Other laws apply to banks

Other laws apply to banks.

POST REPORTERS

FOREIGN BUSINESS / SHAREHOLDING STRUCTURES

Changes in the Foreign Business Act (FBA) will have no impact on the financial sector, which operates under separate laws, according to the Bank of Thailand. Commercial banks are already restricted to foreign shareholdings of no more than 49%, either directly or indirectly. Voting rights and management authority are also considered by the central bank.

Tarisa Watanagase, the central bank governor, said the Commercial Banking Act already stipulated clear restrictions on foreign holdings in local banks.

Individual shareholders are restricted to no more than 5% unless otherwise approved by the central bank, she added.

''The [FBA reforms] have no impact on foreign shareholdings in Thai banks, as the Commercial Banking Act already regulates this issue,'' Dr Tarisa said.

Samart Buranawattanachoke, an assistant central bank governor, said the Commercial Banking Act limited foreign shareholdings at no more than 25% of registered capital unless otherwise approved by the central bank.

Most banks have already sought approval and currently had foreign shareholdings in excess of 25%, he said, adding that under the draft Financial Institutions Act, the foreign shareholding limit would be increased to 49% of capital.

''The central bank already looks at the voting rights and management authority of foreign nationals. In fact, the FBA is basically using the approach used by the central bank for the financial sector in other business sectors,'' Mr Samart said.

He acknowledged that the 49% rule did not include shares held through non-voting depository receipts, an instrument set up by the Stock Exchange of Thailand to facilitate foreign investment in local companies that are at their foreign shareholding limits.

He said NVDRs were not classified as nominee shareholdings, as the securities did not offer voting rights to investors, only the right to receive dividends.

Bangkok Post
Thursday January 11, 2007