December 2, 2024
Under Thailand's Foreign Business Act (B.E. 2542) and related regulations, foreign individuals and companies generally must apply for a Foreign Business License to operate in Thailand with 100% foreign ownership. However, specific exemptions or simplified procedures are available for companies and individuals from certain countries with which Thailand has signed treaties. One such treaty is the Treaty of Amity and Economic Relations between the Kingdom of Thailand and the United States of America (hereafter referred to as the Treaty of Amity), which provides special privileges for U.S. citizens and U.S. companies seeking to conduct business in Thailand.
This article provides a detailed explanation of the process for applying for a Foreign Business Certificate in Thailand under the Treaty of Amity, including the necessary conditions and requirements.
Overview of the Treaty of Amity
The Treaty of Amity, signed in 1966, aims to foster trade and economic cooperation between the United States and Thailand. Under the terms of the treaty, U.S. citizens and U.S. companies are granted certain benefits when engaging in business activities in Thailand.
Eligibility for the Foreign Business Certificate
In accordance with the Treaty of Amity, the following categories of U.S. citizens and entities are eligible to apply for a Foreign Business Certificate:
1. U.S. Citizens
U.S. citizens may apply for a Foreign Business Certificate under the Treaty of Amity to engage in lawful business activities in Thailand without being subject to the restrictions imposed on foreign shareholders under Thai law. Specifically, U.S. citizens are allowed to fully own a company in Thailand, without the constraints related to the foreign ownership ratio that apply to other foreign investors.
2. U.S. Companies
U.S. companies may apply for a Foreign Business Certificate provided they meet the following conditions:
o Company Incorporation: The company must be legally incorporated either under Thai or U.S. law.
o Majority U.S. Shareholding: The company must be at least 51% owned by U.S. citizens or U.S. entities.
o Board Composition: The majority of the company's board members must be U.S. citizens or Thai citizens.
o Signing Authority Restrictions: If the company has a single authorized signatory, that individual must not be a third-country national. If there are multiple authorized signatories, at least half must be U.S. or Thai nationals, and their signatures must be joint.
In the case of a U.S. company, in addition to the shareholder composition, the nationality of the board members and the management structure must also comply with the criteria outlined above.
Restricted Business Activities
While the Treaty of Amity allows significant operational freedom for U.S. companies and citizens, it does impose restrictions on certain business sectors. U.S. companies and citizens are not eligible for the treaty’s protections in the following areas and must apply for a Foreign Business License under Thailand’s Foreign Business Act:
• Transportation and logistics
• Banking, particularly deposit-taking
• Asset management
• Extraction of natural resources or land resources
• Domestic trade in local agricultural products
Application Process
1. Prepare the Required Documentation
Applicants must compile the necessary documents, which typically include:
o Company registration documents
o Proof of shareholder and board composition
o Authorization letters
o Translations of documents (where applicable)
2. Submit the Application
The completed application, along with the required documents, should be submitted to the Department of Business Development (DBD) for review.
3. Review and Approval
The DBD will evaluate the submitted application to determine whether the applicant meets the qualifications specified in the Treaty of Amity and assess whether the proposed business activities fall within the restricted sectors.
4. Receive the Foreign Business Certificate
If the application is approved, the applicant will be granted the Foreign Business Certificate, authorizing the company to conduct lawful business activities in Thailand.
By following the outlined steps and meeting the conditions specified under the Treaty of Amity, U.S. citizens and U.S. companies can benefit from streamlined procedures and certain exemptions when establishing and operating a business in Thailand.
