According to the Foreign Business Act B.E. 2542 (the “FBA“), there are three types of business activities that govern foreign participation in Thai commerce:
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, and 3 of the FBA cover nearly all economic sectors in Thailand with a few exceptions.
However, a recent Ministerial Regulation, issued on 13 June 2019, will open up certain types of services from foreign operators to their affiliates, which means that a Foreign Business License will not be required for a registered Thai company having majority foreign ownership.
The service businesses providing services to affiliates that do not require a Foreign Business License are as follows:
- Domestic Loan Services
- Leasing Office Space with Utilities
- Consulting Services in:
- administration;
- marketing;
- human resources; or
- information technology.
Juristic persons with the following characteristics are regarded as “affiliates”:
- juristic persons that have shareholder(s)/partner(s) who constitute more than half of the total number of shareholder(s)/partner(s) of each company transacting business together;
- juristic persons that have shareholder(s)/partner(s) who own 25% or more of the share capital of one juristic person (Company A) and also own 25% or more of the share capital of another juristic person (Company B) where Company B is transacting business with Company A;
- a juristic person that owns 25% or more of the share capital of another juristic person (again, assuming the juristic persons are engaging in a transaction with each other); or
- juristic persons that have the same director(s)/partner(s) (who constitute a majority) with managerial authority. This would imply such persons have authorized director status under a Company Affidavit (for each company interacting in a transaction).
The regulation is relatively new and it remains to be seen as to how it will be administered by the relevant authority but it is to be expected that some creative structuring will result.
Written by John P. Formichella and Naytiwut Jamallsawat. This article is for information purposes only and should not be relied upon as legal advice. For more information, please contact John at: [email protected].