How you can own 100% of your Thai company
Learn more about 100% Foreign Business Ownership
According to the Thai Foreign Business Act, a business in Thailand must be at least 51% owned by a Thai national.
However, foreigners are allowed to register 100% Foreign business ownership in Thailand, depending on the business activities and if your business receives a FBL Foreign Business License or certificate.
Obtaining a FBL is not easy due to the complexity of the documents that will need to be submitted to the relevant authorities.
What is a foreign company?
A foreign company is a company that is more than 49% owned by a foreigner, whether an individual or a corporation.
The foreign company can do business in Thailand. However, it is limited by the Thai law, the Foreign Business Act (FBA), which prohibits many business activities by foreign companies.
A foreigner, whether an individual or a company, can own 100% of the shares of a company in Thailand, depending on the business activity.
However, the establishment of a 100% foreign-owned company is allowed in the following cases:
- The company has a specific license to obtain 100% foreign commercial ownership
- The company which, due to its business activity in Thailand, allows foreigners to own 100% of its shares
The foreign business license allows majority foreign owned businesses to operate in Thailand without majority Thai shareholders.
However, some business activities are not open to foreign capital, so the FBL license cannot be applied for, and a Thai majority shareholder holding at least 51% will be required.
In any case, any company wishing to apply for an FBL must first check the provisions of the Foreign Business Act and the Thai regulations to ensure that the company is eligible to obtain this license. The application for the license should be made directly to the Ministry of Commerce in Thailand.
The minimum capital required for creating such a company in Thailand is THB 2 million. This can be higher depending on the activity. In any case, we recommend that you contact a lawyer if you want to benefit from the FBL license.
How to own a 100% foreign company?
Let’s assume that you want to set up a foreign company in Thailand that will be controlled and owned entirely by foreigners. In this case, it is essential to first conduct a preliminary analysis of your business to determine with your lawyer or advisor the following legal aspects:
- The type of company that you wish to establish in Thailand
- Check if your activity is eligible to obtain a FBL or receive BOI promotion
- Check with the Thai agent the requirements and documents requested
Thai law allows certain businesses or companies to be 100% foreign owned, with the various options below.
Establishment of a BOI company
Thai companies that obtain approval from the Board of Investment (BOI) may be majority owned by foreign shareholders. However, these companies must apply for BOI promotion in advance.
BOI will only approve businesses operating with their list of eligible activities, which is updated periodically. These activities are in areas that the Thai government and BBOI consider of importance to the country and therefore offer incentives to attract foreign investment.
Setting up a company with a foreign business license (FBL)
Under the Foreign Enterprise Act, foreign investors must obtain a license to conduct business under Thai law for all business activities generally reserved for Thai nationals.
To obtain a foreign business license (FBL) in Thailand, a company must first apply to the Ministry of Commerce for permission. A foreign business license is a specific document authorizing the business to be 100% foreign-owned.
Before applying for a foreign business license, it is necessary to check the Thai law to make sure that your business activity allows foreigners to own a Thai company, letting the foreigner own more than 49%. We recommend that you contact us so that we can put you in touch with a competent lawyer to analyze your request.
Establishment of a company whose business activity is permitted for foreigners
There are certain business activities in which foreigners can hold the ownership of shares in a company, which are:
- Manufacturing activities in Thailand
- Companies whose business is pending
- Management companies of hotel activities
As these business activities are not restricted to foreign investors in the Foreign Business Act, foreigners can hold foreign business ownership of shares in these types of companies without any license.
How to create a foreign company in Thailand?
When setting up a foreign company, it is essential to follow a 7 steps registration process to incorporate your company. Here are the different steps to keep in mind when you want to incorporate a foreign company in Thailand.
Step 1: Analyse your business
Before incorporating a company, it is essential to check whether the company can carry out economic activity through a foreign company in Thailand. Indeed, most economic activities cannot be carried out by international companies or majority owned by foreigners. In fact, Thai law requires that the vast majority of economic activities be majority owned by Thai people (51%), so it is necessary to find a Thai shareholder who holds 51% of the company’s shares.
Step 2: Preparing your license application
In order to have full foreign business ownership, it is important to study all the documents necessary to obtain your license. Sometimes, your license application can be filed before your company is incorporated to increase the chances that your license application will be approved by the Thai authorities.
Step 3: Reserve the company name
You must come up with a unique name for the company. The company name cannot be duplicated. Therefore, it is essential to make sure that no other organisation has the same name. But the reservation of the approved company name will be valid only for 30 days. In addition, according to Thai government rules, there are a few words that are prohibited in a company name. So you have many options to choose the name. Before making this reservation, make sure you already know the name of the director who will sign the incorporation documents.
Step 4: Prepare and file documents with the DBD
Once the name of the corporation has been approved, the incorporation documents must be filed with the Department of Business Development (DBD). Note that once the company is established, you can give 100% of the shares to foreign shareholders. However, it is essential to note that if a specific authorisation is requested, the company will have to wait to obtain the license from the FBL or BOI before starting the economic activity. It will also be necessary to hold a statutory meeting to incorporate the company.
Step 5: Registration of the company
The application for registration of the company must be filed within three months of the statutory meeting of directors. However, the formation of a corporation can be done within 3 business days. All incorporation documents must be filed with the DBD, and all documents related to the formation of a corporation must be completed and signed by the director of the corporation. Please note that it is not necessary for the directors of the corporation to file the application themselves. In any case, due to the complexity of the procedure, we advise you to be represented by an adviser or a lawyer for the creation of your company with foreign business ownership.
Step 6: Obtaining the company documents and tax ID
Upon submission of the documents, a certificate of registration and all company documents will be sent to you. A corporate tax identification number will also be issued to you and will appear on the company’s affidavit document.
Step 7: Obtaining authorisation licenses
If your company is required to obtain a prior authorisation (BOI, FBL, US Friendship Treaty) before you can start your business in Thailand, it will be important not to carry out any business activity during the authorisation period. Of course, you will be able to carry out your activity after having obtained your licenses.
What are the applicable regulations?
The Foreign Enterprise Act defines the term “foreign enterprise” as follows:
- A natural person who is not a Thai national
- A legal entity not registered in Thailand
- A legal entity registered in Thailand, of which half or more of the shares in the capital are held by a person or legal entity, as mentioned in (1) or (2)
- A legal entity registered in Thailand, half of whose capital shares are owned by a person mentioned in (1), (2) or (3)
There are three different lists of business activities:
- Business activities not permitted to foreigners, which are strictly prohibited to foreigners
- Activities allowed to foreigners if they have the permission of the Minister of the Ministry of Commerce with the approval of the Cabinet
- Activities prohibited to foreigners, unless permission is granted by the Director General of the Department of Trade Development with the support of the Committee According to the Thai law called Foreign Business Act (FBA), the above mentioned code indicates three different types of business areas restricted by Thai law:
List 1. Business activities not allowed for foreign citizens
Foreigners are not allowed to conduct business in Thailand in the following sectors:
- Newspaper industries, radio and television station industries
- Business activities related to agriculture, rice cultivation or gardening
- Business activities related to animal husbandry
- Commercial activities related to forestry and natural resources of forests
- Commercial activities related to fishing industries in Thai waters and specific economic zones
- Commercial activities related to Thai herbal extraction
- Sale and trade of Thai historical relics, goods and artefacts
- Casting or manufacturing of Buddha images
- Land trading
In the categories defined in List 1, foreigners can hold a maximum of 49% of the shares in these business sectors. The company must also have a minimum registered capital of three million baht. And the limit of foreign share ownership is 49%. However, to enter the company’s capital, foreign shareholders will have to submit their application to the Department of Business Development. Upon receipt of the application, the DBD will have 30 days to approve or disapprove the applicant’s application.
List 2. Business activities that allow foreigners with conditions and limitations
The following group includes three different categories:
Group 1 – Businesses concerning national security or safety
- Manufacturing, distribution, repair or maintenance of all categories of war materials: firearms, ammunition, gunpowder, composite materials and explosives, weapons, ships, aircraft or military vehicles
- Domestic land transportation, water transportation, or air transportation, including domestic aviation.
Group 2 – Businesses that could have an adverse effect on arts and culture, customs, and native manufacturing/handicrafts
- Trading of antiques or artefacts that are Thai works of art or Thai handicrafts.
- Wood carving.
- Silkworm rearing, manufacture of Thai silk, Thai silk weaving, or Thai silk printing.
- Manufacturing of Thai musical instruments.
- Manufacturing of gold-ware, silverware, nielloware, bronzeware, or lacquerware.
- Making bowls or earthenware which are of Thai art and culture.
Group 3 – Businesses that could have an adverse effect on natural resources or the environment
- Manufacturing of sugar from cane.
- Salt farming, including rock salt farming.
- Mining of rock salt.
- Mining, including stone quarrying or crushing.
- Timber processing for making furniture and utilities.
Foreign companies may only engage in the activities stated in List 2 with prior Cabinet approval.
List 3. Activities for which Thai citizens are not qualified to compete with foreigners
- Production of rice flour from rice and local plants
- Fishing activity involving only the hatching and breeding of aquatic animals
- Reforestation and development of forest areas
- Production of plywood, veneer, particleboard or hardboard
- Lime production
- Provision of accounting services
- Provision of legal services
- Provision of architectural services
- Provision of engineering services
- Construction, except construction of public infrastructure
- Being a broker or agent in the sale or purchase of securities
- Retail trade in goods of any kind
- Wholesale trade of any kind with a minimum capital of each store of less than one hundred million baht
- Advertising and publishing
- Hotel business, except hotel management services
- Guided tour in Thailand
- Sale of food and beverages
- Cultivation, propagation or development of plant varieties
- Other service activities, except service activities prescribed by ministerial regulations
For List 3 companies a foreigner can own 100% of the shares of a Thai company if the following conditions are met:
- The registered capital of the company must be at least 3 million, and 25% of the registered capital must be repaid when the company is incorporated. (25% of the amount is repaid every year for three years after the company's incorporation)
- The applicant must submit the application to the director general of DBD with the necessary documents presenting the project in Thailand
- After approval, the foreign business license will be issued within 15 days, which will allow the applicant to foreign business ownership.