For the commencement of the business, the minimum capital investment used cannot be less than what is prescribed in the regulation laid down by the Appropriate Government and in any other case cannot be less than 2Million THB. The Appropriate Government may also prescribe the time-frame for the minimum capital investment to be brought while commencement into Thailand. As per Section 14 of FBA, these regulations are not applicable for any business which is bringing the capital from other business which was operating its business in Thailand. The Ministry with the consultation of the Committee will issue ministerial regulations which have laid down for the foreign license to comply with. These laid rules can also relate to the ratio of the capital brought into and the loans to be utilized in the permitted business, the list of foreign directors holding domicile in the Kingdom or the number and period for keeping the minimum capital in the country. As per Section 18 of the FBA, the license for foreign business can be suspended or revoked if the conditions are not fulfilled.
The following conditions which are prescribed for establishing the license:
The criteria 5th, 6th, and 7th criteria are applicable only for five years up until the date of application. For any legal person being the license applicant, any foreign directors, managers or any other persons in charge of the day-to-day operation of the particular legal person must hold all the qualifications and shall not have any restricted characteristics as stated in Section 16 of the FBA.
|List One||List Two||List Three|
|Reason||The activities included in List 1 deals with the programs that is directly related to the authenticity of Thai culture and heritage.||List 2 activities include programs safeguarding national safety and security, art and culture, traditions and folk handicrafts and natural resources or ecological environment.||List three included activities that Thai nationals are not prepared to compete.|
Newspaper and Publishing Business
Animal Husbandry and poultry farming
Forestry and Wood Fabrication from Forest
The fishery in Thai waters within the specific economic zones in Thailand
Harvesting of Thai Herbs
Trading and auctioning of Thailand’s antiques and other historical pieces
Manufacturing, retailing, repairing and maintenance of firearms and other ammunitions
Transportation carried on domestic land, waterway or air
Trading of Thailand’s artifacts
Harvesting of the silkworm, manufacturing of Thai silk yarn, a weaving of silk and Thai silk pattern and designs printing
Producing sugar from sugarcane
Processing of salt and rock salt mining
Legal services and accounting business
Engineering and Architecture service business
Construction (subjected to some exceptions)
Internal trade connected with native/ local products
Guided tours and travels
Hotelier and restaurant business
|License||Fully restricted and prohibited||Minister of Commerce with the consent of the Cabinet||Director-Generall with the consent of the Committee|
|Equity restrictions||Thai nationals or Thai companies should hold at least 50% of the share capital or capital investment.||Thai nationals or Thai legal persons should hold at least 40% of the capital or less if mandated by the Minister of Commerce (however in any situations not less than 25% and the number of Thai directors shall not be less than two-fifth of the total number of directors in the company).||Thai companies and nationals should hold at least 50% of the capital.|
|Other requirements||None||The minimum capital introduced during the incorporation of business should not be less than what is prescribed by the Ministerial Regulations and in any other case cannot be less than 2Million TBH. However, where the license is required under List 2 and 3, the minimum capital to be specified by the Ministerial Regulations required for the operation of each business shall, in any case, be not less than 3 Million THB. Specified conditions related to the licensee more than 20 years of age of not being bankrupt.|
Foreigners have been prohibited from carrying any operation from the following business as illustrated in List 1, annexed to the FBA :
1. Newspaper and Publishing business, radio and television broadcasting business.
2. Cultivation of rice or gardening.
3. Animal and poultry farming.
4. Forestry and wood fabrication.
5. The fishery in Thai Waters and within the demographic region.
6. Extraction of Thai herbs.
7. Trading and auctioning Thai antiques and historical objects.
8. Making or casting Buddha images and monks alms bowl.
9. Land trading.
These activities match the authentic aura of Thai economic and business culture, that is why these activities cannot be performed well by the foreigners.
Here, activities laid down in List 2 and List 3 can be performed by the foreigners, only when they have acquired special written permission to do so. It includes two genres of business activities which are divided based upon its protection. National safety and security, art and culture, traditions and handicrafts, natural resources are safeguarded. Unless special permission is received by the Ministry of Commerce with the approval of the Cabinet, any foreigners cannot start with the operations of these businesses which are safeguarded.
Manufacturing, retailing and maintenance of :
1) Explosives, Firearms, Ammunition, and Gun Powder.
2) Accessories and related items of firearms, ammunition, and explosives.
3) Ships and air-crafts, armaments or military vehicles.
4) All categories of equipment or components of war materials.
Transportation business on domestic land or airlines and waterways.
1. Trading of Thai antiques and arts and historical objects.
2. Manufacturing of carved woods.
3. Harvesting of the silkworm, manufacturing of Thai silk yarn, the weaving of silk and Thai silk patterns and designs printing.
4. Manufacturing of Thai musical instruments.
5. Manufacturing and processing of goldware, silverware, nielloware, bronzeware or lacquerware.
6. Manufacturing of Thai art and culture inspired crockery.
1. Producing sugar from sugarcane.
2. Production of salt including underground salt.
3. Mining of Rock Salt.
4. Mining which includes rock exploding or crushing.
5. Fabrication of wood for manufacturing furniture and wooden utensils.
To continue with the business operations of List Two activities, a minimum of 40% of the capital investment has to be held by the Thai Nationals or concerned legal persons who are not foreigners under the law. FBA also prescribes that unless there is a justified cause, The Minister (with the consent of the Cabinet) may decrease the ratio requirement which again shall not be less than 25 % and the number of the Thai directors in the company shall not be less than two-fifths of the total number of directors in the company.
Listing all the businesses as annexed by the Thai Legislator in a List 3 of the FBA, Thai nationals are not compatible unless granted permission by the Director-in-General with the consent of the committee. Also, this permission is subjected to certain rules and conditions.
1. Milling of rice for flour production and farm produce.
2. Culture of the fishery.
4. Manufacturing of plywood, veneer board, chipboard or hardboard.
5. Manufacturing of lime.
6. Accounting or Book-keeping service business
7. Legal service business.
8. Architecture service business
9. Engineering service business.
10. The construction business, excluding :
Basic construction services provided to the public in public utilities pr transport requiring special types of equipment, types of machinery, technology or expertise related to construction having the foreigner’s minimum capital of 500M THB or more. Other construction categories as prescribed by the Ministerial Legislations.
11. The business of broker or agent, excluding :
Broker or agents who underwrite securities or services related to future trading of products or financing instruments or securities
Broker or agents who trade or procures goods or services required for production or rendering services amongst affiliated enterprises.
Broker or agents who trade, purchase or distributes to both domestic and foreign markets for selling domestically that is produced or imported goods of international business operations having the foreigners’ minimum capital 100M THB or more.
Broker or agent of another category as prescribed by the ministerial regulations.
12. The auction, excluding :
A. International bidding not for the auction of antiques, historical artifacts which are the essence of Thai works of art, handicraft or antiques having the historical value.
B. Other auctions which are mentioned by the Ministerial Legislations.
13. Internal trading related to local products or manufacturing of what is not prohibited by law.
14. Selling of all types of goods having a total of minimum capital less than 100 M THB having the minimum capital of each shop less than 20M THB.
15. Bulk selling of all types of products having a minimum capital of each shop less than 100M THB.
16. Hotel business excluding hotel management services.
17. Guided tours and travels business.
18. Selling food or beverage
19. Plant cultivation and propagation business.
20. Other service businesses except that prescribed in the Ministerial Regulations.
This list is exhaustive. A carryall clause has been prescribed as well which states that other service categories businesses except that are specified by the Ministerial Regulations. This clause provides the Director-General with extensive powers where every activity requires his consent, except for those which are expressly authorized like hotel management services.
The Act prescribes that once the application is submitted, there is a responsibility to approve or provide the reason in case of rejection with 60 business days. Once consent is received, the license is generally received within 15 business days.
|List One||List Two|
|1. License application||1,000 – 2,000 THB|
|a) License for certain foreigners||5,000 THB|
|b) License for List Two Businesses||40,000 THB|
|Natural persons||10 THB for each registered capital of 1,000 THB with the minimum of 40,000 THB and the maximum of 500,000 THB|
|Juristic persons||Fraction of capital of 1,000 THB is treated as 1,000 THB|
|c) License List Three Businesses||20,000 THB|
|Natural persons||5 THB for each registered capital of 1,000 THB with the minimum of 20,000 THB and the maximum of 250,000 THB|
|Juristic persons||Fraction of capital of 1,000 THB is treated as 1,000 THB|
|3. Certificate||20,000 THB|
|4. Replacement of License of Certificate||5,000 THB|
A written notification would be provided by the foreign-owned company if his application is rejected. The decision is received within 30 days of lodging the appeal to the company. The decision of the minister is the ultimate decision that is submitted within the 30 days of submission.
There can be two possibilities :
1. One can request the Industrial Estate Authority of Thailand (IEAT) or the Board of Investment (BOI) to allow him a special preference ‘promotion’.
2. Till the US Thai Amity Treaty has been reinstated, setting up a company under the subsequent act, allowing American nationals and companies to hold the majority of shareholding or to fully own a company, representative office or branch office that is located in Thailand.
You can get to know information here: 100% of foreign business ownership.
Business operations relating to banking, insurance, and finance must hold at least 75% Thai shareholders and companies dealing in domestic shipping must hold at least 70% of shares.