American companies and individual investors who want to establish business in Thailand can take advantage of the Treaty Amity, a trade agreement between the US and Thailand, which seeks to promote better trade relationship between the countries. There are some restrictions for foreigners who want to set up a company in Thailand, imposed by the Foreign Business Act. Nevertheless, American companies are exempt from most of those restrictions under the Treaty of Amity and Economic Relations between the United States of America and the Kingdom of Thailand (1966).
The Treaty of Amity allows US citizens and businesses to establish a company or branch office in Thailand and own a majority of the shares. They are allowed to engage business on the same basis as Thais and they receive national treatment.
Thailand applies some restrictions to American and other foreign investments:
- – Business of inland communication
- – Inland transportation and communication industries
- – Fiduciary functions
- – Banking involving depository functions
- – Domestic trade in indigenous agricultural products
- – Exploiting land or other natural resources
Minimum Capital Requirements
There are no limitations on registered share capital. In practice, a minimum of THB 3 million is advisable. If a company has an authorized and paid-up capital of less than this amount, it could have difficulty in obtaining work permits for foreigners.
To receive protection under the Treaty, the US Company who wants to set up a business in Thailand needs to meet the following requirements:
- – The applying person(s) or business organization must be registered and established as an American sole proprietorship, partnership, representative office, branch office, joint venture, or limited company.
- – The majority of shareholders must be American citizens or US businesses,
- – The majority of the Board of Director must be Thai or US individuals. Those of different nationalities must co-sign with a Thai or American Director.
This requirement will apply to the parent company in the US in order to show proof of ownership at every level until the ultimate ownership. In other words, the applicant needs to provide proof that the majority of owners and directors in the company at every level are US citizens.
To receive protection under the Treaty, the applying company must pursue and administrative process to show “Registration under the Treaty”. In order to be officially registered, the applicant has to follow different steps:
1. Required documents needed for the registration
The applicant needs to obtain documents verifying that the company has been registered in compliance with Thai law.
In the case of a sole Proprietorship:
– Notarized copy of owner’s passport to prove US citizenship
In the case of a Thai company with majority of American’s shareholders:
- – Certificate
- – Objective Class
- – Memorandum of Association
- – Attestation
- – New Director(s)
- – Articles of Association
- – List of Shareholders
- – Certificate of Company Registration
- – Notarized copy of American Shareholder’s passports.
If the majority shareholder of the Thai Company is the US Parent Company, some further documents must be provided for certification:
- – Affidavit
- – Bylaws
- – Article of Incorporation
- – Notarized copy of American passport of the major shareholder(s).
In the case of an US Company acquiring a Thai Company:
- – Articles of Incorporation
- – Bylaws of the Company
- – An affidavit of the Manager or Corporate Officer, stating the followings:
- • Name of the Company, registration number, and date of registration.
- • Address of registered office.
- • Jurisdiction under which the corporation is registered.
- • Name, address, nationality, age and race of each director, number of shares held by each, and identification of the director(s) with the power to bind the company.
- • Authorized capital of the Company, number of shares and par value of each and amount of paid up capital.
- • Total number of shareholders, their nationalities, and number of shares owned or held by them
2. Notarization of the documents
For a US business entity, documents must be notarized at a notary public in the USA. For American citizens who reside in Thailand, passports must be notarized at the American Citizens Services section at the US Embassy in Bangkok or US Consulate in Chiang Mai.
- – Documents cannot be notarized by a Thai firm.
- – Thai documents do not have to be notarized or certified but they must be translated.
- – All documents need to be valid at least 6 months.
3. Certification at the US Commercial Service
The applicant has to submit all the required documents to the US Commercial Service, at the American Embassy in Bangkok, with the “Request Form for Treaty of Amity Certification Letter”.
The Commercial Service, after certifying to the Thai Department of Commercial Registration in the Ministry of Commerce that the applying business is an owned and managed American company and therefore entitled to national treatment, will deliver a Certification document. This Certification document will cost $80 to the applicant.
It will take approximately 1 week to register with the US commercial service.
4. Registration at the Ministry of Commerce
Once the US commercial service issues the Certification document, in order to fully register under the Treaty, an original copy of all the documents and the application form must be given to the Thai Department of Commercial Registration in the Ministry of commerce. Note that the Thai Ministry of commerce charges THB 22,000 for the application fees and their certificate. Registration by the Thai Government can take from a few weeks to a few months.