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Kularb Kaew has 1 year to cut non-Thai shareholding


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Extracted from The Nation: The Nation


With the revised Foreign Business Act taking effect, Kularb Kaew will be defined as a nominee company.


And to comply with the law, the company has a year to reduce its foreign-shareholding ratio and voting rights to less than 50 per cent.


Kularb Kaew is controlled by Cypress Holdings, which is owned by the Singaporean government's investment arm, Temasek Holdings.


Deputy Prime Minister and Finance Minister MR Pridiyathorn Devakula yesterday came up with the judgement, clarifying the issue that has been under the authorities' scrutiny since last April.


"Any company of which the foreign shareholders' voting right is more than 50 per cent must reduce that voting right within two years. Having nominees holding the shares [on behalf of foreigners], the companies must inform the authorities within 90 days, and the nominees must unload the shares within a year," said Pridiyathorn.


"Kularb Kaew falls into the 'nominee' case and must inform the authorities within 90 days and unload the [foreign] shareholding within one year," he said after yesterday's Cabinet meeting.


"We await details. We'll then consult with our legal counsel on the implications of the changes," said Myrna Thomas, Temasek's managing director for corporate affairs.


Earlier, Temasek gestured its readiness to comply with the law if the authorities promised to enforce a similar rule for all other foreign-owned companies in Thailand. This is believed to be a major reason behind the legal amendments.


Pridiyathorn's verdict is expected to affect Shin Corp. Kularb Kaew has been in the spotlight since last January, when Temasek Holdings formed a consortium with Thai investors, including the Siam Commercial Bank, to take over Shin for Bt143 billion.


Kularb Kaew's involvement in the deal sparked suspicions as to whether any Thai party had acted as a nominee for Temasek, chiefly due to the huge investment involved and the huge voting right of its foreign shareholder, Cypress Holdings, which is a unit of Temasek.


Kularb Kaew owns 41.1 per cent of Cedar Holdings, which in turn holds a 54.54-per-cent stake in Shin. Indirectly, Kularb Kaew owns 22.4 per cent of Shin, which was valued at more than Bt30 billion at the transaction price of Bt49.25 a share. But then, its capital was only Bt164.4 million, and it was later recapitalised to Bt4 billion after the emergence of Surin Upatkoon.


Moreover, although owning 49 per cent of Kularb Kaew, Cypress Holdings' voting right was 90 per cent.


Unclear sources of funds and the voting-rights issue sparked doubts about whether Temasek was the true owner of Kularb Kaew. If so, all Thai shareholders of Kularb Kaew should be considered Temasek nominees.


The Commerce Ministry started investigating the nominee issue last April. Its Business Development Department stated in an unwarranted result that Kularb Kaew was a nominee, but there has been no official endorsement of the investigation result.


Stock analysts anticipate that if Kularb Kaew is classified as a nominee, it would lead to a shareholding restructuring in Shin, and there could be repercussions to Shin's affiliates and subsidiaries.


Earlier, Siam Commercial Bank announced it would review its investment in Cedar Holdings if the authorities deemed Kularb Kaew to be a nominee and if Temasek Holdings needed to reduce its holding to comply with Thai law.

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