Navigating the Foreign Business License Application in Thailand

In Thailand, a Foreign Business License is a privilege offered to certain non-local companies—specifically companies where the majority of its shares are owned by non-Thai nationals—or investors wishing to conduct business in Thailand.

The FBL allows them to operate without facing the restrictions applied to foreign nationals under Thailand’s laws.

If a business wishes to apply for an FBL, it should first check with the Foreign Business Act (FBA) to ensure they’re an applicable business type allowed to operate in Thailand by Thai Law.

Different Businesses That Foreigners Could or Couldn’t Partake In

Applying for an FBL in Thailand includes several key considerations and steps, particularly under the framework of the FBA of B.E. 2542 (1999). Let this a comprehensive guide based on the latest available information.

First, let’s discuss FBL requirements and candidacy. The FBA governs all the foreign business activities in Thailand while categorizing such businesses into three groups.

• Group 1: Businesses exclusively reserved for the citizens of Thailand and are thus forbidden for foreigners to enter.

• Land trade.
• Livestock farms.
• Extracting Thailand medicinal herbs.
• Crop growing, rice farming, or plantations.
• Timber processing from the forest or forestry.
• Creation or casting of monk alms bowls and Buddha images.
• Auction and trade of objects for sale or objects of historic value to Thailand.
• Radio and television station businesses, radio broadcasting stations, and the press.
• Fishery, but only in terms of catching in Thai waters aquatic animals and specific Thai economic zones.

• Group 2: Pursuits involving natural resources, national safety, traditional and folk handicrafts, arts, and culture. Such activities require Cabinet approval and a license.

  According to FBA’s Section 15, as long as the foreigner, a juristic person, has a company where not less than 40 percent of its shares are held by Thai nationals or juristic persons which are not foreigners, then he can operate any business specified in Group 2.

• Group 3: The businesses where Thai citizens aren’t prepared to compete with foreigners, thus requiring the FBL but not Cabinet approval for sectors like retail, construction, and advertising.

• Lime production.
• Tour guide service.
• Legal services provision.
• Businesses in advertising.
• Sale of food and beverages.
• Forestry via a grown forest.
• Accounting services provision.
• Engineering services provision.
• Architectural services provision.

• Construction except for the following:

• Constructing structures for delivery of infrastructure and public services within the scope of transportation or public utilities that need special paraphernalia, expertise, tech, or machines requiring the minimum capital of ฿500 million (US$14.44 million) and up from foreigners.

• Construction of other things as stipulated by the Ministerial Regulation.

• Auction sales except for the following:

• The sale by auction includes international bidding of objects other than antiques, artistic items that are artistic handicrafts or works, items of antiquity of Thailand, and items with Thailand-relevant historical value.

• Sales by auction of other such categories under the stipulations of Ministerial Regulation.

• Agencies or brokerages except for the following:

• Serving as an agent/broker in the procurement, sale, or purchase of goods or services needed in producing or providing services among affiliated organizations.

• Serving as an agent/broker in the purchase or sale of securities or in services linked to futures trading of financing instruments or securities or agricultural commodities.

• Serving as an agent/broker in the purchase, distribution, sale, procurement, or acquisition of foreign and domestic markets for distributing imported or domestically made goods, which is part of international trade operations, and has a minimum capital of ฿100 million (US$2.89 million) or beyond from foreigners.

• Serving as an agent/broker of other types of agencies or brokerages as outlined by the Ministerial Regulation.

• Development, propagation, or cultivation of plant varieties.
• Rice mills and flour production from rice and economic plants.
• Fishery in terms of the hatching and raising of aquatic animals.
• Hotel businesses save for the hotel management service industry.
• Production of veneer wood, chipboards, hardboards, and plywood.
• Internal trade of traditional agricultural produce or products not prohibited by Thai law.
• Other services businesses save services businesses as stipulated by the Ministerial Regulation.
• Wholesale of all product types with the minimal capital of each store in the amount lower than ฿100 million (US$2.89 million).
• Retail sale of all types of goods with a total minimum capital in the amount lower than ฿100 million (US$2.89 million) or with the minimum capital of each store in the amount lower than ฿20 million (US$578,000).

Operations falling under Group 1 are absolutely not allowed for foreigners to be a part of. Activities found in Group 2 are prohibited to foreign nationals unless the Cabinet grants them permission to partake in them.

As for the companies included in Group 3, they’re banned to foreigners unless they’re permitted by the Director-General of the Commercial Registration Department (CRD) to become part of the list.

The Application Process for the FBL

Expect the following when applying for your FBL.

• Eligibility and Qualifications: Non-citizens of Thailand must be qualified in accordance with Section 16 of the FBA, which includes qualifications like not being under legal prohibitions and having Thailand residence.

  They could also have permission for temporary stay. The FBA also requires the foreigner in question to not be a quasi-incompetent or incompetent person.

• Document Preparation: You need to specifically collect supporting documents such as financial statements, a detailed business plan, shareholding structure, and company incorporation documents for your FBL application.

  Your other supporting documents include those specified by the Foreign Licensing Department. Consult with them for more details or leave the details to us here at Umpire Legal.

• Submission of the Application: Send your application to the FLD at the Ministry of Commerce. The process includes form fill-out, translation of necessary documents to the Thai language, and making sure all documents adhere to department guidelines.

• Review and Approval: Your application is first reviewed by the Foreign Business Committee. They’ll analyze the impact your company will have on Thailand in terms of economic growth, national security, local employment and so forth.

  Your company is likely to get the license if it’s able to support Thai economic interests when all is said and done. This assessment process can take several months to complete and may need further info and clarification throughout.

• Decision and Issuance: Once you’ve gotten application approval, you’ll get license issuance for your FBL. If you instead get application rejection, you have the right to appeal within a month.

  From there, the Minister himself will review your application carefully for its merits one last time. Whatever they decide will become the final decision for your company’s licensing.

A More In-Depth Look at the Qualifications for an FBL Application

Under the FBA’s Section 16, it is stated that a foreigner who intends to apply for an FBL must have specific qualifications mentioned below while not being under prohibitions also outlined below.

• He must not be less than twenty years old.
• He must have residence in Thailand or have been permitted to enter the country temporarily under immigration law.
• He must not be an incompetent or quasi-incompetent person.
• He must not be bankrupt.
• He must not be disciplined by a court judgment or fined in settlement of any offense under the FBA or under the Notification of the National Executive Council No. 281 on 24th November B.E. 2515 (1972) unless he’s been discharged for a length of time not less than 5 years prior to the date of the FBL application.
• He must not have gone to prison by a court judgment for reasons of cheating, cheating creditors, misappropriation, or trade-related offenses under the Penal Code, or offenses linked to public loan fraud or offenses under immigration law unless he has been discharged for a length of time not less than 5 years prior to the date of applying for an FBL.
• He must have had a revoked license issued under FBA or under the Notification of the National Executive Council No. 281 on 24th November B.E. 2515 (1972) within 5 years prior to the date of applying for an FBL.

Who are Considered “Foreigners” Under the FBA?

Under the FBA’s Section 4, a foreigner is defined as the following.

1. A natural person who isn’t a non-Thai national.

2. A juristic person not registered as a Thai citizen.

3. A juristic person registered in Thailand, but described as the following:

1. A juristic person has at least half of his capital shares held by persons under (1) and (2) or whose investment has been placed by persons under (1) and (2) in the amount at least equal to half of the total capital.

2. A limited partnership or registered ordinary partnership, with the manager or managing partner being the person under (1).

4. A juristic person registered in Thailand with at least half of the capital shares of which are held by persons under (1), (2), or (3) or a juristic person whose investment has been placed by persons under (1), (2), or (3) in the amount at least equal to half of the total capital.

Post-Application Considerations

Once you’ve had your FBL approved, here are some further considerations to keep in mind.

• Capital Requirements: As mentioned above, you need a minimum capital of ฿2 million for general businesses. However, if your company instead belongs to Group 2 or 3, you instead need a ฿3 million capital minimum. Before operations start, the capital must be paid in full.

• Enduring Compliance: Having an FBL means you must comply with Thai business laws, which includes regulatory stipulations, capital-to-loan ratios, and allowable number of (foreign) directors.

Why The FBL Is Required

If you have a foreign company that has majority foreign ownership (that is, it’s not a Thai Limited Company with majority local Thai ownership) and it belongs under Group 2 or 3 of the list above, an FBL is required for it to operate legally in Thailand.

The license guarantees that the foreign company can contribute in a positive manner to the country’s economy while Thailand safeguards its national interests from foreign interference at the same time.

Foreign-owned businesses, foreign shareholders, and foreign investors can avail of an FBL at the Ministry of Commerce in Thailand, specifically within the Foreign Licensing Department (FLD).

A company gunning for an FBL should have a minimum total capital of ฿2 million (around US$58,000). Moreover, the process of applying for an FBL is usually expedited if you’ve obtained Thai Board of Investment (BOI) approval beforehand.

Strategic Considerations for Having an FBL

It’s in the best interest of most foreigners conducting business in Thailand to have their own FBL. Here are the benefits and considerations for getting an FBL.

• Treaty Benefits or BOI Involvement: Using promotions from BOI or benefits from the United States and Thailand Amity Treaty can streamline the process of FBL application or bypass several restrictions.

  This also includes getting tax incentives or certain cases allowing full foreign ownership for the company getting an FBL.

• Professional Assistance: Because applying for an FBL can be quite intense and complicated, hiring a law firm who specializes in Thai business laws is highly recommended.

  Hire us at Umpire Legal and we’ll help you untangle the complexity of this process, streamlining everything while ensuring your compliance in every which way. We’ll navigate through the bureaucratic challenges presented in this endeavor.

• Expectations and Realities: Applying for an FBL and navigating through its so-called bureaucratic challenges requires painstaking preparation, a lot of patience, and professional guidance from the likes of us here at Umpire Legal.

  This ensures that all legal requirements, documents, and considerations are collected and met without any snags whatsoever, leading to a licensed business venture in the Kingdom of Thailand when push comes to shove.

Why You Need Thailand Legal Counsel

As your Thailand legal counsel, we here at Umpire Legal will provide you with legal services for the sake of guiding you when handling the documents, details, and processes involved when acquiring your FBL or setting up your legitimate Thai business.

Our legal team of experts will always be available to offer you expert consultation as you need them to deal with legal issues and requirements.

If you’re an expatriate or foreigner requiring legal services in getting your own FBL so that you can proceed with your Thai-related business legally then you can depend on us for help.

Just send us a message at your most convenient time for all your Thailand business license acquirement needs, and any other legal concerns you may have.