New Thailand Laws Curb Foreign Dominance of Telcos
http://www.lawsays.net/articles/10717/1/New-Thailand-Laws-Curb-Foreign-Dominance-of-Telcos/Page1.html
Gregory Smyth
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. We provide international standards of legal services while retaining the customs of the Thai business culture. By Gregory Smyth
Published on 11/17/2011
The strengthening of Thailand laws to prevent foreign dominance of the nation's telecommunications industry has been controversial. Some have praised the new Thai business law regulations as offering protection to local operators, especially as the kingdom gears up for increased free trade within east Asia.
For others the regulations are seen as a deterrent to foreign business investment in Thailand.
Company powerbrokers can often be hidden within a complex web of parent companies, subsidiaries, shareholders, nominees and executives. In the case of a multinational firm this intriguing network can be even harder to unravel.
Many countries have laws aimed at protecting national interests - including telecommunications, media and agricultural sectors - from being dominated by foreign interests.
Thailand is no different. Thai business law, in particularly the Foreign Business Act, sets strict standards to cap foreign ownership to an acceptable level. For this reason foreigners starting a business in Thailand are always advised to keep abreast of Thai law (consulting an international law firm in Thailand is the best way to do this).
The south-east Asian nation has recently introduced new regulations aimed at curbing foreign dominance of its telecommunications industry. The new Thai laws come as the nation looks to strengthen its broadband internet market.
For an in-depth look at the finer details of the new regulations we turned to BSA Law, a law firm in Thailand with more than 25 years of experience handling Thai business law cases.
The firm advised that the notification restricting foreign dominance was issued by the acting National Broadcasting and Telecommunications Commission (NBTC). It was published in the Thai Government Gazette on August 30, 2011 and came into effect the following day.
The Thai law company advised that the notification applied to current holders of and applications for Type 2 and Type 3 licenses as well as holders of state telecoms concessions.
BSA Law advised that Type 2 licence holders were telecoms with or without their own network whose competition affected specific markets while Type 3 licences were operated by telecoms with their own network whose competition affected the public.
The Thai law firm said telecommunications companies had to report to the NBTC each year on their foreign-ownership levels. The organisation has the power to suspend or revoke licences if telecoms fail to prevent foreign dominance.
According to the Thailand law notification, foreign dominance has been classified as:
- Direct or indirect share holding by foreigners or foreigners' agents;
- Use of apparent agents (nominees);
- Holding of shares with special voting rights;
- Participating in appointing or having control over the board of directors or senior officers of the licensee;
- A financial relationship such as having a corporate guarantee or a loan with a lower-than-market interest rate;
- Licensing or franchising;
- Management or procurement contracts;
- Joint investments (by a licensee and foreigners);
- Transactions involving transfer pricing; and
- Any other behaviour which provides direct or indirect control to a foreigner over a licensee.
In the lead-up to the introduction of the new Thai business law regulations the National Telecommunications Commission (now the acting NBTC) conducted public hearings. It cited the use of nominees as shareholders as a tactic which allowed foreign shareholding to exceed the permissible level.
Under the Foreign Business Act (a key piece of Thai business law) foreign ownership of a Thai-held company must not exceed 49 per cent. Other key pieces of Thailand law include the Telecommunications Business Act.
New regulations aimed at curbing foreign dominance in Thailand telecommunications industry have been aimed at protecting local interests but have been met with fears they could suppress foreign business investment in Thailand.
Company powerbrokers can often be hidden within a complex web of parent companies, subsidiaries, shareholders, nominees and executives. In the case of a multinational firm this intriguing network can be even harder to unravel.
Many countries have laws aimed at protecting national interests - including telecommunications, media and agricultural sectors - from being dominated by foreign interests.
Thailand is no different. Thai business law, in particularly the Foreign Business Act, sets strict standards to cap foreign ownership to an acceptable level. For this reason foreigners starting a business in Thailand are always advised to keep abreast of Thai law (consulting an international law firm in Thailand is the best way to do this).
The south-east Asian nation has recently introduced new regulations aimed at curbing foreign dominance of its telecommunications industry. The new Thai laws come as the nation looks to strengthen its broadband internet market.
For an in-depth look at the finer details of the new regulations we turned to BSA Law, a law firm in Thailand with more than 25 years of experience handling Thai business law cases.
The firm advised that the notification restricting foreign dominance was issued by the acting National Broadcasting and Telecommunications Commission (NBTC). It was published in the Thai Government Gazette on August 30, 2011 and came into effect the following day.
The Thai law company advised that the notification applied to current holders of and applications for Type 2 and Type 3 licenses as well as holders of state telecoms concessions.
BSA Law advised that Type 2 licence holders were telecoms with or without their own network whose competition affected specific markets while Type 3 licences were operated by telecoms with their own network whose competition affected the public.
The Thai law firm said telecommunications companies had to report to the NBTC each year on their foreign-ownership levels. The organisation has the power to suspend or revoke licences if telecoms fail to prevent foreign dominance.
According to the Thailand law notification, foreign dominance has been classified as:
- Direct or indirect share holding by foreigners or foreigners' agents;
- Use of apparent agents (nominees);
- Holding of shares with special voting rights;
- Participating in appointing or having control over the board of directors or senior officers of the licensee;
- A financial relationship such as having a corporate guarantee or a loan with a lower-than-market interest rate;
- Licensing or franchising;
- Management or procurement contracts;
- Joint investments (by a licensee and foreigners);
- Transactions involving transfer pricing; and
- Any other behaviour which provides direct or indirect control to a foreigner over a licensee.
In the lead-up to the introduction of the new Thai business law regulations the National Telecommunications Commission (now the acting NBTC) conducted public hearings. It cited the use of nominees as shareholders as a tactic which allowed foreign shareholding to exceed the permissible level.
Under the Foreign Business Act (a key piece of Thai business law) foreign ownership of a Thai-held company must not exceed 49 per cent. Other key pieces of Thailand law include the Telecommunications Business Act.
New regulations aimed at curbing foreign dominance in Thailand telecommunications industry have been aimed at protecting local interests but have been met with fears they could suppress foreign business investment in Thailand.