The ministry will not only focus on the proportion of Thai and foreign shareholders in a business entity, but also the voting rights and benefit-sharing conditions of each company, said Yanyong Phuangrach, deputy permanent secretary of the ministry and a head of the Foreign Business Act committee.

He said the ministry was now amending the Foreign Business Act 1999, aiming to draw up stringent controls to prevent illegal shareholdings.

The definition of the words "foreigner" or "alien" are unclear, so many problems have arisen since the law was implemented. The ministry will try to establish a clearer definition of the rights of foreign shareholders and their investments in Thai-land.

For instance, the ministry has so far concentrated on the percentage of shareholding instead of voting rights and manage-ment.

As a result, unscrupulous investors have used this loophole to control management of a company and have more voting rights, despite being minor shareholders. The practice has involved nominee shareholders.

"Despite being minor shareholders, foreign shareholders in some companies have more voting rights than Thai shareholders through the use of non-voting depository-receipt tactics," he said.

The committee will soon propose amending the definitions to the new commerce minister for approval by the new cabinet.

In addition, the ministry will apply more stringent penalties against foreign investors who violate the law, particularly investors who do not inject funds into Thailand and refuse to complete the technology transfers that apply under certain investment agreements.

Petchanet Pratruangkrai

The Nation