It might be difficult to explain to the common man why Thai shareholders who have a combined stake of 90 per cent are offered slim voting rights of only 10 per cent.

Indeed, the Commerce Ministry's ongoing investigation has sparked questions that cannot be explained outright by the sophisticated. Why do Thais holding shares in Kularb Kaew - including renowned businessmen Pong Sarasin and Suphadej Poonpipat - enjoy fewer voting rights than does Singaporean shareholder Cypress Holdings?

And after Surin Upatkoon, a Thai businessman who built up his wealth in Malaysia, emerged as a new shareholder, so did questions about his voting rights. Despite the change in the shareholding structure, Thais still own only preferred shares, which pay dividends and possess senior claims on the company's equity but carry no vote.

Does this mean Cypress Holdings, the holder of Kularb Kaew's common shares - which usually carry the right to vote on major decisions affecting the company - still has control over the company? It seems so.

Given the discrepancy, authorities in some countries, such as Israel, prohibit listed companies from having more than one class of stock.

A similar development is under way in Brazil, where both preferred and common shares can be issued. Last Friday, the Brazilian Securities Commission, or CVM, increased protection for preferred shareholders. Its ruling prevents controlling shareholders - those who own voting stock - from voting on matters that could benefit themselves at the expense of other shareholders.

The CVM ruling was in response to a long-standing demand by investors to clarify shareholder rights in the face of complex Brazilian laws regulating share structures of listed companies.

Most Brazilian companies have two classes of stock, one called common shares with voting rights and 80-per-cent tag-along rights for minority shareholders, and the other called preferred shares, which have few rights.

Merrill Lynch welcomed the move, saying the enhanced rights of preferred shareholders was a victory for better corporate governance.

"We applaud the CVM opinion to empower preferred shareholders rights, reducing the chances of unfair treatment to minority shareholders," said the investment firm.

The Temasek-Shin deal has sparked a lot of requests to answer key questions. As caretaker Finance Minister Thanong Bidaya said, learning whether Kularb Kaew was a nominee meant doing many things, not just reaching a conclusion.

Paradoxically, while some say this issue could diminish Thailand's attractiveness, others believe it is a good provocative issue - one that should encourage the public to learn more about the law, in order to keep from being taken advantge of.

achara_d@nationgroup.com