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The Treaty of Amity in Thailand
09/05/2022
The Treaty of Amity (the Treaty of Amity and Economic Relations between the Kingdom of Thailand and the United States of America), is a bi-lateral agreement between Thailand and the US. Source
The treaty was signed on May 29, 1966 and affords special rights and benefits to American citizens who are looking to establish their business in Thailand.
The Treaty of Amity aims to provide significant advantages for US investors and companies to enter the Thai market.
Key points
- The Treaty of Amity allows American companies to hold the majority of the shares in a company.
- American companies may also operate a business on the same foundations as Thai companies.
- American companies will also be exempt from most of the restrictions relating to foreign investment set out by the Foreign Business Act 1999.
Am I eligible to establish a business under the Treaty of Amity in Thailand?
Generally speaking, a foreign owned company cannot operate in Thailand unless:
- a Foreign Business License (FBL) has been granted by the Ministry of Commerce or;
- an investment promotion from the BOI and a Foreign Business Certificate from the Ministry of Commerce has been obtained.
However, if one of the shareholders in the company is a US citizen and this shareholder will hold the majority of the shares, this company will be considered a US-majority owned company. US-majority owned companies are eligible to apply for protection under the Treaty of Amity. A Treay of Amity company can operate their business in Thailand without having to apply for a FBL or a BOI promotion.
What are the minimum capital requirements for setting up a company under the Treaty of Amity?
Companies who are eligible for the protections granted by the Treaty of Amity still need to satisfy the minimum capital requirements established under the Foreign Business Act (FBA).
If the business is performing an unrestricted activity as set out by the FBA, the minimum capital requirement for a Treaty of Amity protected company is THB 2 million.
If the business is undertaking a restricted activity, they are required to obtain a Foreign Business License under the FBA. The minimum capital requirement for this kind of business is THB 3 million for each business activity.
How can I obtain Treaty of Amity certification?
Here is a brief outline on how to register a company in Thailand under the Treaty of Amity.
Stage 1: Document filing
The applicant compiles all the relevant documents verifying that the company has been registered in compliance with Thai law.
Stage 2: Certification by the Commercial Services Office (CSO)
Upon receiving the required documents, the CSO will provide confirmation to the Thai Department of Commercial Registration (in the Ministry of Commerce) that the applicant is an American owned and managed company and is therefore entitled to the provisions of the Treaty of Amity.
Stage 3: Application to the Ministry of Commerce
After certification by the CSO, the original copies of all the documents and completed application forms must be submitted to the Thai Department of Commercial Registration to complete the registration process.
Are there any restrictions for Treaty of Amity Companies?
There are several restrictions which must be considered. The Treaty of Amity prohibits American investors from operating in the following reserved activities:
- Communications
- Transportation
- Fiduciary functions
- Banking involving depository functions
- Land Ownership, Exploitation of land or other natural resources
- Domestic trade in indigenous agricultural products
The following requirements also apply:
- A minimum of 51% of shares must be held by American citizens
- A minimum of 50% of directors must be American citizen(s)
How can our team of experts help?
The Belaws team of highly experienced lawyers can carefully assess your project and establish whether your business is eligible for the Treaty of Amity provisions. Our experts can also help you apply for and process the whole application procedure.
For more information on the Treaty of Amity, please click here. Alternatively, you can book a consultation with one of our experts here.
Please note that this article is for information purposes only and does not constitute legal advice.
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