Most Read Contributor in Hong Kong, September 2016
Any foreigners whether individuals or juristic entities (companies, partnership, etc) who invest and carry out business in Thailand may be restricted by the "Alien Business Control Law" This legislation is embodied in National Executive Council Announcement No. 281, which was introduced in 1972 and classifies business into 3 categories, details of which are contained in Appendix 1 which may be summarised as follows:
Category A: Business under this category is strictly prohibited to foreign individuals or juristic entities, for instance: trade in real property, internal trade of local agricultural products, building construction businesses, accountancy, architecture, etc.
Category B: Business under this category is also prohibited to foreigners, but may be permitted if the business entity concerned receives promotional privileges from the Board of Investment (BOI) such as: retailing of all products. manufacture of sugar, medicine, wood carvings, etc.
Category C: Business under this category is open to foreigners but is subject to receipt of prior permission from the Alien Business Registrar, for example: wholesale of all types of products within the country, export of all types of products, retail of machines, engines and tools, etc.
Other business not mentioned in these 3 categories are freely open to foreigners. However, if foreigners are prepared to accept a minority position, up to the amount not exceeding one-half of equity in a venture, then no businesses are prohibited, since Alien Business Law applies only to the entities which are more than 50% owned by foreigners.
In case of Import and Export Business, foreigners are prohibited to carry on such business by National Execution Council Announcement No.281 ("NEC No. 281"). However, if foreigners are prepared to accept a minority position, up to the amount not exceeding one-half of equity in a venture, this business is not prohibited.
When desiring to engage in an open category, must submit an application to the Department of Commercial Registration and must receive a permit pair to begin business activities. Permits will be valid for a fixed period or with- out limit, but may be subject to conditions.
The following standard conditions apply for companies applying for Alien Business Permits:
1. The total debt financing used in the business shall not exceed seven times the capital owned by the shareholders, partners and proprietors of the business.
2. Money remitted from aboard shall not be less than the amount declared as the capital investment to be made in Thailand.
3. The number of Thai an when directors shall be in proportion to their capital holidays.
4. At least one person responsible for operating the business must have his residence in Kingdom
5. Upon expiry of the permit, the portion of the capital of the shareholders, partners or business proprietors owned by Thai Nationals, shall not be less than that owned by the alien(s).
NOTE: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
If you would like further advice please contact: David Ellis, Johnson Stokes & Master, 16th Floor, Princes Building, 10 Chater Road, Hong Kong; Tel 2843 4226; Fax no. : 2845 9121. Alternatively do a text search "Johnson Stokes and Master" and "Business Monitor".
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