A Commerce Ministry committee, chaired by Pramon Sutivong, proposed on Tuesday the final draft amendment relating to the voting rights of foreign shareholders in each company. If it exceeds 50 per cent, they will be defined as nominees. The new criteria will affect most foreign companies in Thailand which use nominees.

Thai Retailers' Association president Thanapon Tangkananan said the government should exempt foreign investors from the strict regulations governing voting rights or shareholdings if they really have a long-term commitment to the companies in Thailand.

He said that, considering its shareholding structure, the country's modern retail business is mainly owned and controlled by Thais.

He added that the current alien business law does not favour foreign investment in the hypermarket business in Thailand since it is difficult for foreigners to own land. The law also bans them from running farming businesses.

Yoichi Kato, president of the Japan External Trade Organisation, said foreign investors wanted a clear definition regarding the national entity of companies. In Japan, he said the nationality of a company was defined by three tiers of shareholder structure, whereas the current Thai law was still ambiguous on that point.

Sigve Brekke, chief executive of Total Access Communication (DTAC), said that whatever the final regulations are, DTAC is willing to comply with them. In 2000, Telenor bought 24.8 per cent of United Communication Industry (Ucom) and 30 per cent of Ucom's flagship DTAC through its subsidiary Telenor Asia.

Last October, Telenor increased its stake in its local partnerships in a complex series of transactions that saw Thai Telco Holdings, Telenor Asia's 49-per-cent-owned affiliate, buying 39.9 per cent of Ucom in a deal worth Bt9.2 billion.

Thai Telco now owns 42.4 per cent of Ucom, while Telenor Asia holds 47 per cent. Ucom owns 43.1 per cent of DTAC, while Telenor Asia owns 32.6 per cent.

Darmp Sukontasap, senior vice president of Ek-Chai Distribution System, which operates Tesco Lotus superstores, said the company was confident that from the outset its corporate structures have been in full compliance with existing laws and regulations.

He showed surprise that Tesco was singled out for "nominee" investigation and it asked the ministry for clarification.

"The response we received was that there was an anonymous complaint made against us. This was why the ministry had started an investigation. This explanation is quite interesting because it shows that anyone can actually register complaints or accusations against anyone else without any transparency in the system," he said.

He said Tesco was more concerned about the way the authorities plan to implement the new amendments. If the ministry announced that the amendments would have retroactive effect, "this would cause serious confusion among the thousands of foreign investors in Thailand, many of whom came into the country at the invitation of the Board of Investment".

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