Integrity Legal - Law Firm in Bangkok | Bangkok Lawyer | Legal Services Thailand Back to
Integrity Legal

Legal.co.th - Resources 

Research & gain insights into Thai, American, and International Law.

 

Contact us: +66 2-266 3698

info@integrity-legal.com

ResourcesCorporate and Tax AdvisoryThailand Corporate LawProposed Changes to the Foreign Business Act in Thailand

Proposed Changes to the Foreign Business Act in Thailand

Transcript of the above video:

As the title to this video suggests, we are going to be talking about the Foreign Business Act in this video. For those who are unaware of what the Foreign Business Act is, we have other videos on this channel specifically discussing things like the Foreign Business Act, as well as the FBA in the context of Board of Investment Certification, as well as the US-Thai Treaty of Amity. I urge those who are interested in this topic to go ahead and check out those further videos on our channel with respect to those topics and those specific nuances.

Today, this video specifically is going to look at some recent news that I found in various channels but I'm only going to really focus on one specific source, the Bangkok Post. The title of the article: “FBA Upgrades Under Review”: March 21st 2018: quoting directly “Plans to amend the Foreign Business Act of 1999 have resurfaced after 3 years of silence with the Business Development Department vowing Tuesday to approve the law particularly with regard to a new definition of the "Foreigner" to tackle the nominee problem”, the Department's Director General said. “The amendment aims to bring the FBA in line with changing economic conditions and strike a balance between protecting Thai investors and promoting foreign investment”. Here to me, this is more the crux of it:” The new definition of “foreigner” will also take into account the management control or voting rights. The department is studying a new definition for the term "foreign" and comparing it with similar laws in other countries and the model law from the United Nations Commission for International Trade law”. She said the department had studied revisions for penalties under the new Act noting that the existing Act delivers a relatively serious penalty for petty offenses. Yes that is true. The Foreign Business Act, I won't go to so far as to say Draconian, but it has some really stiff penalties for things that in other jurisdictions aren't even considered an issue. To quote further, "In addition" she said "the department is considering withdrawing certain service businesses from List three. As discussed in a prior video there are three Lists that exist under the Foreign Business Act. List one is highly restricted to Thai nationals only. List two is sort of semi restricted and then List three, it's not really all that restricted at all frankly. No I take that back. Not that it is not restricted; it is less restrictive than the other two lists. Many services businesses fall under List three and therefore those individuals can't operate in the Kingdom without further first receiving a Foreign Business License or through some mechanism like the US-Thai Treaty of Amity or BOI certification which comes with a Foreign Business Licensing; if you have to get certified with an activity that falls under the Foreign Business Act. So the thing to take away from this video is, it looks to me like they're probably trying, it looks like they're trying to tighten up certain aspects of the Law with respect to voting rights, disproportionate voting rights, disproportionate equity rights in an underlying corporate structure. I think they're trying to figure out some way of tightening some of that up to protect Thai investors while at the same time, it seems like there may be some light at the end of this tunnel with respect to possibly easing up of some of the restrictions under list three, and by easing up the restrictions  I mean it would seem that they may be some business activities they may just pull off of list three and therefore it's not going to require a Foreign Business License anymore in order to operate one of those businesses. So it remains to be seen how all this is going to play out. I suspect if they are talking about this now we are not going to see a finalized draft for some months, but that being said they could already have it in the can and they are ready to roll it out so it remains to be seen what is going to happen with respect to this but we will keep you updated on this channel and provide whatever information we can with respect to any changes in the Foreign Business Act.