On May 29, 1966, the United States of America and the Kingdom of Thailand signed the Treaty of Amity and Economic Relations. This agreement permits residents and enterprises from the United States to open a company or branch office in Thailand. Under the pact, it is allowed to do almost anything that a Thai firm is allowed to do.
Benefit of Thailand-US Amity Treaty
The Treaty’s main advantages are that it permits American corporations to own a majority of their company’s shares, have a branch office in Thailand, and enjoy national treatment. That is, they are permitted to conduct business on the same terms as Thais and are excluded from the majority of the foreign investment limitations set by the Alien Business Decree of 1972. In exchange, Thais are granted reciprocal investment rights in the United States, and Thai entrepreneurs are eligible for visas as “treaty traders” and “treaty investors” in the United States.
Thailand is allowed to impose the following restrictions on American and other foreign investments under the Treaty:
- Land ownership,
- Inland communications and transportation,
- Fiduciary functions,
- Banking involving depository services,
- Domestic trading in indigenous agricultural goods, and
- Land or other natural resource exploitation.
It’s worth noting that, under the terms of the Uruguay Round of the GATT multilateral trade negotiations, Thailand must grant the same Most Favored Nation (MFN) designation to all World Trade Organization (WTO) members as it does to the United States by January 1, 2005. As a result, Thailand can either grant all other WTO member-states the same benefits as the United States under the Treaty of Amity and Economic Relations, or it can simply cancel the Treaty.
Are you Eligible to Receive the Rights Under the Treaty?
The applying person(s) or business organization must be registered and organized as an American sole proprietorship, partnership, representative office, branch office, joint venture, or limited company to be eligible for Treaty protection.
A person who wishes to get protection as a sole proprietorship under the Treaty must be a U.S. citizen, either by birth or naturalization.
A majority of the owners and directors of an application business entity intending to get Treaty protection as a partnership, branch office, joint venture, or limited company must be US citizens, either by birth or citizenship.
The parent or holding company of an application U.S. corporation that is a subsidiary of a bigger, parent firm must also have U.S. citizen majority ownership and management.
The majority of the owners and stockholders of both the applying firm and the upcoming company must be U.S. citizens either by birth or naturalization for an application U.S. firm to get a majority of the Thai company’s shares.
Registration Procedure under Treaty of Amity of Thailand
To be eligible for Treaty protection, a business must go through an official process to demonstrate “registration under the Treaty.” An American company or branch office will not be recognized by the Thai government until it has been properly registered. To complete the administrative process of demonstrating “register under the Treaty,” the applying business organization can either consult with one of Thailand’s many law firms or follow the steps below:
Sole Proprietorship:
A notary copy of the owner’s passport or birth certificate to verify U.S. citizenship can seek protection under the Treaty for a sole proprietorship (either by birth or naturalization). They must submit this information for certification to the Commercial Service office at the US Embassy in Bangkok.
Other Forms of Business:
A Notary Public must notarize the following documents. Henceforth, you should forward to the Commercial Service office at the Embassy in Bangkok. It is mandatory for certification for a partnership, branch office, joint venture, or limited company:
- Articles of Incorporation.
- The Company’s Bylaws.
- An Affidavit of the Manager or Corporate Officer, stating the following:
- The company’s name, registration number, and registration date.
- The registered office’s address.
- The jurisdiction of the registration of business.
- Each director’s name, address, country, age, and race. Additionally, the number of shares held by each, and the director(s) having the power to bind the firm.
- The Company’s authorized capital. They are the number of shares and their par values, as well as the amount of paid-up capital.
- The total number of shareholders, as well as their nationalities and the number of shares they possess or hold.
Other Cases:
Now let us take the case of a subsidiary of a bigger or parent firm. In this case, the applying U.S. corporation must also send the same required documents to its parent company. Applicant must send the document to the Commercial Service office at the U.S. Embassy in Bangkok, in addition to the above required documents.
An applying U.S. firm can invest directly in a Thai business and obtain a majority of the Thai company’s shares. But for that, it must provide notarized confirmation that the majority of the owners and directors. Owners of both the applying company and the will-be business must be U.S. citizens by birth or naturalization.
After receiving these documents, the Commercial Service will prepare a certificate. It addresses the Thai Ministry of Commerce’s Department of Business Development. It certifies that the applying business organization is an American-owned and operated corporation. Henceforth it testifies and is thus entitled to national treatment under the Treaty’s requirements.
Your Final Steps!
Acquire original copies of all of the documents and the application form from the Thai Department of Business Development of the Ministry of Commerce. Henceforth, you must deliver them to the Thai Department of Business Development of the Ministry of Commerce. It is mandatory to register under the Treaty and complete the procedure after certification by the Commercial Service.
Allow four to five weeks for the entire procedure to complete. The Commercial Service office normally issues the certification in less than a week. However, Thai government registration can take anything from a few weeks to several months. Please keep in mind that the following method description is based on the Commercial Service’s best knowledge. It might still be a good idea to consult with a Thai legal firm like Konrad Legal.
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