2 firms face action under foreign ownership act

Economy March 17, 2014 00:00

By Petchanet Pratruangkrai


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The Business Development Department has discovered that two companies in Chiang Mai may have breached the Foreign Business Act (FBA) by allegedly having Thais act as nominees so foreigners can hold majority control.

The department uncovered this in an investigation involving 16 companies.

The firms, both in the food and beverage sector, will be further investigated by the Department for Special Investigation (DSI) before facing legal action under the FBA, department head Pongpun Gearaviriyapun said.

She pointed out that of the 16 firms investigated, seven were in the food and beverage sector, eight in tourism and one was involved in spa services.

The eight firms involved in tourism were found to have done business transparently by having foreign shareholders maintain contacts with customers, while Thais dealt with hotels and restaurants.

However, the two companies found breaching the Act were suspected of allowing foreigners hold the majority share and run the entire firm, which is against the FBA.

This year, the department is planning to investigate 198 of the 6,942 registered companies to see if any of them breach the FBA.

As per its schedule, the department will investigate companies in Chon Buri and Phuket during April and May, before moving on to firms in Prachuap Khiri Khan, Krabi and Phang Nga in June and then to Trat in July.

Firms that are under scrutiny are in six industries, namely food and beverage, tourism, property financing, real estate, car rental and spa.

Last year, the department filed a case with the DSI against 14 companies, while 362 firms were sued under the Land Ownership Act.

Thailand does not allow foreigners to hold more than 50 per cent of certain businesses such as telecommunications, rice milling, property development, media and retail and wholesale trading services. However, some foreigners have been using Thai nationals as nominees to operate such prohibited businesses.