Legal Issues Concerning the Establishment and Regulation of Holding Companies

Abstract

This research consists purposes were 1. to concepts, theories and principles related to the establishment and control of holding companies 2. to legal measures related to the establishment and control of holding companies under international public law, foreign law and Thai law 3. to analyze problems related to the establishment and control of holding companies and 4. to approaches to resolving legal issues concerning the establishment and control of holding companies. This study employed a qualitative approach based on documentary research into the laws governing the establishment and control of holding companies. The data collected from the relevant documents were then subjected to comparative content analysis of Thai and foreign laws. The findings indicate that 1) Key principles related to the establishment and control of holding companies include the principles of freedom of contract, equality, transparency, accountability, unity of the legal entity, control through shareholding, corporate governance within the group of companies, protection of stakeholders within the group, prevention of misuse of the legal entity structure, and related tax planning. 2) Thailand lacks a specific definition of holding company requiring government agencies and practitioners to rely primarily on interpretations of general company law. This differs from the laws in other countries. 3) From the existing legal framework, there is a lack of specific legislation that defines a holding company, the rights and duties of a holding company and its shareholders, as well as criteria for systematically controlling the operations of a holding company. This results in ambiguity in the enforcement of the law, opening the door to a lack of transparency in the shareholder structure, cross-shareholdings and transactions within the group of companies, as well as creating risks in taxation and corporate governance and 4) This research proposes a specific law on the establishment and control of holding companies, the essential elements of which include (1) definitions (2) roles and responsibilities and (3) liabilities.