The US-Thai Treaty of Amity allows American companies to maintain majority or wholly ownership and to be exempt from restrictions on foreign investment in Thailand. Additional exceptions are provided by international treaties to which Thailand is bound.
The country has a well-developed legal system, though bureaucratic discretion remains prevalent. Gratuity payments to officials are common.
Ownership and Directorship Requirements
Citizens of the United States who own a majority of shares or a majority of directors in a company that has been incorporated in Thailand can qualify for special benefits under the Amity Treaty. In addition to a significant reduction in registration fees, these companies can benefit from “national treatment,” which exempts them from many foreign investment restrictions.
This is a major advantage that can provide a distinct competitive edge for US-Thai businesses. To qualify for Amity Treaty protection, the applicant must submit documents to the U.S. Embassy’s Commercial Service office in Bangkok that verify that the company meets all of the requirements for Amity Treaty protection. The Commercial Service office will then issue a letter to the Ministry of Commerce that certifies the business as an Amity Treaty protected company. The process can take up to a few weeks to complete. Once certified, these entities can operate as a national company in Thailand.
The US-Thai Treaty of Amity offers national company privileges to American companies that have majority ownership by US citizens or businesses. However, there are still some restrictions that apply. Most notably, companies under the Treaty are not allowed to engage in reserved enterprises which include domestic trade in agricultural products and natural resources, banking involving depository functions, land ownership and exploitation of land and natural resources.
Other than these exceptions, Amity Treaty companies are treated the same as Thai companies and can undertake a wide range of business activities. The process to obtain national treatment under the Treaty can take some time because of the requirement that the company be certified by the U.S. Embassy in Thailand. The company must also meet the minimum capital requirements set out in the Foreign Business Act (FBA). The US Embassy can help you verify whether or not your business qualifies for national treatment under the Treaty. Once your business is qualified, you will be required to register it with the Ministry of Commerce.
Requirements for a Foreign Business Validation
The process of establishing an American business under the US-Thai Treaty of Amity can be complex, but it can also bring benefits. The first step is to submit all relevant documents to the U.S. Commercial Service office located in the Embassy in Bangkok. This office will issue a letter certifying that the company qualifies for protection under the treaty.
The resulting Amity treaty company will enjoy national treatment in Thailand, meaning it is exempt from many restrictions on foreign investment imposed by the Foreign Business Act. However, the company will not be able to own land or engage in certain types of businesses that require a foreign business license. It will also have to comply with work permit regulations. In addition, the company will have to meet minimum capital requirements. Acclime offers comprehensive legal, accounting and business services to help companies establish themselves in Thailand. Our efficient Amity processes ensure that you will be up and running as quickly as possible.
Minimum Capital Requirements
While a company under Treaty of Amity does not need to be incorporated in the US, it must meet certain minimum capital requirements. The Commercial Service office at the Embassy in Bangkok will certify that the applicant meets these requirements before the foreign business entity can operate.
The certification must include the name of the company, its registered number and date, address of its headquarters and jurisdiction under which it is registered, and the names and nationalities of shareholders, partners or directors (for natural persons, certified copies of passports are sufficient; for corporations, evidence that a majority of shares or 50% of the votes are held by US citizens).
Companies operating under Treaty of Amity enjoy a great deal of flexibility in the way they conduct business in Thailand. However, a thorough legal review is recommended before setting up such an entity in order to avoid any misunderstandings. GPS Legal has experience guiding clients through the process of both Treaty of Amity and FBLs.