The Foreign Business Act (FBA) of Thailand outlines some business models that are forbidden to foreign companies. However, there is an approach that allows foreign companies to participate in such operations, which is acquiring the Foreign Business License in Thailand.
For more information on the license, keep reading.
Who is a Foreigner for Foreign Business License in Thailand?
A natural person who does not have Thai nationality or a juristic person not registered in Thailand is a foreigner under the FBA. A juristic individual registered in Thailand but with non-Thai natural and/or juristic persons holding more than half of the capital shares is also a foreigner.
A limited partnership or a registered ordinary partnership with a foreign person as managing partner or manager is subject to the same rules. Foreigners, as defined above, cannot conduct business in Thailand without first obtaining permission from the appropriate authority.
After obtaining a license from the Director-General, two types of “special” foreigners can operate (certain) businesses –
- Foreigners who were born in Thailand but did not receive Thai citizenship.
- An individual whose nationality is revoked under the law regulating nationality or other rules makes him/her a foreigner.
In either case, all foreigners deported (or awaiting deportation) or remaining in Thailand without authorization under the Immigration Law or other laws are forbidden from conducting any business in Thailand.
Basic Requirements
The minimum capital required to start a company cannot be less than that required by ministerial legislation, and in any case, cannot be less than 2 million THB. Ministerial regulations can also specify the time limit for bringing or remitting the minimum capital into Thailand. These conditions are not mandatory the money or property exists from a previous business activity in Thailand (section 14 of the FBA).
The Minister, on the recommendation of the Committee, has the authority to issue ministerial regulations imposing additional requirements on international licensees. These conditions may pertain to the use of the capital-to-loan ratio in the permitted company. It is applicable on the number of foreign directors who must have a domicile in the Kingdom or the number and length of time that the minimum capital must be kept in the country. If the business does not appear to meet or no longer meets these provisions, the international business licence may be suspended or revoked (section 18 of the FBA).
Mandatory Provisions for Foreigners to Apply for Business License
- Having attained the age of twenty.
- Having a residency permit or legal permission to enter Thailand on a temporary basis under Thailand’s immigration laws.
- Being (quasi-)incompetent is not an option.
- Being a non-bankrupt person.
- No history of fine payment or disciplinary action by court order for an offense under this Act. Compliance with National Executive Council’s Announcement No. 281 dated November 24.
- No convictions for illegal activities, debtor cheating, embezzlement, or trade-related offenses under the Criminal Code. There should not be offenses involving fraudulent loans to the public or immigration-related offenses.
- Never having had a license suspended under this Act or the National Executive Commercial’s Notification No. 281 dated November 24, 1972.
Up to the date of the filing, the 5th, 6th, and 7th conditions are subject to a five-year term. Firstly, if the juristic person is the license applicant, the international directors, managers, or persons in charge of the juristic person’s operations must also meet the qualifications. And secondly, they should not possess the prohibited characteristics mentioned above (section 16 of the FBA).
What is a Foreign Business License in Thailand?
The Royal Thai Government grants a Foreign Business License (FBL) in Thailand to a foreign company, but, under conditions. These are applicable for non-Thais to own the majority of the company’s shares or foreign investors. However, they can run a business that has restrictions for foreign nationals under Thai law.
If a foreign company wants to apply for such a license, it must first review the “Foreign Business Act“. They must do so to see if the form of business they want to run is legal in Thailand. Moreover, some company forms are exclusively for Thai people.
Foreign investors and foreign-owned companies may apply for a Foreign Business License at Thailand’s Ministry of Commerce’s Foreign Licensing Department. In Thailand, the minimum capital requirement for forming such a company is 2 million THB.
Restrictions in the Foreign Business License
According to the Foreign Business Act (FBA), there are three categories of business operations:
List 1: Businesses that strictly restrict the involvement of Foreigners.
List 2: Foreign business influencing national security or the arts, culture, traditions, customs, and folklore. Similar businesses targeting handicrafts, or natural resources and the environment.
List 3: Businesses in which Thai citizens are unwilling to compete with foreigners
- Restrictions from engaging in activities that come under List 1.
- Foreign businesses cannot include in List 2 until the Cabinet gives permission.
- Foreigners cannot operate businesses protected by List 3. It is possible only if the Director-General of the Commercial Registration Department (“CRD”) grants authorization.
Easy Method to Obtain Foreign Business License in Thailand
In general, obtaining a Thai Foreign Business License is a lengthy and complex operation. A decision on the application could take as long as four months. Therefore, Konrad Legal strongly advises that you or your organization seek legal advice before applying for such a license.
Finally, before you embark on such a process, our FREE first consultation will show you the involved process. In addition, we might be able to make alternate recommendations that are a better fit for you or your business. Mail us at [email protected] to book your free consultation round.
