In order to invest or do business in Thailand as a foreign entity, a foreign business license (FBL) is required under the Foreign Business Act BE. 2542 (“FBA”). The definition of ‘Foreign’ under FBA covers non-Thai private and corporate entity, as well as Thai registered corporate entity with majority of shares held by the foreigners.
In order to determine whether it is possible and, moreover, necessary for you to obtain a foreign business license to carry out business in Thailand, these legal aspects are to be considered:
Not all type of business is eligible for Foreign Business License application. Restrictions are imposed to certain type of business, varying from businesses strictly reserved for Thai national, businesses concerning national security, culture and natural resource, to those businesses that Thai nationals are not yet ready to compete with. The list of businesses has been amended several times since the enactment to lift some of the restricted businesses from the annex.
Investors from specific countries may, however, be able to bypass the imposed restriction under the FBA should their nation be a party of a commercial treaty that Thailand is obliged to honor. In this regard, H&P lawyers in Bangkok can advise you on how to correctly structure the business in Thailand using these treaties and taking advantage of some preferential agreements.
QUALIFICATIONS OF APPLICANT
A foreign investor or a manager of a foreign corporate entity applying for the foreign business license shall qualify and not barred by the prohibition prescribed as follows 1) Twenty (20) years old or over 2) Being a permanent residence or having a permit to enter Thailand on a temporary basis 3) Being a competent person 4) Has not been sentenced or fined under FBA within five (5) years prior to the license application submission date. 5) Has not received imprisonment sentence for any offences of fraud, cheating creditors, misappropriation or any other criminal offence relating to trade under Criminal Code, Laws relating to immigration and Loans of Money Amounting to Public Cheating and Fraud within five (5) years prior to the license application submission date. 6) Has not been stripped off a foreign business license issued in pursuant to the FBA within five years prior to the license application submission date.
After the foreign business license is granted, the licensee shall comply with the provision under FBA concerning the capital requirement and period for capital remittance.
In general, businesses labelled under Category 2 and 3 shall have the capital of minimum 3,000,000 THB (Three Million Baht). One quarter (25 percent) of the capital shall be remitted upon the commencement of business, one quarter by the end of the first year) and the remaining shall be remitted each year equivalent to 25% of the capital. To summarize, the capital shall be fully paid by the third year of business operation.
If you need to talk with a lawyer in Thailand to structure your business or apply for Foreign Business License in Thailand, please contact our lawyers in Bangkok at [email protected]