Business laws in Thailand reserve certain rights only for Thai nationals. Therefore, foreign investors face certain restrictions when doing business in Thailand:
Juristic Persons in Thailand
The law separates foreigners in terms of juristic persons into two different kinds:
- Juristic person not registered in Thailand
- Juristic person registered in Thailand having the characteristics as follows:
- Limited company or public limited company whereby over 50% of its capital shares are owned by foreigner(s),
- Limited partnership or registered ordinary partnership whereby over 50% of its capital is invested by foreigner(s), or
- Limited partnership or registered ordinary partnership having a foreigner as the managing partner or manager.
Foreign Business Act Restrictions
According to Thailand Foreign Business Act B.E. 2542 (FBA), there are 3 types of business activities:
- List 1: Business Not Permitted to Foreigners
- List 2: Business Permitted to Foreigners under Conditions
- List 3: Business Not Yet Permitted to Foreigners
Lists 1, 2, or 3 of the Foreign Business Act in Thailand are subject to the limitations imposed by this Act.
- Activities that fall under List 1 are strictly prohibited to aliens.
- List 2 are prohibited to aliens unless permission is granted by the Cabinet.
- Businesses that are covered by List 3 are prohibited to aliens unless permission is granted by the Director-General of the Commercial Registration Department ("CRD").
Based on the above definition, if majority of the shares of a limited company are held by Thais, it is regarded as a Thai company and thus not subject to this Act. This means that aliens are generally allowed to participate up to 49% in a company engaged in restricted businesses. Beyond that, the approval requirement must be complied with. Strictly speaking, any company with majority of foreign shareholders is required to apply for the Foreign Business License (FBL) if it engages in a restricted business.
The minimum capital requirement for foreigners is two million baht in general, and three million baht for those under List 2 or List 3.