Services / Cross-border transactions and investment
How much a foreigner may own in Thailand
The question that arrives most often is what percentage a foreigner may hold. The answer is not only a number: it depends on which list the business falls in, and on whether the structure is real ownership or holding on another's behalf, which carries criminal liability.
Who counts as a foreigner
Section 4 of the Foreign Business Act B.E. 2542 (1999) defines a foreigner more widely than most expect: a natural person without Thai nationality, a juristic person not registered in Thailand, and a juristic person registered in Thailand where half or more of its capital shares are held by either of the first two, or where they have invested half or more of the total capital. The line sits at one half, which is where the familiar figure of 49 comes from.
The rule stacks
Section 4(4) extends the test one layer further: a Thai-registered company half or more of whose capital shares are held by any of the first three categories is itself foreign. Interposing another Thai company to make the numbers look right does not escape the definition, because the test follows the chain of ownership upward.
The three lists
Section 8 divides business into three lists. List One is business a foreigner may not carry on for special reasons. List Two covers business affecting national safety or security, arts, culture, customs and folk handicraft, or natural resources and the environment, permitted only with ministerial approval by the Cabinet. List Three covers business in which Thai nationals are not yet ready to compete, permitted with the Director-General's approval on the Board's concurrence.
Nominee holding is a criminal offence
Section 36 is explicit. A Thai national or non-foreign juristic person who assists, supports or joins in a foreigner's business on the schedules where the foreigner is unlicensed, or holds shares on a foreigner's behalf so that the Act may be evaded, together with a foreigner who consents to it, is liable to imprisonment of up to three years, a fine of one hundred thousand to one million baht, or both, and the court is to order the shareholding or partnership brought to an end.
There are more lawful routes than people assume
Lawful structures are more varied than assumed: applying for the licence or certificate the Act provides for, relying on a treaty to which Thailand is a party, or seeking investment promotion, which affects permitted shareholding in certain activities. The choice belongs before the company is registered, not after a structure is in place and has to be unwound.
PREPARE
What to bring
- A precise account of the business activities actually intended
- The intended shareholding structure, every layer
- The nationality and residence of every shareholder
- The source of funds of the Thai shareholders
- Any treaty rights available to the investor's nationality
QUESTIONS
Questions this raises
Can a Thai hold 51 per cent on my behalf?
Section 36 penalises holding shares on a foreigner's behalf so that the Act may be evaded, and it reaches both the nominee and the foreigner who consents: up to three years' imprisonment and a fine of one hundred thousand to one million baht, with the court ordering the holding brought to an end. What is actually examined is where the Thai shareholders' money came from and who really decides, not the figure on the register.
My business is on none of the lists. Do I still need approval?
Section 8 imposes its prohibitions and conditions by reference to Lists One, Two and Three, so a business on none of them is not caught by that section. Whether an activity falls on a list turns on what is actually done rather than what it is called, and a great many businesses touch List Three without meaning to, service activities in particular.
LAW
The legislation
- Foreign Business Act B.E. 2542 (1999), sections 4, 8 and 36
ENQUIRIES
