(1/2007)
On 26 December 2006, the Foreign Business Act Committee concluded the following proposed changes to the FBA:
1. Definition of a foreigner under the FBA
It is proposed to use both shareholdings and voting rights to determine whether an entity is considered “foreign” under the FBA, instead of focussing on only the shareholdings as under the current law.
2. Lists attached to the FBA
The Committee recommended that Lists 1 and 2 should remain unchanged. In terms of List 3, certain businesses which are governed by other specific laws or acts, such as travelling, financial, insurance business, etc., should not be included in List 3 and that as a result, those businesses should not be required to obtain a foreign business licence.
Furthermore, (i) some businesses which are frequently permitted by the Committee or which are established to undertake contractual projects with government or state enterprises such as, construction, and (ii) businesses provided by foreigners for affiliated companies, i.e., accounting, financial and logistics businesses, should also be removed from List 3.
The Committee recommended further that retail business operators should be required to obtain a business license regardless of whether the registered capital of the business exceeds Baht 100 million.
3. Temporary provisions
Companies using Thai nominees to hold shares on behalf of foreign investors to keep a majority of shares owned by Thai may become “foreign” under the new definition. The Committee proposed three alternatives as follows:
3.1 The said company falling into Lists 1-3 must register as a foreign company within 1-2 years and is allowed to continue to operate the business as is.
3.2 The said company falling into Lists 1-3 must change its structure to be Thai company within 1-3 years.
3.3 The said company falling into List 3 only must change its structure to be Thai company within 1-3 years.
The Committee will provide its recommendations to the Minister of Commerce for consideration.
