Foreign Ownership Scrutiny a Warning for Business Investment in Thailand

A legal skirmish between two of Thailand's telecommunications providers has again put the nation's foreign business ownership laws in the spotlight. As foreign business leaders complain ambiguities in Thai law are threatening foreign investment, Thai law company BSA Law warns against the use of risky and illegal corporate structures. End Quote

(1888PressRelease) September 16, 2011 - Bangkok, Thailand - Scrutiny over the level of foreign ownership of Thailand mobile phone provider Total Access Communication (DTAC) has put overseas investors on notice, according to Thailand law experts BSA Law.

Rival telecom True Move recently lodged complaints that DTAC was in breach of the Foreign Business Act, which limits foreign investment of a Thai-held company at 49 per cent.

Leading Thai law consulting firm BSA Law has closely watched legal and political jostling surrounding the claims of an alleged breach of Thailand law.

Spokesman Apisakde Kongkangwanchoke said scrutiny of foreign shareholding arrangements had reignited debate over nominee structures.

The practice of using Thai nominee shareholders to allow foreign investors to form and control Thai companies was prohibited under the 1999 Foreign Business Act.

Mr Kongkangwanchoke said this Thai business law gave foreign-owned firms free reign to operate in manufacturing sectors, but restricted foreign ownership in areas including telecommunications, land and property and insurance.

He said the latest legal battle was a reminder of the controversy over the sale of another telco, Shin Corporation, to Singapore-owned Temasek Holdings.

He has warned foreign investors or those starting a business in Thailand to observe Thailand law restrictions on foreign ownership.

The common practice of using shareholder nominees to form a majority Thai-held company was not only risky but illegal, Mr Kongkangwanchoke warned.

"The practise of using nominee shareholders was made a criminal offence under the Foreign Business Act of 1999. New regulations introduced in 2006 further strengthened Thai law," he said.

"While foreign business investment in Thailand is encouraged, there are restrictions under Thai law and directors caught breaching Thai business law face heavy fines and even jail terms.

"As an international law firm in Thailand we are able to advise our clients about foreign business investment options, which include Board of Investment privileges and Treaty of Amity provisions."

About BSA Law:

For nearly 30 years, Bamrung Suvicha Apisakdi Law Associates (BSA Law) has focused on providing reliable legal advice and services to the Thai and foreign business community in Thailand. BSA Law seeks to provide international standards of legal services while retaining the customs of the Thai business culture.

For more information please contact:

Jim Byrne
Business Advisor, BSA Law.
Email: jim ( @ ) bsalaw dot co dot th

http://www.bsalaw.co.th

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