The Council of State is drafting amendments to the Foreign Business Act on voting rights, adding management control and omitting some businesses deemed critical to national security in an annex to the law.

The amendments are likely to be a compromise between the differing opinions of the Commerce Ministry and National Legislative Assembly (NLA), according to a source.

"The council will create the strongest regulations, but it will not hamper foreign direct investment by removing Annex 3," said a source who worked closely with the draft.

The Foreign Business Law covers three lists of business sectors deemed critical to national security and subject to protection. The most protective category is Annex 1, followed by Annex 2 and Annex 3.

The council disapproved of ministry draft amendments that were tough on the control of nominee companies by restricting voting rights, the source said.

The council's draft will bring to three the number of amended versions of the Foreign Business Act. The third is from the NLA.

All drafts focus on voting rights and ownership but in different ways, the source said.

The source added that the council had had a meeting with the ministry last week.

Its draft will concentrate on defining alien companies through voting rights and management control.

The source said companies 49-per-cent owned by foreigners but with special management rights over Thai shareholders would be defined as "foreign-management controlled".

This will make the company an "alien" business and therefore required to be registered by the ministry.

"One could call the third draft a deliberate compromise between the ministry and NLA drafts. However, we have not said whether all of Annex 3 will be cut, but that will be considered," the source said.

Ministry draft amendments ignited concern that there would be discrimination between

new and existing companies.

Another source said the council draft was being rushed to completion within 30 days following the government's receipt of the NLA draft this month.

The council is looking at the NLA version and amending it too.

"It is the council's duty to find a way out whenever the government has a dispute over legislation," the source said.

He said the NLA draft was a ruse designed to have the government pressure the ministry into softening its stringent regulations.

Achara Pongvutitham

The Nation