Thai Business Law Recent Modifications for Finance Sector Businesses
The global financial crisis has been at the forefront of many people's minds in the past 18 months - but none more so than the world's politicians. Thailand in particular has spent quite a bit of time making amendments to the law to ensure that the country is protected as far as possible, while maintaining a just environment and as much economic growth as possible. We look at the financial law amendments noted by Thai corporate legal services in recent times.
The Institutes of Deposits Protection Act was a Thai law modified on 11 August 2008, and caused some controversy upon its release. Where other countries in the Asia-Pacific have moved to guarantee all bank deposits, in order to bolster confidence in the economy, Thailand has effectively reduced the deposit protection.
Thai legal services saw much consternation at the new system, which has a tiered structure. 100% of deposits are guaranteed in the first year, but this decreases to 100 million baht per person per bank in the second year, 50 million in the third, 10 million in the fourth and 1 million in the fifth.
However, it seems that in this case, the net benefit to the country as a whole outweighs the risk taken on by some depositors with the new Thai law. It is estimated that around 1.2% of depositors have over 1 million baht in their accounts - however, the net gain to the Thai government has been 5.1 trillion baht. These small percentages of accounts have provided 73% of possible money saved. Thai corporate legal services are advising customers that are dissatisfied with the amendment that offshore banking still provides a secure and flexible finance option.
A less divisive and controversial Thai law amendment in recent times is the Mutual Funds Act amendment, which came into effect on 31 October 2008. Mutual funds are now required to disclose their investment portfolios on a monthly, rather than bi-yearly basis. This move should help both small and large investors determine which companies are best positioned to handle their cash, in the new more volatile marketplace. Law firms in Thailand advise that mutual fund companies now have to publish their top five industries as well as the top five stocks in their portfolios within 15 days of the end of the calendar month.
As is often the case with Thai laws, the third major financial sector change in recent times has also been controversial in the industry. The Financial Institutions Business Act amendments came into effect in August 2008, and the main change is to prohibit related-party lending, with penalties specified for violators. A single lending cannot now comprise more than 5% of the total capital or 25% of the total outstanding loans to one business or group of businesses.
Loans to large companies and conglomerates may move out of the banking sector as a result, and into bond or equity markets. The shareholding limit of individual investors in financial institutions, and share restrictions for institutions in related institutions was also changed - Thai business law professionals can provide corporations with those details.
BSA Law has focused on providing reliable thai Law consulting and services to the business community in Thailand for nearly 30 years.Click to find out more about Law firm in Thailand.