Thai-foreign firms face crackdown

PHUKET: As the crackdown on work permits in Phuket takes effect, both Thai and foreign shareholders in companies that have failed to restructure their shareholdings to conform with the Alien Business Law (ABL) of 1999 face close scrutiny and the possibility of severe penalties. As one of the members of the committee set up by Provincial Governor Pongpayome Vasaputi to examine work permits, the Phuket Commercial Registration Office (CRO) will be examining every company that applies for work permits to ascertain whether it complies with the ABL. One of the major provisions of the law swept away the old rules that allowed companies to be set up with Thai nominee shareholders. The old rules resulted in many firms being established with tuk-tuk drivers, maids or chauffeurs listed as investors. Now, Thai shareholders in a company with foreign participation must be bona fide investors who can show that they have invested money in the company. The CRO has sent faxes out to local law offices and consultancies specializing in establishing companies, advising them of the salient points of the law and the penalties for infringing it. These penalties range up to three years in jail and/or a fine of up to 1 million baht. The penalties will apply both to Thais found to be infringing the ABL, and to their foreign partners. The Office is understood to be installing computer software that will enable it to identify Thais who appear as “shareholders” in large numbers of companies, and to access information on all those companies. The Gazette understands that Thai shareholders may be subject to visits in their homes to ascertain whether they have a lifestyle compatible with being shareholders. They will also be required to sign an affidavit confirming that they are genuine investors, and will then have to prove that they did, indeed, invest. If they are unable to do so, they and the foreign partners in the business face criminal charges. If they decline to sign the affidavit, the company will be regarded as being majority foreign-owned and must be reincorporated as such – if this is possible, which, in most cases, it will not be. For further information on the work permits crackdown see also “Work permits: Governor gets tough” at https://phuketgazette.net/news/index.asp?Id=1345.