Integrity Legal

Those who track this blog may have noticed that there has been an increase in political activities which have disrupted the otherwise calm political and economic environment in the Kingdom of Thailand. There are many who feel that these disruptions are only temporary and will not prove detrimental over the long term. In the short term, individuals and businesses in Thailand are analyzing some new risks which have manifested themselves over the past 9-12 months. To quote directly from Westlawbusiness.com:

Several companies have recently disclosed risks arising from the political turmoil in Thailand. For example, Priceline.com, an online hotel auctioneer, recently disclosed that “civil unrest in Thailand, a key market for our Agoda business and the Asian business of Booking.com. This may result in “significant year-over-year declines in booking volumes in this market….Thailand has experienced disruptive civil unrest in prior years as well and continued or future civil or political unrest could further disrupt Agoda’s Thailand-based business and operations.”

Communication cable manufacturer General Cable is also reporting that it is subject to business risk arising from unrest in Thailand. The copper, aluminum, and fiber optic wire and cable products provider recently disclosed that its “business is subject to the economic, political and other risks of maintaining facilities and selling products in foreign countries. . . Thailand recently experienced significant political and militant unrest in certain provinces. The country’s elected government was overthrown in September 2006, with an elected government only recently restored.” [emphasis in original]

Political turmoil can have substantial unforeseen consequences for some businesses and business models operating throughout Asia. This is why retaining the assistance of local legal counsel can be advantageous for multinational corporations as professionals with on-the-ground knowledge of local business customs and practices can guide clients away from unforeseen legal, and in some cases; business, risks.

There are many, this author included, who feel that the current political turbulence in Thailand is simply a “bump in the road” eventually leading to overall tranquility and economic prosperity in the Kingdom of Thailand as well as the South East Asia region. Bearing that in mind, those wishing to establish a business or corporate presence in Thailand are well advised to conduct research and due diligence before making irrevocable business decisions as  maintaining a corporate presence in Bangkok, or the emerging markets in Cambodia, Laos, Burma (Myanmar), Malaysia, and Vietnam can be fraught with unforeseen legal and business issues which may not arise in jurisdictions such as the United States, the European Union, the United Kingdom, Australia, or Canada.

Many wishing to do business in Thailand opt to do so under a Thai Limited Company as this type of juristic person provides a measure of limited liability. Limited Liability is often one of the first methods employed by those wishing to hedge against unforeseen future business risks. American businesses may also enjoy many benefits pursuant to the language of the US-Thai Treaty of Amity. Regardless of the type of corporate structure, any foreigner wishing to work in the Kingdom of Thailand must obtain a Thai work permit prior to taking up employment pursuant to Thai labor law.

For related information please see: Bangkok Lawyer or Amity Treaty Company.

Tags: Amity Treaty Company, Asian Business, Bangkok Business, Bangkok Lawyer, Bangkok Riots, Cambodia Business, Malaysia Business, Myanmar Business, Southeast Asian Business, Thai Business, Thai Company Incorporation, Thai Company Setup, Thai Limited Company, Thailand Business, Thailand Business Risks, Thailand Company Formation, Thailand company registration, Thailand Political Turbulence, Upheaval in Thailand, US-Thai Treaty of Amity, Vietnam Business
Posted in Amity Treaty, Ecommerce, Thailand Business, Thailand company, Thailand Work Permit, US Business | No Comments »

Many people in Thailand, both foreign and Thai, choose to incorporate Thai businesses. Thailand is one of Southeast Asia’s major trading locales and as a result many individuals and business concerns need a corporate presence in the Kingdom of Thailand. In many cases, companies are incorporated with substantially similar articles of incorporation. That being said, some companies opt to incorporate with unique provisions regarding different types of shareholder rights in the corporate charter. These different types of rights can have a major impact upon the running of the business because these rights can have a collateral impact upon employee compensation, shareholder vote tabulation, and banking issues. Therefore, an understanding of share classification can be helpful to those who are thinking of incorporating a Thai company.

In the articles of association (also known as articles of incorporation) of a Thai limited company, one could denote the rights associated with different share classifications. Therefore, some shares could simply hold an equity interest in the company while not having any voting rights at shareholder meetings. Other types of shares could hold little or no equity in the company, but maintain voting rights regarding the Directors of the company. If a company owns Thai property, there could be specific shares that have certain rights in relation to the Thai property concerned. For example, a Thai company that owns Thai real estate could place special rights in the hands of certain shareholders with regard to said real estate. If a Thai company owns a Thai Condo, then share classification could be used to delineate the rights of individuals with regard to the Condo premises.

For those who are interested in Thai limited companies certified under the US-Thai Amity Treaty, these same principals could apply to an Amity Company. One shareholder could retain a sizable equity holding while another holds certain voting rights. The same could be said about a Thai limited company that has obtained a Foreign Business License. A company such as this could incorporate special shareholder rights in the provisions of the articles of association or incorporation.

These issues bleed into the realm of Thai Immigration because the shareholder in a Thai company could apply for a Thai business visa. The basis for such an application could be an impending shareholder’s meeting that the foreign national must attend. The approval of such an application would depend upon the Thai Embassy or Consulate concerned. If present in the Kingdom on another type of visa, an O visa, for example, it may be possible for the shareholder to attend a meeting in order to vote his or her shares.

Tags: Amity Treaty, Amity Treaty Company, Corporate Law, Limited Company Thailand, Shareholder Classification, Thai Company, Thai Limited Company, Thailand company, Thailand limited company, Treaty of Amity Company, US-Thai Amity Treaty, Voting Rights
Posted in Amity Treaty, Thailand Business, Thailand company, Thailand Condo, Thailand Embassy, Thailand Property, Thailand Real Estate, Thailand Visa | 22 Comments »

Thailand has become a major epicenter of trade in Southeast Asia. The Kingdom also remains one of the most important trading partners of the United States of America, the European Union, and the United Kingdom. Many businesspeople who do business in Thailand must deal with restrictions imposed upon foreigners under the Thai Foreign Business Act. American Citizens enjoy some benefits under the provisions of the US-Thai Amity Treaty. This Treaty was promulgated in the mid-60′s. In Thailand, Treaties are considered the “law of the land,” and are considered superior to locally drafted legislation (this notion is similar to many of the ideas codified in the American Constitution, specifically the Supremacy Clause).  As the Amity Treaty is the “law of the land,” it supersedes the Foreign Business Act.

A Thai Limited Company certified under the provisions of the Treaty of Amity is a good vehicle for conducting business in Thailand, but the Treaty does have caveats and Companies conducting certain types of business cannot obtain Treaty Certification. Most importantly for some, Amity Treaty Companies cannot own land. Even though an Amity Company is accorded “National Treatment,” the company is barred from holding property in the form of Thai Real Estate. Although, technically it may be possible for an Amity company to purchase a Condo in Thailand.

Aside from ownership of Thai property, there are other activities which an Amity Company cannot engage in, such as: Inland Transportation, Communications, Fiduciary Functions, and the Practice of Professions. Each of these types of activity are reserved to Thai nationals and/or Thai Companies. Even still, the Amity Treaty provides American Citizens with the opportunity to own virtually 100% of a Thai company. For many types of businesses the Amity Treaty is a perfect solution to the problems imposed upon foreigners by the Foreign Business Act.

Some have postulated regarding the possibility of using American Citizens as nominees in order to obtain Amity Treaty benefits. This is basically impossible as nominee shareholders are illegal under current Thai law. That being said, delineating whether or not an American Company is “American,” could be difficult. The relevant agencies of the Thai Ministry of Commerce adjudicate Amity Treaty Certification applications on a case by case basis and come to a decision based upon the makeup of the corporate shareholders in question.

An Amity Treaty Certificate is somewhat similar to a Foreign Business License. However, the two documents are issued based upon different legal foundations. There are some US Immigration benefits accorded to Thai nationals under the US-Thai Treaty of Amity in the form of E visas, but there is not a direct counterpart found under Thai Immigration law.

Tags: Amity Treaty, Amity Treaty Company, Thai Company, Thai Limited Company, Thailand company, Thailand limited company, Treaty of Amity, Treaty of Amity Company, US-Thai Amity Treaty, US-Thai Treaty of Amity
Posted in General Legal Information, Thailand Business, Thailand company, Thailand Condo, Thailand Property, Thailand Real Estate, US Visa and Immigration | 5 Comments »