Transcript of the above video: 

As the title of this video suggests, we are discussing foreign corporate structures, or Thai-Foreign Corporate Structures here in Thailand. For those who are unaware, the Foreign Business Act as it stands right now, stipulates that foreign nationals can only own up to 49% of most types of businesses, or most types of corporate structures doing business in Thailand. So that's the first place you need to start is the Foreign Business Act.

Over the years there have become arrangements. Now there are nominees, and then there are real shareholders, in real corporate structures who are an interval part of a corporation running. So again where you have got somebody that's a local that knows how things work here, that can assist you in the administration of your corporation, can assist in things like accounting and certain types of compliance, that's not a nominee. A nominee strictly speaking is somebody whose name is just purely on corporate or other legal documentation for pretextual or even some could argue pretensive purposes, in order to meet basic legal criteria that could not otherwise be met by a foreign national. And again, nominees are illegal in Thailand, but that said, what a nominee is and is not, it is not the most cut and dried thing in the world. And that said there are folks that are on as 51% shareholders of multiple companies in Thailand that are perfectly legitimate, so bear that in mind. 

That said, quoting directly from a recent article in the Bangkok Post, bangkokpost.com, the article is titled: A nominee to a criminal is still a criminal. Quoting directly: "Thai nationals looking to take on more than 40% of a business with a foreign partner are now required to produce three months of personal bank statements to prove they have their own investment funds." You know, that may look like it's being designed to thwart undue foreign influence, but at the same time, that's a restriction on Thais being able to do business with who they want to do business with. That said, quoting further: "If more than five companies are registered at a single address, they are automatically flagged for a physical inspection."

To what end? We have multiple corporations registered at our address here at the firm. I mean there's nothing per se illegitimate about that. Now I understand, maybe Thailand doesn't want to be like the Cayman Islands where you can have 10,000 companies on one post box, but five companies registered to one address, I don't view that as per se problematic. I have to be honest; I'm a little bit concerned about this one. Generally speaking, I tend to just kind of report these things and then move on, but I'm actually worried about the effect this could have on foreign investment in Thailand. And moreover it just has the feel of really kind of government overreach. It's like why can't folks just be allowed to do business? And I understand there is in the background of all of this, there are a number of situations involving foreign nationals who have done business and nefarious things here. That said, why don't we have law enforcement go after those people, rather than communally punishing the business community of Thailand? I mean to my mind that would make more sense than this. 

That said, I can understand, from time-to-time the Department of Business Development, Ministry of Commerce, they tweak some of the rules because times they are a-changin’ that's just, the only constant is change. I do get that to some extent, but honestly it strikes an odd tone that it's like they set up a regime, it was fairly cumbersome, but people figured out a way, it's sort of like that movie Jurassic Park; life finds a way. Business people found a way to be in compliance with Thai Law, while at the same time figuring out a way to do their business and get on with making their living and again, there's a very different thing from huge businesses that take up a huge amount of market share and might be able to exploit Thailand, and small businesses, and it's going to be the small businesses by volume who will be most affected by these rule changes. And again, well we'll just have to deal with them and here at the firm we will be dealing with whatever aspects of compliance we have to deal with moving forward, if we have to deal with it, presuming that some new rules are promulgated. But I have to be honest, I really don't think that this is conducive to foreign investment. And then meanwhile I don't think it's going to really accomplish much of the goal that they seem to be seeking to accomplish, which is protection of and insulation of the local Thai economy. Because at the end of the day, what could happen here is just a massive discouragement of foreign direct investment into Thailand. 

Now notwithstanding these types of provisions, there are other ways of doing business in Thailand. For example the US-Thai Treaty of Amity allows Americans to own their companies 100% notwithstanding the provisions of the Foreign Business Act. Meanwhile, there is also the Board of Investment or BOI, which allows for certain concessions including Foreign Business Certification that could allow foreign nationals to own a business out right here. The Eastern Economic Corridor here in Thailand can also provide such concessions; again where it is warranted under their rules. But again, Thailand was already some place that it was - I won't say completely cumbersome - but where you had to go through some extra steps in order to do basic business activities as a foreigner here in Thailand. To tack on even more requirements, I'm not saying it's the worst idea, but I just am worried that this could negatively impact direct investment here, and also what is it going to get it anyone? At the end of the day, it is just going to be more Government just interfering in the business community, which frankly I think if we had less of that, we would see the economy do better; that's my opinion. But I think history has born that out in other jurisdictions as well as this one.

Meanwhile, if we were really looking at sort of protecting the Thai labour force, allowing a bunch of foreign nationals to come into Thailand on a nebulous Visa with nebulous work authorization would probably be the better way to go after that, to tackle that, rather than looking at people who want to come in, and actually set up a corporate structure, get their Business Visas and Work Permits in order, do business through a Thai entity and therefore be subject to Thai taxation. I would think that those people would be the people you would want to encourage rather than the other way around.