Satuday, August 26 business page of the Bangkok Post headline
Nominees likely to face more scrutiny
Shareholders of 5% may be in spotlight
PLOY CHITSOMBOON
The Securities and Exchange Commission plans a ''nominee-monitoring'' measure that will require any shareholder with more than 5% in a listed company to disclose its identity.
The current information disclosure rule applies to shareholders with stakes of more than 10% in a listed company, according to Chalee Chantanayingyong, a senior assistant secretary-general of the Securities and Exchange Commission.
''We are basically checking everything to make sure that we're not far from the international standard, and in order to lock up the whole system to be in control,'' Mr Chalee said at a seminar held by the Thailand Development Research Institute yesterday.
The change is a response to recent concerns raised about the use of nominees to hold shares in companies on behalf of foreign entities. Such holdings could result in foreign shareholding limits in certain business sectors being exceeded.
Mr Chalee said the scrutiny of such holdings might take longer as regulators would need to consult with various parties about the possible impact.
According to the TDRI, Shin Corp now leads all listed companies in the use of nominees at 98.1% of total shareholdings, followed by the rubber producer Hua Thai Manufacturing at 97%, then Golden Land Property 85.4%, Tycoons Worldwide Group 83.4%, and Delta Electronics (Thailand) 82.6%.
Nominees were most prevalent in the technology sector, at 36.19% of total shareholdings, followed by finance at 30.27% and construction and property at 24.3%.
According to Supavud Saicheua, managing director of Phatra Securities, the use of nominees in the Thai stock market was widespread.
''[Nominees] have never been an issue until the [Shin] deal. But you have to differentiate the pros and cons of using nominees. Having a nominee doesn't necessarily mean a lack of transparency. You need to look at the intentions,'' Mr Supavud said.
New business registration rules that took effect on Aug 15 require all new companies with foreign shareholdings of more than 40% to declare their sources of funds, in guidelines issued by the Commerce Ministry.
The change was aimed at guarding against possible problems arising from the use of nominee shareholders and increasing transparency in the corporate registration process.
The rule will also apply to new companies that are controlled by foreign entities, even if their direct shareholdings are less than 40%.
Shareholders must submit evidence of financing used to hold shares, including bank statements and other documents.
The authorities have taken a stricter line on the practice of nominee shareholders following the takeover of Shin Corp by Singapore's Temasek Holdings earlier this year.
Temasek has full control of Shin through the use of nominee companies, such as Kularb Kaew, despite the fact that Thai law limits foreign ownership of telecom companies at 49%.
The Commerce Ministry is currently investigating whether Kularb Kaew should be classified as a nominee for Temasek and whether Shin is in violation of the foreign shareholding limit.
Chalongphob Sussangkarn, the TDRI president, said that despite the experience of the 1997 crisis, corporate governance problems remained rampant.