CAN FOREIGNERS 100% OWN A COMPANY IN THAILAND?
This question has been asked so many times and the answer depends on what type of business you are looking for.
As mentioned in the previous article ‘HOW TO FORM A COMPANY IN THAILAND?’, a company setup with foreign partner(s) more than 51% of the shares shall be deemed as a foreign company and must comply with Foreign Business Act (FBA). The business type will play an important part in this case. If the business type is under the list of FBA, it will require to apply for FBL. Please find the list of restricted business which requires FBL below.
LIST OF RESTRICTED BUSINESS FOR FOREIGN COMPANIES
- Rice milling and flour production from rice and plants
- Fisheries, specifically breeding of aquatic creatures
- Forestry from re-planting
- Production of plywood, veneer, chipboard or hardboard
- Production of lime
- Accountancy
- Legal services
- Architecture
- Engineering
- Construction, except:
- Construction of infrastructure in public utilities or communications requiring tools, technology or special expertise in such construction, except where the minimum foreign capital is 500 million baht or more
- Other construction, as prescribed in regulations
- Agency or brokerage, except:
- Brokerage or agency of securities or service related to future agricultural commodities futures or financial instruments or securities
- Brokerage or agency for the purchase/sale or procurement of goods or services necessary to production or providing services to affiliated enterprises
- Brokerage or agency for the purchase or sale, distribution or procurement of markets, both domestic and overseas for the distribution of products made in Thailand, or imported from overseas in the category of international business, with minimum foreign capital of not less than 100 million baht or more
- Other brokerage or agency activities, as stipulated in ministerial regulations
- Auctioneering, except:
- Auctioneering in the manner of international bidding, not being auctions of antiques, ancient objects or artifacts that are Thai works of art, Thai handicrafts or antique objects, or with Thai historical value
- Other types of auctioneering, as stipulated in ministerial regulations
- Domestic trade in local agricultural products not prohibited by law
- Retailing all categories of goods having of less than 100 million baht capital in total or having the minimum capital of each shop of less than 20 million baht
- Wholesaling, all categories of goods having minimum capital of each shop less than 100 million baht
- Advertising
- Hotel operation, excluding hotel management
- Tourism
- Sale of food and beverages
- Planting and culture of plants
- Other services, except those prescribed in the ministerial regulations.
WHAT IS THE PROCESS OF FBL AND TIMEFRAME?
In order to apply for FBL, you have to submit your business details such as; business model, potential suppliers and clients, budget, employment, technology transfer, etc. This is for sure a load of details and paperwork. You will also be required to have a certain amount of the capital depending on your estimated budget but not less than 3 million bath. The FBL application will be considered by DBD or Minister of Commerce and it usually takes not less than 2-3 months. The main consideration focus on the benefit the country should have from having the business established in the country and the competition with Thai business in the same industry.
IS THERE ANY EXCEPTION FROM FBL?
The answer is Yes! The government by the Board of Investment (BOI) usually has a policy to promote some business every year. One of the incentives the BOI give to you is to waive you from applying for FBL. This means if your business is in the restricted type under FBA but fortunately it is also in the business category which is promoted by BOI, you can choose to apply for BOI’s promotion instead and you will not be required to obtain FBL.
The FBL and BOI applications are actually similar (in terms of details for filing) but not the same! The FBL is a license which is a must to obtain while BOI is a promotion that comes with benefits.
Laws related to this topic: Foreign Business Act B.E. 2542 (1999)