a minute, their bawl of noodle soup aside, and really look

deeper they will find 7,000 such companies and not 7,

however in must be said that the Thai government doesn't make it any easy for forefingers

to work here and earn an honest living without the needs to circumvent the silly FBA....

[Soutpeel]

I am shocked at this news...only 7 companies...

[pinkpanther99]

I wonder if these seven companies are isolated cases or herald the start of the large scale crackdown which has been promised by various govts for years?

There must be thousands of these 'companies' operating all over Thailand. Has their day finally come?

[Squeegee]

Let them chase off more foreigners every which way they can, and the last foreigner who hasn't already gone to Vietnam or Cambodia, please turn off the lights.

[tio boomsinger]

scrutiny of tesco lotus share holding wouldnt be done in the light of day.

[SABloke]

I've never understood the issue with nominees: So some Thai person owns a majority stake in a company, but has no say in how the company's run. The company is stilll legally Thai owned though isn't it? It's like when childten inherit their parents' companies. Yes, they own the company, but 9/10 times they have very little to do with running the company. If I'm missing something regarding what a nominee is, please feel free to enlighten me.

[bangkoklawyer24]

Just a re-publishing from http://www.nationmultimedia.com/business/Travel-agency-suspected-of-breaching-FBA-with-nomi-30254223.html? Same article, same author, same wording. Different day.

Edited March 25, 2015 by bangkoklawyer24

[BudRight]

I'm only surprised by the lack of amazement among Thais that they can own their own companies and land in Western countries.

[konying]

What a better way to eliminate competition in tough times ?

May be government should concentrate on all the thousands of thai owned business that do not pay any taxes , do not have any permits or licences , do not honour any warranties , do not pay social or even a minimum wage.

[jpeg]

Just a re-publishing from http://www.nationmultimedia.com/business/Travel-agency-suspected-of-breaching-FBA-with-nomi-30254223.html? Same article, same author, same wording. Different day.

Great click bait though

[craigt3365]

The use of nominees in Thailand gained popularity a decade ago when the sitting PM normalized them as his way of skirting dastardly legal rules. To clarify rules concerning the use of nominees, judging by this article, if you are a small player, you are in deep trouble. If you are a billionaire - carry on as usual.

I'll try to find the article, but some time back the current government stated they were going after these nominee companies because Thais were using them for "dastardly" reasons, as you stated. So it's not just foreigners who are doing this. I'm sure plenty of locals use this structure to hide illegally gotten gains?????

[trogers]

The use of nominees in Thailand gained popularity a decade ago when the sitting PM normalized them as his way of skirting dastardly legal rules. To clarify rules concerning the use of nominees, judging by this article, if you are a small player, you are in deep trouble. If you are a billionaire - carry on as usual.

I'll try to find the article, but some time back the current government stated they were going after these nominee companies because Thais were using them for "dastardly" reasons, as you stated. So it's not just foreigners who are doing this. I'm sure plenty of locals use this structure to hide illegally gotten gains?????

What article is needed? Have the world forgotten about those super rich drivers, maids and gardeners? Nor the phrase - It is just an honest mistake? Edited March 25, 2015 by trogers

[madmitch]

I've never understood the issue with nominees: So some Thai person owns a majority stake in a company, but has no say in how the company's run. The company is stilll legally Thai owned though isn't it? It's like when childten inherit their parents' companies. Yes, they own the company, but 9/10 times they have very little to do with running the company. If I'm missing something regarding what a nominee is, please feel free to enlighten me.

The issue is they don't invest any money.

I set up a company 10 years ago using the nominee system. It was done through a prominent legal company in Bangkok and a major sponsor of this website. I had no idea it was wrong at the time. I never met the nominees; they literally are just names.

I closed the company some time ago but had I run into trouble with the authorities over this I would have seriously considered a lawsuit against the firm that set up the illegal company.

[Suffinator]

The use of Thai nominees can be found in both business and property ownership ... how many developers, lawyers and accountants are responsible for fraud? After all they knew what they were doing was illegal.

During my years in the cesspit of Asia I was asked numerous times to buy property or go into business, my questions were always the same ... why would any sane individual engage in an illegal activity in a country where its authorities are nationalistic and protectionists? Why would any rational person hand over 51% of their assets to people known to be corrupt and dishonest? Why would any person with half a brain engage in any activity where the laws are set up to effectively fleece the foreigner?

So is this the start of the national witch-hunt for foreigners who were stupid enough to go into business or buy property using a Thai nominee? If so then bring on the parade for I have no sympathy for the stupid but what amazes me is that these idiots think the Thais are dumb ... go figure because I doubt you'll see a Thai hand over 51% of their assets to a complete stranger and knowingly break the law at the same time.

A fool and his money is soon parted.

This move is almost certain to do more damage to foreign investment but the Thais know all to well there are a lot of very stupid foreigners getting off the plane who are ripe for the taking.

[Strangebrew]

So this has do with Thai 's not being able to compete with others who go by the rules and regulations pay fair wages and benefits use the correct standards and practices as all others?

[jcisco]

I think the real issue here is that Nominee holdings are entirely in the shadows due to their illegality. Other environments expect nominees to be listed as such and the identity of the shareholder to be filed or on file. I don't wanna get started, this topic erks me.

[mike324]

Wasn't Telecommunication allowed back in the early 2000s, hence that is why Thaksin was able to sell his shares legally. Companies like DTAC already had more than 50% foreign ownership even before Thaksin sold his shares that caused an uproar.

[catweazle]

Thais who want to perform business in any other country than Thailand should be treated equally, not being allowed to own and have full control over their investments. This might teach them something... Thais only take, never give - this has to end and it will eventually as soon as ASEAN starts.

There will be no foreign investors left willing to put money in a black hole they have no control over while Thailand will be flooded with better educated staff who actually have full control over written and spoken English and are willing to work harder for less than the Thais. It will be total mayhem and the Thais will not realize what came over them until they all are out of jobs and out of money. What goes around comes around and Thailand deserves a kick in the butt and a reality check badly.

Reg. the nominees, the Thais know that only by turning a blind eye on the nominee thing they are able to "lure" (a word that is so hot right now in Thailand) more and more foreign investors into Thailand. This also is the reason why they only talk about 7 instead of 7.000 firms... Thailand - hub of BS

[ronaldo0]

Sounds like a great way to steal successful businesses back from farangs who have pumped loads of money into places !!!

[Srikcir]

"the Foreign Business Act of 1999"

A barrier to normal business relations in a global free enterprise environment. Let's see if the other ASEAN countries will adopt Thailand's xenophobia or retaliate by blocking Thai ownership of businesses in their countries. The FBA needs serious reform if Thailand is going to host any global businesses.

[Sviss Geez]

Months back Thai investors were advised the time was right for them to get into European companies that needed money urgently.

Days ago the PM told Thai companies to start selling overseas by reducing prices and undercut local firms.

Thai business practice, " we will do what we like wherever but foreigners here will be strictly controlled. "

Hypocrisy or Thainess.? Same, same.

As usual you (deliberately) fail to understand what is happening.

Thailand has it's business laws as do European countries have theirs. Thailand is complying with those countrys' laws so it is only reasonable that foreign investors obey Thailand's business laws. Thai companies are not forced to do business in Europe, neither are foreign companies forced to trade here, it's a free choice. There is no hypocrisy, nor that ridiculous Thaivisa term, "Thainess"

[JoeLing]

Thais who want to perform business in any other country than Thailand should be treated equally, not being allowed to own and have full control over their investments. This might teach them something... Thais only take, never give - this has to end and it will eventually as soon as ASEAN starts.

There will be no foreign investors left willing to put money in a black hole they have no control over while Thailand will be flooded with better educated staff who actually have full control over written and spoken English and are willing to work harder for less than the Thais. It will be total mayhem and the Thais will not realize what came over them until they all are out of jobs and out of money. What goes around comes around and Thailand deserves a kick in the butt and a reality check badly.

Reg. the nominees, the Thais know that only by turning a blind eye on the nominee thing they are able to "lure" (a word that is so hot right now in Thailand) more and more foreign investors into Thailand. This also is the reason why they only talk about 7 instead of 7.000 firms... Thailand - hub of BS

I fully agree with you about Thai's should be treated equally as we are here in Thailand

but don't blame Thais for it, petition and blame your own governments for allowing Thai

nationals to have more rights in our countries then we have in theirs.

Maybe instead of expecting Thais to learn from us, our governments and people should

learn from them? It seams there is still a steady flow of foreigners who want to invest

in Thailand despite all the restrictions on us, so they might not even be so wrong in

protecting their interests.

Edited March 25, 2015 by JoeLing

[Sviss Geez]

So this has do with Thai 's not being able to compete with others who go by the rules and regulations pay fair wages and benefits use the correct standards and practices as all others?

No, it's to do with those who don't go by the rules and regulations and don't use the correct standards and practices as prescribed by law. This is nothing to do with wages or benefits.

[Sviss Geez]

<script type='text/javascript'>window.mod_pagespeed_start = Number(new Date());</script>

If the investigators will put for a minute, their bawl of noodle soup aside, and really look

deeper they will find 7,000 such companies and not 7,

however in must be said that the Thai government doesn't make it any easy for forefingers

to work here and earn an honest living without the needs to circumvent the silly FBA....

I am shocked at this news...only 7 companies... alt=rolleyes.gif>

I wonder if these seven companies are isolated cases or herald the start of the large scale crackdown which has been promised by various govts for years?

There must be thousands of these 'companies' operating all over Thailand. Has their day finally come?

Thais who want to perform business in any other country than Thailand should be treated equally, not being allowed to own and have full control over their investments. This might teach them something... Thais only take, never give - this has to end and it will eventually as soon as ASEAN starts.

There will be no foreign investors left willing to put money in a black hole they have no control over while Thailand will be flooded with better educated staff who actually have full control over written and spoken English and are willing to work harder for less than the Thais. It will be total mayhem and the Thais will not realize what came over them until they all are out of jobs and out of money. What goes around comes around and Thailand deserves a kick in the butt and a reality check badly.

Reg. the nominees, the Thais know that only by turning a blind eye on the nominee thing they are able to "lure" (a word that is so hot right now in Thailand) more and more foreign investors into Thailand. This also is the reason why they only talk about 7 instead of 7.000 firms... Thailand - hub of BS alt=coffee1.gif width=32 height=24>

7 so far, the OP doesn't say they have stopped looking for others.

Edited March 25, 2015 by Sviss Geez

[moe666]

Let them chase off more foreigners every which way they can, and the last foreigner who hasn't already gone to Vietnam or Cambodia, please turn off the lights.

hehehe more creative than Nail in the coffin