The corporatization and privatization of state enterprises has been an objective of Thai government policy makers for several years. In December 1999, the Capital of State Enterprise Act (also know as the Corporatization Act) was published, providing the regulatory framework for the conversion of state enterprises to private or public limited companies, to be initially 100%-owned by the Ministry of Finance.
On October 1 2001 the Petroleum Authority of Thailand (PTT) was corporatized, through its conversion to become PTT Public Company Limited (PTT Pcl). Two Royal Decrees were published on September 30 2001 to deal with issues requiring legislative solutions:
- one decree prescribes that PTT Pcl will have the powers, exemptions, special rights and receive protection as prescribed and granted by the law governing PTT. It also provides that certain assets of PTT Pcl are not subject to execution; and
- the other decree prescribed that the Petroleum Authority of Thailand Act was repealed as of October 1 2001.
An initial public offering was conducted in November 2001, and approximately 33% of the shares of PTT Pcl are now owned by the public.
This corporatization was the first under the Corporatization Act, and provides a helpful precedent for lenders to study in order to understand how the corporatization of other state enterprises in Thailand may proceed. It also posed some issues for counterparties to gas sales agreements.
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