The End Of The Preference Share Company Structure

[oracle]

Voting rights in spotlight

Voting rights might be among the areas to be revised in the Foreign Business Act as part of an effort to stem loopholes arising from the nominee problem, Sakol Harnsuthiwarin, secretary to the commerce minister, said yesterday.

Speaking at a seminar titled "Nominee Problem in the Foreign Business Act BE 2542: Policies Related to Surveillance and Impact", he said voting rights that allow minority shareholders higher entitlements than majority shareholders were unfair.

"Any change in the law should have regard to both law enforcement and investment," he said.

The dean of the Faculty of Law at Chulalongkorn University, Asst Professor Tithiphan Chuerboonchai, gave the example of the rights of Thai investors who are major shareholders in Kularb Kaew being inferior to those of foreign investors, who are actually minor shareholders.

Cypress Holdings, in which Singapore's Temasek Holdings is the major shareholder, owns common shares with a 49-per-cent stake, while Thai investors hold preferred shares representing a 51-per-cent stake in Kularb Kaew. Kularb Kaew is a major shareholder in Cedar Holdings and a firm set up to buy out Shin Corp from ousted prime minister Thaksin Shinawatra's family.

Cedar Holdings holds 54.43 per cent of Shin while Aspen Holdings, another indirect unit of Temasek Holdings, owns 41.76 per cent.

He cited these limitations: Thai investors' returns from investing in Cedar Holdings are restricted to 3 per cent per annum; their preferred shares are not saleable, transferable or cannot create obligations without approval from Kularb Kaew's board; and Thai investors' voting rights are limited to 9.43 per cent, while Cypress Holdings makes up the rest.

Even though the structure of Kularb Kaew does not violate Article 4 of the Foreign Business Act, it appears that Thai investors have been set up as nominees to avoid the 49-per-cent shareholding restriction if these issues are considered, Tithiphan said.