Under the Foreign Business Act of 1999 (B.E. 2542), foreign involvement in business activities in Thailand is limited. Meaning to say, companies with shares that are majority foreign-owned can be classified as foreign business entities thus the need for them to secure the foreign business license first before they can operate in Thai soil.
On the contrary, companies with less than 49% foreign ownership can operate without the need to obtain a foreign business license as they are classified as Thai companies.
However, foreign business entities wishing to invest in Thailand and are looking forward to obtain the foreign business license must first make sure that the type of activity they will indulge in the Kingdom belongs to either:
- List 2 – these are businesses permitted to foreigners but on certain conditions and these foreign companies need to obtain permission from the Cabinet first.
- List 3 – these are businesses that are not yet permitted to foreign companies but maybe allowed if permission has been handed by the Director-General of the Commercial Registration Department (CRD).
Yet, foreign companies have other options when it comes to conducting business in Thailand and these are through the Treaty of Amity (for American-owned companies) and the Thailand Board of Investment’s promotion.
Obtaining the foreign business license practically involves two steps:
- The acceptance of an official of the Ministry of Commerce of the official company documents and application for committee review and;
- The committee’s actual review of the application.
The official representative of the company must submit an application for foreign business license at the Ministry of Commerce for review. Together to be submitted with the application form are various company documents such as but limited to:
- list of company shareholders,
- amount of paid-up capital,
- business location,
- list of directors and authorized company signatories and
- other details that include evidences of the official company representative is qualified to act in such capacity.
These documents must be notarized before submission.
Once the application form and attached company documents are reviewed upon by the official of the Ministry of Commerce and found them to be complete and in order, he will then issue a receipt.
This is also means that the Committee is now in charge of reviewing the application and they will base their decision on the following criteria:
- The advantage and disadvantage it will cause to the country’s safety and security.
- Economic and social development.
- Public order, good morals, art, culture and traditions of the Thailand.
- Natural resources conservation, energy and environment, consumer protection, company size and employment.
- Technology transfer and research and development.
On one look, the application process may be seen as simple but in reality it can be highly complicated and time consuming thus making sure that the documents are in order is critical.
Furthermore, this leads to the fact that foreign business applying for foreign business license need to solicit the services of corporate lawyers and or law firms in Thailand to make sure that everything is in order and in compliance to the requisites and the Foreign Business Act.