An english translation of the draft of the amendements approved by the Cabinet in april 2007, is available on the Department of Business Developement’s website, by clicking here (PDF document).
It’s important to understand the differences between the first FBA, enacted in 1999, and the draft of the “amended” version (AKA FBA 2), the one initiated by the Junta and that should be enacted before the general elections of 2007.
The name of the law remains the same. And the content too, more or less.
However, there is one fundamental difference, that touches to the very core of the law : how to define a company as “foreign”.
This discrimination is the very core of this law.
FBA 1 was very clear : number of shares. If a foreigner own 51 % of the shares of a company, then this company is defined as “foreign” and the FBA’s provisions shall apply.
FBA 2 is very clear too, but much worse, with a double system :
-number of shares
OR
-voting rights
It looks like a small detail, but actually it changes everything.
With FBA 2 foreign investors won’t be able to use the previous scheme, with a two classes of shares (ordinary and preferred for instance) a system that allow to control a company, without having the majority of its shares… Click here for more details.
HEAVIER PENALTIES
It’s important to note that with FBA 2 the penalties are much heavier than with FBA 1.
FBA 1
Fine : 100 000 to 1 million THB
Prison : 3 years
FBA 2
Fine : 500 000 to 5 millions THB
Prison : 5 years.
CHANGES WITHIN THE LISTS
A few items are modified within the List 3.
FBA 1
(13) Internal trade connected with native products or produce not yet prohibited by law.
(14) Retailing all categories of goods having the total minimum capital less than 100 million Baht or having the minimum capital of each shop less than 20 million Baht.
(15) Wholesaling all categories of goods having minimum capital of each shop less than 100 million Baht.
FBA 2
(13) Domestic trade relating to native agricultural products or produce not prohibited by any law except futures trading pursuant to the law on agricultural futures trading, only where delivery or receipt of the futures traded agricultural products did not actually take place.
(14) Retailing of all categories of goods.
(15) Wholesale trade of all categories of goods.
(18) Guided tour” is canceled with FBA 2.
What a gesture of good will from the thai authorities ! 😉
The point 21 (“other businesses“, that we would call the “vacuum point”) is kept, but with some exclusions (linked to special financial trading activities, like futures).
OTHER CHANGES
The section 10 is totally revamped. It contains provision for the companies that were not defined as “foreign” under FBA 1, but… that will be defined as “foreign” under FBA 2 !
Basically, they need to come forward (to inform the Commerce ministry), with differents processes and/or conditions if their activities are classified in List 1, 2 or 3.
This point is not very clear and could be amended again by the NLA.
It’s important to note that this draft of FBA 2 might not be “final”. The Council of State and then the NLA could make some changes.
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