By Kate McGeown
BBC News, Bangkok
The Thai government has announced plans to tighten rules regulating foreign businesses - a move analysts say could damage an already shaky economy.
Recent events in Thailand have made investors nervous
Changes to the Foreign Business Act would see foreign firms being prevented from controlling more than 49% of the voting rights of a Thai business.
But the changes will take two years to implement and key sectors, such as retail and banking, will be exempt.
Foreign investors are already nervous after last month's stock market crash.
The downturn was sparked by the government's sudden decision to limit the amount of money that could be withdrawn by investors - a plan it then partially rescinded in an effort to bring market levels back up again.
September's coup and the New Year's Eve bombings have also raised questions about Thailand's stability for investment.
The Joint Foreign Chambers of Commerce in Thailand (JFCCT) said it was "gravely concerned" about the proposed changes to foreign ownership controls.
"Such a radical change of this law will lead to a further erosion of business confidence," said its president Peter van Haren.
Thai stocks fell nearly 3% after the proposals were published.
Different regulations currently apply to different industries but while many businesses already have a 49% ceiling on foreign ownership, in practice foreigners often have overriding control, because the local subsidiary owners are merely nominees with little or no voting rights.
By tightening up laws to consider voting rights as one of the key criteria for foreign ownership, many firms may be forced to alter shareholding structures and sell shares to Thai investors to stay within the law.
Officials said about 15 publicly listed companies would be affected by the proposals, which have still to be approved by Parliament.
But according to the draft proposals, industries such as retail, tourism, banking and insurance - in which foreign firms have substantial interests - would not be affected as they are governed by other laws.
This would exclude firms such as Tesco and Carrefour from any impact.
Thaksin's business dealings put foreign firms under scrutiny
One analyst said that his initial impression was that the changes would not be as punitive for foreign investors as first thought.
"First indications are that the revision is somewhat less stringent than initially expected," said HSBC's Frederic Neumann.
"The amendment brings the Thai direct investment regime broadly into line with international practice."
Foreign control over Thai businesses has been highlighted by the continuing investigations into the financial dealings of former Prime Minister Thaksin Shinawatra, who was ousted in a coup in September.
Investigators are focusing on the Thaksin family's sale of its controlling stake in the telecommunications giant Shin Corp last year.
The shares were bought by the Singapore-owned investment firm Temasek - effectively selling the company abroad, albeit partly through Thai subsidiaries.
The sale fuelled allegations that Mr Thaksin had abused his power and betrayed national interests.