Foreign companies wishing to operate in business activities controlled by the Foreign Business Act are required to apply for a Foreign Business License prior to commencing their business operation in Thailand.
Laws concerning conducting business in Thailand are set to reserve certain rights only for Thai nationals. In order to protect their interest, Thai government issued a Thai Foreign Business Act of 1999 that restricts in which activities “foreign” companies may engage in.
The Foreign Business Act defines the term “foreigner” as:
The Foreign Business Act draws a clear line as to what activities are restricted and regulated for foreigners. While some activities are completely prohibited, some may be engaged in with prior approval from a designated government agency, and some do not require any special approval at all. There are three lists annexed to the Foreign Business Act for the following purposes:
Based on the above definitions, a foreign company wishing to operate in business activities listed in List 2 and List 3 of the Foreign Business Act is required to apply for the Foreign Business License from relevant authorities prior to commencing its business operation in Thailand.
|List 1||List 2||List 3|
|Open to foreigners|
|Authority issuing the Foreign Business License||N/A||The Cabinet||Thai Ministry of Commerce|
|Capital requirements||N/A||3 million THB or more||3 million THB or more|
There are two notable business structures that favour majority foreign ownership and also allow for easier obtaining of the Foreign Business License. Those are:
A foreign company in the form of a Representative Office, Branch Office or a company registered in Thailand with majority foreign capital investment and shareholding must submit an application for the Foreign Business License to the Foreign Business Committee whereby there are two steps involved as follows:
Acceptance of the application by the Ministry of Commerce (MoC). A completed application form for the license along with all supporting documents must be submitted to the MoC for the registrar to review. The registrar may request for further documentation or information to support the business license application.
Review of the Foreign Business License application by the Foreign Business Committee
When the application is accepted by the MoC, the registrar at the Foreign Business Committee will review it within a sixty-day consideration period for which they will consider the advantages and disadvantages of the business to the nation’s safety and security; economic and social development; public order, good morals, art, culture and traditions of the country; natural resources, conservation, energy and environment, consumer protection, size of the enterprises, environment; and technology transfer and research & development.
In the case that an application for a license is rejected, the MoC will inform the applicant within 15 days of the decision in writing, expressly stating the reason for rejection. Applicants may appeal the decision within 30 days from the date on which the applicant received the rejection notice for the business license application, after which the decision of the Minister shall be final.
Foreign companies operating in business activities under List 2 and List 3 of the Foreign Business Act in and holding a license must have a registered capital of no less than 3 million THB and comply with other requirements such as those concerning the schedule for the minimum capital to be brought or remitted into Thailand, the ratio of the capital and loans to be used in the permitted business, the number of foreign directors or representatives who may have domicile in the Kingdom as prescribed by the Ministerial Regulations.
If you would like to explore the possibility of applying for a Foreign Business License for your company in Thailand, we can expertly assist you with preparation of the government forms for the license application, including the necessary Thai translation of your company documents, the submission process up until collection of the Foreign Business License certificate on your behalf upon receiving approval from the Ministry of Commerce in Thailand.
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