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Surapong has discussed the plan at length in two previous meetings with representatives of the Securities and Exchange Commission, Stock Exchange of Thailand, Bank of Thailand, Fiscal Policy Office and business leaders about issues and solutions related to M&A activities.

Surapong promised to promote M&A in order to help firms enjoy economy of scale.

A source said Surapong was urged to exempt corporate income tax and stamp fees levied on transactions of share acquisitions between two firms or a parent firm and its subsidiaries. In order to prevent tax avoidance, those who acquire shares have to hold them for specific period of time, the source said.

He said tax allowances enjoyed by firms should be transferred to the new entity after an M&A. Currently, firms do not have to pay corporate income tax if they record financial losses. The Revenue Department does not allow a tax allowance to be transferred to a new entity. The Revenue Department was also urged to set clear rules about market prices or a reasonable price for share acquisition, since it has an impact on tax payments.

The source said that tax allowances should be given to firms that record losses due to its de-capitalisation. Tax authorities have been urged to lay down clear rules related to reserves of insurance firms after they merge as current regulations create too much of a tax burden.

Business representatives asked the Revenue Department to abandon complicated rules related to asset and business acquisitions.

They also wanted the Revenue Department to exempt fees on building and land transactions.

Laws and regulations should state clearly that firm can use other assets to pay for the shares of other firms.

The SEC is urged be more flexible about a time requirement to inform the SEC when firms acquire or sell 5 per cent of shares. The one-day requirement is too short.

M&As face complicated issues related to third parties, since firms have to restructure debts or obligations with third parties. The proposed solution is that a firm could just inform the third party about the M&A, then rights and obligations of old contracts should automatically be transferred to the new entity.

Firms should be allowed to buy shares at a fair price from minority share holders who do not agree with an M&A, a source said.

Rights and obligations between previous employers and employees should be automatically transferred to the new entity. Or if employees do not agree to be employed by the new entity, then employment contracts should be voided, he added.