Integrity Legal

24th November 2009

Thailand is one of the major trading centers in Southeast Asia. As a result, many foreign nationals wish to conduct business in the Kingdom of Thailand. However, the Thailand Foreign Business Act precludes foreign ownership of Thai companies. Strictly speaking, foreign ownership is not technically illegal, but operating such a company for profit is against the law.

When we say, “foreign ownership,” we mean foreign majority ownership as foreign nationals are allowed to own a minority stake in a Thai company, up to forty-nine percent. If a Thai owns fifty-one percent of a company in Thailand, then that company is considered to be a “Thai Company.”

There are some who incorporate “Thai companies” that utilize so-called “nominee shareholders.” A nominee is one who owns shares in a Thai company on behalf of another. A nominee is not an “active shareholder,” in a company. Under current Thai corporate law nominee shareholders are illegal. However, defining what constitutes a “nominee shareholder,” can be difficult.

Thai law does provide for a way around the restrictions imposed by the Foreign Business Act. There are ways to license a Thai Company, with majority foreign ownership, to conduct business in Thailand.

On method of facilitating a foreign company to conduct business in Thailand is through a Foreign Business License. These documents can be difficult to obtain and the process for obtaining a Thai foreign business license can be very time consuming. Once granted the license will specify the exact nature of the business and the company will be precluded from conducting any other type of activity, unless another license is obtained.

Another method of facilitating foreign ownership of a Thai company is through the US-Thai Amity Treaty. As the name suggests, the US-Thai Treaty of Amity and Economic Relations is a bilateral agreement between the Kingdom of Thailand and the United States of America. A company certified under the terms of the Treaty is given “national treatment,” allowing it to operate in the same way as a “Thai Company.” The major exception being that an Amity Treaty Company is precluded from owning real estate in Thailand. Other types of Thai property could be owned by an Amity Company, such as a Thai Condo. Also, the provisions of the Treaty grant the aforementioned benefits exclusively to United States Citizens. Therefore, this method of certification is not for everyone.

The Australia-Thai free trade agreement provides some special benefits to Australians in Thailand as Australian Citizen may be allowed to own a majority stake in certain types of Thai companies.

A final method of licensing a foreign company in Thailand is through the Board of Investment or BOI. A BOI company can receive special benefits in the form of rights to operate and some BOI companies can own land. That being said, BOI companies are very difficult to incorporate and require a great deal of legal expertise to set up. BOI Companies are generally not advisable for those thinking of establishing a small Thai business. For large enterprises, such a setup may be advisable due to the fact that a Thailand visa and/or work permit is generally easier to obtain for a BOI company.


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