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ResourcesCorporate and Tax AdvisoryThailand Corporate LawThe Foreign Business Act and BOI Certification of Companies in Thailand

The Foreign Business Act and BOI Certification of Companies in Thailand

Transcript of the above video:

In this video today as the title suggests, we are going to be discussing the Foreign Business Act and we are going to be discussing it in the specific context of BOI Companies established here in the Kingdom or certified here in the Kingdom.

The reason I am making this video is another video on this channel we did a specific breakdown on foreign business license benefits for those companies which obtain BOI certification. I wanted to make this video as a sort of addendum or just I guess a follow-up to that video in order to provide a little bit more clarity with respect to foreign business licensure. The first thing to take note of, I am going to be reading directly from "A Guide to the Board of Investment 2017"; I got this by going down to the Board of Investment in person and obtain this. The first thing to keep in mind with respect to foreign shareholdings of companies in Thailand is what is called the Foreign Business Act which specifically deals with matters pertaining to foreigners doing business here in the Kingdom. In fact it often times it will circumscribes certain activities to Thais only or will require a Thai majority in a company that wishes to operate in Thailand. 

To quote directly from “A guide to the Board of Investment -2017”:

"Criteria for foreign shareholding:

The board stipulates the following criteria for foreign shareholding in projects that apply for investment promotion.

1. For projects and activities under list 1 annexed to the Foreign Business Act B.E. 2542, Thai Nationals must hold shares totaling not less than 51% of registered capital. That is what's called list 1 of the Foreign Business Act. That is the list of the most protected forms of business activity that are going to be present here in the Kingdom. So basically at that level you're going to see, that is where it is most restrictive of foreign activity. 

2. For projects and activities under list 2 and list 3 annexed to the Foreign Business Act B.E 2542, there are no equity restrictions for foreign investors except as specified in other laws.

3. The Board may set shareholding limits for certain activities eligible for investment promotion as deemed appropriate.

The reason I bought this up is because I wanted to be clear. BOI certification does not fully aggregate the provisions of the Foreign Business Act. In fact as noted, list 1 still maintains a high degree of protection. List 2 and 3, if the underlying activity or the activity that is wishing to be undertaken in the Kingdom and that a company is seeking BOI Certification on, falls under the auspices of list 2 or 3, it looks to me at least from reading in this guide, that you can go ahead and have as much foreign shareholding as one wants.  And finally the BOI does reserve the discretion to stipulate the percentage of shareholdings which may be maintained within the corporate structure by a foreign national in ratio to the Thai National, or to the Thai Nationals for that matter.

So the things to take away from this is although the foreign business licensure maybe secure pursuant to promotion by the Foreign Business Act promotion by the Board of Investment, BOI, the Foreign Business  Act still applies and restrictions thereunder may still be present in the adjudicatory process of BOI certification.