One of the most important aspects of doing business in Thailand is understanding the foreign company law. In this article, we will provide an overview of what you need to know about the Thai legal system as it pertains to foreign businesses.
Foreign companies wishing to do business in Thailand face a complex system of rules and regulations that often change. Among the things you need to understand first is that Thailand has a civil law system. This means that the laws are mainly found in statutes and regulations, as opposed to common law where precedents set by past court decisions play a more significant role.
The Thai legal system is also based on the French Napoleonic code, which emphasises the written law over judicial precedent. This can make the Thai legal system seem more rigid and difficult to navigate than common law systems. However, it also means that the laws are generally well-defined and easy to find.
The Foreign Business Act (FBA) of Thailand
The Foreign Business Act (FBA) is the main piece of legislation that governs foreign businesses in Thailand. It was introduced in 1999 with the aim of protecting Thai businesses from being overtaken by foreign competitors. The FBA prohibits foreigners from owning or operating a majority stake in certain types of businesses. The FBA was updated in 2002 to encourage foreign direct investment by lifting some of the restrictions imposed on foreign companies, but it still applies to a broad range of business activities and sectors.
Types Of Businesses Allowed In Thailand
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Under the Thai Foreign Business Law, there are six types of business activities that are allowed to be conducted by foreigners: trading, service, manufacturing, agriculture and fishery, investment, and tourism. Each type of activity has its own specific set of regulations that must be followed. For example, certain activities may require a special license or permit from the government.
Licensing And Registration Requirements For Foreign Businesses
In order to operate a business in Thailand as a foreigner, you must first obtain the appropriate license and register your company with the Thai government, which top law firms in Bangkok would be able to help you with. The specific requirements will vary depending on the type of business activity you are conducting, but typically you will need to submit documents such as a copy of your passport, rental agreement or land title deed, and a list of shareholders and directors.
Restrictions On Foreign Ownership Of Thai Businesses
There are some restrictions on foreign ownership of businesses in Thailand. For example, foreigners are not allowed to own more than 49% interest in a Thai company that is engaged in certain activities such as trading, service, manufacturing, agriculture and fishery, investment, or tourism. In other cases, the maximum allowable percentage may be lower. It is important to check with the appropriate authorities to determine if a particular business activity is allowed for foreign owners.
There are a few business activities that are prohibited or restricted for foreign ownership in Thailand. These include banking, insurance, securities, telecommunications, farming, trade of Thai antiques, and extracting Thai herbs. Additionally, there are some sectors of the economy that are closed to all foreign investment, such as land ownership and construction.
Requirements To Operate A Business In Thailand As A Foreigner
In order to operate a business in Thailand as a foreigner, you must first obtain the appropriate license and register your company with the Thai government. Don’t hesitate to check with the Thailand Board of Investment for business opportunities as well as incentives, especially when you are found to be qualified. The specific requirements will vary depending on the type of business activity you are conducting, but typically you will need to submit documents such as a copy of your passport, rental agreement or land title deed, and a list of shareholders and directors.
In conclusion, it is important for foreigners to understand Thai business law and what type of businesses are allowed in order to avoid any legal issues. Hiring a legal adviser is also recommended.