There are not many breaks for the foreign SME business owner in Thailand. One major hurdle is that foreigners are barred from owning a majority stake in a Thai limited company. A notable exception is those who have been through the process of obtaining a foreign business license. As a result many foreigners establish a company which is majority Thai-owned, although in practice this type of arrangement can prove problematic for any number of reasons.
The Treaty of Amity and Economic Relations between the United States of America and the Kingdom of Thailand permits American companies to maintain a majority shareholding or to wholly own its company, branch office or representative office located in Thailand.
This ability to have all-American shareholders is of great consolation to those who feel uneasy about offering controlling ownership of their company to others may not completely understand the business and/or be fully aligned with its values. On the other hand, many U.S. businesses happily pursue joint ventures with Thai partners, and permit them to hold a majority stake in the company, in recognition of their greater familiarity with Thai business culture and the local regulatory framework.
Another feature of the Treaty is that American companies are treated similar to Thai companies in many regards, and are exempt from most of the restrictions on foreign investment imposed by the Alien Business Act.
Do be aware though, that the following restrictions still apply to companies formed under the auspices of the Treaty:
- Owning land
- Engaging in the business of inland communication
- Engaging in inland transportation and communication industries
- Engaging in fiduciary functions
- Engaging in banking involving depository functions
- Engaging in domestic trade in indigenous agricultural products
- Exploiting land or other natural resources
The process by which American citizens may utilize the USA-Thailand Treaty of Amity can be confusing to those who are unfamiliar with the relevant steps, rules and procedures. Interactive has experienced staff on hand to help you every step of the way. We ensure that the process of creating your Amity company is completed correctly, smoothly and quickly – thus avoiding any unnecessary cost or delay.