Kularb Kaew is nominee under revised act
With the revised Foreign Business Act taking effect, Kularb Kaew Co Ltd - controlled by Temasek Holdings-owned Cypress Holdings Co Ltd will be defined as a nominee company.
And to comply with the law, the company has a year to reduce its foreign shareholding ratio and voting right.
Deputy Prime Minister and Finance Minister MR Pridiyathorn Devakula Tuesday came up with the judgement, clarifying the issue that has been under the authorities' scrutiny since April last year.
"Kularb Kaew falls into the "nominee" case and it must inform the authorities within 90 days and unload the (foreign) shareholding within 1 year," he said Cabinet meeting on Tuesday.
Earlier, Temasek gestured the readiness to follow the law, if the authorities promised to enforce a similar rule to all other foreignowned companies in Thailand.
This is believed to be a major reason behind the legal amendments.
Asked what is Temasek's next step, Myrna Thomas, Temasek's managing director for corporate affairs, said yesterday "We await details. We'll then consult with our legal counsel on the implications of the changes,"
Thai government has announced it will limit foreign investors to holding no more than 50 per cent of the shares or the voting rights in companies here under legal changes approved Tuesday.
"Foreign investors who altogether hold more than a 50 per cent stake in a company must lower their stake within a year," Pridiyathorn said.
"Foreign investors who hold more than 50 per cent of voting rights must also reduce their voting rights within two years,"he added.
The 50-per cent cap will only apply to companies that deal with areas considered important to national security, or that have an impact on natural resources or Thai culture, he said.
The cabinet approved the changes to the Foreign Business Act "in principle" on Tuesday.
Surayud said the government's top panel of legal advisers would continue to work on the details of the law to ensure precision and transparency.
"The Council of State is authorized to work on the details to make the law precise and transparent, without any need to be resubmitted for cabinet approval again," he told reporters.
"It will take some time for the law to take effect," he added.
The Cabinet approved Tuesday the foreign business law amended by the Commerce Ministry.
The amended act would include the requirement on the voting rights of the board members and increase the penalty for violators.
Netpreeya Chumchaiyo, deputy government spokesman, said after the Cabinet meeting that the Council of State is assigned to review the draft amendments.
Earlier, Joint Foreign Chambers of Commerce warned that the amendment might affect their decisions to do business decision.
Commerce Ministry and Finance Ministry are scheduled to make seperate press conference at 3pm.
Earlier Finance Minister Pridiyathorn Devakul vowed to press ahead with legal change that could overhaul the way foreign companies do business here despite warnings of potentially disastrous economic fallout.
Pridiyathorn insisted that foreign companies would not be scared off by the final version of the law, which has not yet been released.
Foreign business community in Thailand has urged the government to postpone the changes for at least six months.
"Why should we withdraw it? They have not yet seen the details. If they had seen the details, I am sure that they would be happy," Pridiyathorn said.
"Why should we postpone it when we have worked on it for three months. This is Thailand," he added.
The minister was speaking after attending the cabinet meeting which will consider the changes.
Pridiyathorn said he had consulted some foreign investors about the changes to the Foreign Business Act and more than half of them had found the new rules acceptable.
"I myself will talk with them. I have held talks with many investors but they have not seen all of the details and the commerce minister cannot disclose the bill before the cabinet gives its approval," he said.
"We have a record of welcoming foreign investment. We are not hostile to them. Foreign investors have made Thailand develop and we are certainly still adhering to this policy," he said.
The revised law is expected to redefine shareholder rights and ownership structures for local subsidiaries of international firms.
Companies have traditionally set up their operations in Thailand so that the local subsidiaries are nominally owned by Thais but controlled by foreigners.
The Nation/Agence France Presse