The Thai Foreign Business Act ("FBA"), A.D. 1999, prohibits foreigners from engaging in certain business sectors, including most of service businesses, without a Foreign Business License ("FBL") or Foreign Business Certificate ("FBC"). However, the FBC will be granted swiftly for Americans, in most business areas, because of the US-Thai Amity Treaty of 1966, which gives exclusive rights and benefits to citizens of the USA who wish to establish a business in Thailand.
The treaty aims to provide significant advantages for U.S. investors to run businesses in Thailand for both corporations and individuals. In particular, the treaty grants the USA nationals two significant trade advantages:
- U.S. citizens and/or companies are permitted to hold the majority of the shares or the whole company, branch office, or representative office located in Thailand.
- American citizens and/or companies may engage in business on the same basis as Thai companies and are exempt from most of the restrictions of foreign investment imposed by the Foreign Business Act.
A successful application for the US-Thai Amity Treaty by a corporation will require that the following criteria are met:
- More than 50% of the shares must be held by U.S. shareholders;
- Corporate US shareholders meet legal requirements: more than 50% U.S. shareholding and director is a U.S. national;
- More than half of the board of director(s) of the company has to be Thai or U.S. national;
- A director who has been given the authority to sign on behalf of the company must be Thai or U.S.
- If several directors has been given the authority to sign on behalf of the company, the majority of such directors must not be nationals of a third country.
Further, the following activities are not subject to the treaty and remain reserved for Thais:
- Fiduciary functions;
- Operating in the field of banking (involving depository functions);
- Land ownership;
- Engaging in inland transportation and communication industries;
- All business related to inland transportation and communication industries.
Procedure of the application:
The application process for the US-Thai Amity can be described as follows:
- If not existing yet, a company must be registered at the Department of Business Development (DBD) as a majority foreign entity.
- After registration at the DBD, the company has to obtain a certification letter by the U.S. Commercial Service, located in GPF Witthayu Building next to the U.S. Embassy in Bangkok, which states that the shareholders are U.S. citizen or U.S. shareholders ultimately benefit from the company.
- In the next step, all the required documents (as shown below) need to be submitted to the Ministry of Commerce (MoC) for examination.
- The MoC will report the result of the examination to the applicant.
- After the application is accepted, the MOC will issue a Foreign Business Certificate (FBC), which allows the company to do business in Thailand.
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.