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Thailand considers new rules for foreign business
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wonderfulday
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09-Jan-2007 17:23
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Tuesday January 9, 4:52 PM
Thailand to limit foreign stake in firms to 50 percentThailand will limit foreign investors to holding no more than 50 percent of the shares or the voting rights in companies here under legal changes approved on Tuesday, according to the officials. "Foreign investors who altogether hold more than a 50 percent stake in a company must lower their stake within a year," Finance Minister Pridiyathorn Devakula said after a nearly five-hour cabinet meeting about the changes.
The 50-percent cap will only apply to companies that deal with areas considered important to national security, or that have an impact on natural resources or Thai culture, he said. Stocks tumbled on the news, with share prices falling 2.03 percent after the announcement. The Stock Exchange of Thailand (SET) was down 12.84 points to 620.98. The cabinet approved the changes to the Foreign Business Act "in principle" on Tuesday but army-installed Prime Minister Surayud Chulanont said the new regulations would not take effect for "some time," as the country tries to reassure investors about their impact. Surayud said the government's top panel of legal advisers would continue to work on the details of the law to ensure precision and transparency. "The Council of State is authorized to work on the details to make the law precise and transparent, without any need to be resubmitted for cabinet approval again," he told reporters. "It will take some time for the law to take effect," he added. "We think that it needs to be worked out in detail for the law to be more transparent, and to make investors more confident," Surayud said. "If we explain clearly and allow investors to participate, they will agree that the law is open and transparent at a certain level." Companies have traditionally set up operations in Thailand so that the local subsidiaries are nominally owned by Thais but controlled by foreigners. Analysts fear the revised law could force foreign companies to sell off huge amounts of stock to Thai investors, who might not be able to absorb a large number of shares over a short period. Investors were already nervous about Thailand, especially after last month's sudden introduction and reversal of capital control measures, which sparked a stock market crash. The market had just recovered from that crash when the deadly New Year's Eve bomb blasts in Bangkok sent share prices plunging again last week. |
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wonderfulday
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09-Jan-2007 13:35
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Will this affect SGX stock like wat it did when the announce changes previously when they implement the control and reverse the next day 2 weeks ago? |
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