(13/2007)
The Cabinet has, on 10 April 2007, approved new amendments to the Foreign Business Act, 1999 as proposed by the Ministry of Commerce ("MoC"). The new amendments proposed are based on the version previously approved by the Cabinet on 9 January 2007. The draft legislation is scheduled to be submitted to the National Legislative Assembly on 13 April 2007 before being passed into law.
The material amendments may be summarized as follows:
1. Definition of “Foreigner” to include Thai companies in which foreigners have the power to exercise one half or more of the total eligible votes of the company (whether by law, or under the articles of association or any agreement).
2. Transitional provisions
1) Those companies affected by the new definition of “foreigner” and currently operating businesses under Lists 1, 2, and 3 of FBA, who wish to continue their business operations must report to, and apply for a certificate from, the Director General of the Business Development Department, within 1 year (after the amendments come into force).
However, those engaged in List 1 or 2 businesses will be permitted to continue their business for 3 years, after which time they will be considered in violation of the law.
For those engaged in a List 3 business, they may continue to operate the business until cessation.
2) The penalties for Thais who aid, abet or take part in a restricted business operation of a foreigner without permission are increased to a term of imprisonment not exceeding 5 years and/or a fine of up to Baht 5,000,000.
3. Revise some businesses in List 3
3.1 Remove minimum capital exemption for retail and wholesale business (such that these businesses now become restricted regardless of the amount of capital employed).
3.2 Exclude businesses which are subject to specific laws, e.g., guided tour, commodities and securities trade, bank and insurance business, etc.
4. Reduce members of Foreign Business Committee
The number of Committee members will be reduced from 25 to 17.
Remarks:
It should be noted that the new approved amendments do not include the “amnesty” provision as contemplated in the previous version, i.e., the requirement for companies which have nominee structures (but which are not under investigation or subject to legal proceedings) and currently undertaking a restricted or prohibited business to report to the Director General of the Business Development Department within 90 days, and to restructure its shareholding to comply with the law within 1 year in order to be exempt from punishment.
Therefore, such companies are still subject to the enforcement of the current FBA.
