Doing Business in Thailand – the “Amity Company”‐ a Thai Company without Thais

The Foreign Business Act (1999) of Thailand (the “Act”) generally restricts foreigners from engaging in most business activities in Thailand without special permission as provided under the Act. Serious violations of the Act by a foreigner, or facilitated by a Thai, carry significant criminal penalties. In the case of a Thai limited company, Section 4 of the Act provides that if fifty percent or more of its share capital is owned by a non-Thai, the company is considered a “foreigner” for purposes of the Act. This means that if a foreigner wishes to conduct business in Thailand in compliance with the Act, they generally must find a Thai willing to actually invest in and own more than half of the company — a significant impediment for foreigners seeking to conduct lawful business in Thailand.

However, Section 10 of the Act provides a significant exception to its restrictions on foreign-owned business. This exception applies to foreigners whose country is party to a treaty under which each party’s citizens may operate businesses in the other’s country under the same conditions as local citizens. Currently, Thailand has such a bilateral treaty only with the United States. Under the Treaty of Amity and Economic Relations between the United States and Thailand (1968) (the “Treaty”), citizens of the United States and Thailand are granted reciprocal national treatment with regard to, among other things, business ownership in the other’s country. As a result, a Thai company in which fifty percent or more of the share capital is American-owned, a majority of directors are also American, and which obtains formal permission under the Treaty (an “Amity Company”) is permitted — without any Thai ownership or management — to engage in virtually any business activity in Thailand that a Thai majority-owned company may engage in.

For a Thai limited company to qualify as an Amity Company, it must meet the following conditions:

1. More than half of the company’s capital is held by American(s);
2. More than half of the company’s shareholders are American, or a combination of American and Thai;
3. More than half of the company’s authorized directors are American(s) or Thai(s); and
4. If an authorized director is from a third country, that director must act jointly with another authorized director who is either American or Thai.

To complete the administrative requirements, an Amity Company must also obtain a “Foreign Business Certificate” (FBC) under Section 11 of the Act. Because of the Treaty, obtaining the FBC for an Amity Company is a relatively certain and expeditious process, provided the legal and administrative requirements are met during the application.

It should be noted that while the Treaty grants Americans the right to own and control their Thai limited company, it does not grant unrestricted freedom to stay or work in Thailand. Americans must obtain the relevant Thai visas and work permits to stay and work in Thailand, just like citizens of any other country.

It should also be noted that the Treaty does not grant the right to own land. Although foreigners of good standing may own land in the United States under American law, under current Thai law — with few exceptions — foreigners, including Americans and Amity Companies, may not own land in Thailand.

Finally, although the Treaty permits an Amity Company to engage in most businesses in Thailand, including many otherwise restricted under the Foreign Business Act, the Treaty itself carries exceptions. An Amity Company is not granted the right to engage in any of the following businesses in Thailand:

1. Communications;
2. Transportation;
3. Fiduciary functions;
4. Banking involving depository functions;
5. Exploitation of land or natural resources; and
6. Domestic trade in indigenous agricultural products.