The Securities and Exchange Commis-sion (SEC) is preparing to draft a law governing nominees in companies listed on the Thai stock market.

The securities watchdog's legal department will consider what kinds of mechanisms should be used to control nominees' investments and how they should be applied to the stock market, he said.

The department will also handle the drafting of the law using applications from the US, assistant secretary-general Pra-song Vinaiphat said.

"Thailand has no nominee law at the moment, while such laws have long been available overseas," he said.

"We want a law that is viable as there has been much talk about nominees recently. This does not mean that all of their investments are wrong but some might use nominees as instruments to commit wrong, so we think we should have a law governing nominees."

Investment through nominees is gaining popularity in Thailand. It became the talk of the town when Ample Rich, a nominee of caretaker Prime Minister Thaksin Shinawatra's two children Panthongtae and Pinthongta, sold a sizeable stake in Shin Corp to them for Bt1 per share before they sold them on to Temasek Holdings of Singapore a few days later for Bt49.25 each.

"Our legal department is studying related laws and laws governing nominees overseas. Legal patterns in general would come from the nominee law in the US," said Prasong.

After the drafting process is completed, the law would be forwarded to the Finance Ministry before being passed to Parliament," he said.

The nominee law to be drafted by the securities watchdog would be applied exclusively to companies listed on the Thai stock market, but it would depend on the Finance Ministry whether it prefers to expand the law's coverage to non-listed companies, he said.

"The nominee law would benefit investigations in the future. In a case where overseas custodians invest in Thailand and we need to investigate them, we might ask those custodians to disclose the names of the real investors," he said.

"Until now, investors who do not want their names to appear as shareholders in listed companies can transfer their holding to brokers and the SEC has no right to ask the brokers to disclose the names," he said.

Siriporn Chanjindamanee

The Nation