FOREIGN SHAREHOLDINGS

Govt to study NLA version of business act

MONGKOL BANGPRAPA

The cabinet yesterday accepted for study the draft amendment to the Foreign Business Act sponsored by the National Legislative Assembly. Prime Minister's Office Minister Prasit Kovilaikool told the NLA the government would examine the draft along with the Commerce Ministry's proposed version and then submit them to the NLA for debate.

The government's version of the FBA, being vetted by the Council of State, has drawn flak from the business community as it calls for strict restrictions and nominee conditions. The NLA draft is seen as offering flexibility. It is backed by 58 NLA members led by veteran banker Somchai Sakulsurarat.

Addressing the NLA, Mr Somchai yesterday criticised the government's draft for opening the way for ''a certain company'' to avoid punishment.

Despite tough restrictions, the government's bill contains an amnesty for companies allowing them to legalise any violations relating to foreign shareholding or voting rights structures.
''I believe everyone knows who I am talking about. Is it appropriate for a foreign company, which is aware that use of nominees to hold shares is illegal, to be spared?'' he said.

The amendment to the FBA was prompted by use of nominees to hold shares in Kularb Kaew for the acquisition of Shin Corp by Singapore's Temasek Holdings.

Mr Somchai also said that defining a company where foreigners hold more than 50% of the shares as an alien business, as the government's draft does, would only strip Thai investors of the right to conduct business.

There would be cases where Thai investors allowed foreigners to have majority voting rights for business needs.

For example, he said, the voting rights could be exchanged for the rights to use foreign shareholders' brands or patented technology.

There were ways to ensure against the use of nominees, such as tracing sources of investments and the financial status of shareholders.

''In principle, the bill separates honest investors from dishonest ones, protects the honest and punishes the dishonest.

''We disagree with the government's version in part because it requires a joint-venture business to seek an amnesty when they have done nothing wrong,'' he said.

Bangkok Post
Thursday March 15, 2007