Nominee shareholder amnesty?

[BahtandSold]

Minister ponders nominee amnesty
source: Bkk Post

The Commerce Ministry could offer an amnesty to foreign joint ventures in violation of the Foreign Business Act in order to resolve problems with the use of nominees, according to Commerce Minister Krirk-krai Jirapaet.

Authorities plan to review the Foreign Business Act and other laws to close loopholes and modernise regulations. An amnesty, meanwhile, would give joint ventures that currently use nominee vehicles time to restructure their indirect holdings to fully comply with the law.

''If it is necessary to [offer amnesties] due to economic reasons, and it does not violate the principle of law, then we will look at it,'' the newly appointed minister said yesterday in an interview with the Bangkok Post.

Such an amnesty would include the telecom giant Shin Corp, which is the subject of a criminal investigation over whether Singapore's Temasek Holdings used nominee vehicles to violate the 49% foreign shareholding limit, he said.

''What is necessary is necessary, and we have to abide by the principles, and if that means that we have to give amnesty to [Temasek] then we'll have to do it, because we have to treat them in the same manner as everybody else,'' said Mr Krirk-krai, who ranked the nominee and Temasek issues as his fourth priority after farm products, retailing, and exports.

Temasek controls 42% of Shin directly through wholly owned Aspen Holdings, and also has an indirect stake through Cedar Holdings, which holds another 54.5% of Shin.

The Business Development Department earlier submitted a report to police investigators that Shin violated the 49% foreign limit due to the use of illegal nominees, an offence punishable by jail, fines or even dissolution of the business.

Mr Krirk-krai said it was time for the nation to move on and try to differentiate between political and economic problems.

''If there's something that is not right about the structure, then we'll adjust it, but if we try to mix politics and business together then we will be stuck, and in this case the biggest loser will be the economy and the investors' confidence in the Thai economy,'' he said.

Mr Krirk-krai added that the ministry under his guidance would look to amend various laws to suit the needs of the investors and the free-market economy.

''On the issue of nominees, we have to look at ways to sort it out. Once we have the laws ready, then we'll discuss it.

For example, if the 49% gives way for nominees, and your aim is to seek help in development of the country, especially in sectors in which we cannot compete, then why don't you give them 51%?'' he asked.

While companies that have nominee structures would be allowed to maintain the status quo, those set up in the future would have to follow any new regulations that would be put in place.

The market has welcomed the minister's views, saying they were a positive step for the country and would help restore lost confidence.

''If you ask me, this is great news as deals have remained low as foreign investors have shied away from investing in Thailand,'' said an investment banker at one of Thailand's leading brokerages.

Fund managers and lawyers also said Mr Krirk-krai's proposal was positive and that funds would likely start to flow in the future once policies were clearer.

''This is definitely very positive for the country,'' said Lance Depew, investment manager at Quest Capital, which manages $240 million in assets in Thailand.

The legal changes would bring the government's policy in line with reality as in the past the governments had turned a blind eye to the shareholding structures of companies, he added.

''The devil would be in the details, although I must say I support it wholeheartedly if the government can do it,'' added Supavud Saicheua, a managing director with Phatra Securities.

''It will be a very positive step for Thailand if the government can set the right framework for the future.''

It is estimated that 13,000 companies have nominee structures and fears of consequences arising from the Shin-Temasek investigations have prompted many investors to put decisions on hold.
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[BahtandSold]

[friesman]

"Ambiguous" hmmmm; I like that word.
Perhaps this government can go even further in an effort to restore the investment & tourism sectors of this great Kingdom, by 'adjusting' the very silly property-ownership laws, as well as the absurd pub-closing arrangement, which drives the droves to other shores ? ? ?
I'd vote for it !

Jaap Klasema
Pattaya
Hotel GM

[BahtandSold]

Friday October 20, 2006
FOREIGN BUSINESS LAW
Certainty 'would help investment'
source: The Nation

The International Chamber of Commerce (ICC) and the Board of Trade yesterday urged the government to amend the Foreign Business Act and clarify the nominee issue, to avoid a repetition of the Kularb Kaew controversy, which was largely the result of an unclear definition of a nominee under Thai law.

ICC representatives met with Commerce Minister Krirkkrai Jirapaet for more than an hour yesterday. After the meeting, he said his ministry would consider amending trade and investment laws under the ministry's jurisdiction, based on fairness and benefit to both domestic and foreign enterprises.

During the first meeting with Krirkkrai after he became commerce minister, the foreign chambers of commerce raised the issue of unclear foreign-ownership regulations as their main concern.

ICC president Peter John van Haren said foreign investors were concerned about the unclear foreign-business regulations, and amending the act to clarify the foreign-ownership issue should promote foreign investment.

Asked if they were worried about the government's investigation into Temasek Holdings' alleged foreign-ownership violation, he said that as long as it was conducted in accordance with the rule of law, there should be no problem.

Allegations of Kularb Kaew violating foreign-ownership regulations have worried many foreigners, because a number of them hold shares through proxies, enabling them to benefit from possible legal loopholes by becoming involved in industries in which the government still imposes foreign-ownership limitations.

The unclear definition of foreign ownership in the foreign-business regulations became controversial after the investigation into Kularb Kaew to determine whether that company had bought Shin Corp shares on behalf of Singapore's Temasek Holdings.

Van Haren said foreigners were also closely watching the case and that the government should ensure political issues remained separate from the investigation.

Foreign investors are also questioning their role in Thailand after some foreign businesses were investigated.

The Foreign Business Act currently states that Thailand allows foreigners to hold a maximum 49-per-cent share in most businesses.

The ICC and BOT also suggested the government amend laws to increase the proportion of foreign shareholding in some service sectors, such as advertising, tourism and education.

They said Thai tourism enterprises would have a high potential to compete with foreign enterprises if they were united with foreign partners, creating a good business environment for the country.

Increasing the shareholding ratio would increase the size of businesses and attract more foreign investors.

Van Haren said the education and advertising sectors needed improving and that an increase in foreign investment would develop the education system.

BOT chairman Pramon Sutivong said the government might consider attracting foreign investors by increasing the proportion of shareholding in some high-technology businesses.

Pramon supported the idea that the government should urgently clarify the definitions of "foreign" and "nominee" that have confused investors.

He said the government must also amend some regulations related to foreign business investment, in order to ensure foreign investors' confidence while protecting the country's benefits.
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