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Thai Corporate Structures Benefiting Foreign Nationals

Transcript of the above video:

This video is just going to briefly discuss Thai corporate structures and how Thai corporations in some instances, limited circumstances, can be structured to benefit foreign nationals in terms of say voting control, these types of things. I should preface this video with a notation that in Thailand, one should always be cognizant with the provisions of the Foreign Business Act especially those provisions pertaining to Thai nominee shareholders. Nominee shareholders in the Kingdom of Thailand are illegal pursuant to the provision of the Foreign Business Act.

I should also be clear about the fact that I am an American attorney, so I am just giving a rough overview of   we have Thai attorneys on our staff. Those of you watching this video, if you want more in depth information about these matters, I strongly encourage you to contact us because a Thai attorney can provide far more detail on these issues and far more insight into the specific circumstances and specific, regarding specific circumstances and specific situations for those foreign nationals who are wishing to engage in business here in Thailand. Finally another thing to keep in mind, American citizens, this video is not really meant for you necessarily unless you have, unless one is trying to set up a Thai company, or a Thai corporation, with a foreign national who is not an American citizen. For American citizens, I strongly recommend checking out the video, there are a couple of videos on this channel regarding Treaty of Amity companies. Treaty of Amity companies pursuant to the provisions of the American-Thai Treaty of Amity, American citizens can own virtually 100% of a Thai corporation and maintain control and have that corporation certified notwithstanding the provisions of the Foreign Business Act. So sort of now that’s all prefaced, this video was actually done in response to a request for this information, or some of this information, made in a comment in one of our previous videos. “Yes, there are certain Thai corporate structures, Thai companies can be set up in such a way that a foreign national can be on them, notwithstanding the provisions of the Foreign Business Act they can have lets’ say more voting control of let’s say certain kinds of shares within a Thai corporate structure, most notably certain foreign nationals can, foreign nationals can generally also be directors and the structure of the board, with respect to at least a small Thai business can be sort of set up in such a way as to provide some at least some disproportionate control for a foreign national who’s operating here in Thailand.

Again, the nominee provisions of the Foreign Business Act need to be kept in mind. One can’t just have a nominee shareholder on their company and then just sort of utilize that person to sort of sit there and just hold shares while the company operates, so active participation in the company in question is often a necessity with respect to the shareholders. Another thing to keep in mind with respect to the corporate structures that have been structured in such a way to assist foreigners, is keeping in mind issues dealing with the requirement of paid up capital. Often times, although circumstances vary, oftentimes, where a foreign national is on a Thai company, the paid up capital of said Thai company, you have to deal with matters pertaining to paid up capital.  and let’s be clear, over the years it’s gone from the situation where paid up capital could be sort of “on paper proposition” to essentially now it’s basically, it’s been my experience that  where a foreign national is setting up, where a company is being set up with a foreign national either as a director or major shareholder in the company, it almost just “ red flags” and immediate sort of stringent analysis by the Department of Business Development under the Ministry of Commerce, the officers therein, by those folks to go ahead and look , make sure that that company is on the up and up at the outset. To be clear, Yes, foreign nationals, non American foreign nationals specifically, of other nations can have certain protections, certain provisions put in place within the structure of the company itself that will provide them with some extra protection although that being said, at the end of the day, there is only so much protection that can be provided, notwithstanding the provisions of the Foreign Business Act. These structures again are sort of set up, in the past they were sort of set up to kind of side step some of the provisions with respect to the FBA. That being said, these days, it’s honestly generally my best advice to folks that all things being equal, seeking a foreign business license may simply be the best way to go about dealing with this overarching matter. Once a foreign business license is issued, that license is issued in full knowledge of the provisions of the FBA and a license is issued by the Thai authorities to allow that business to go ahead and operate. So while Yes, you can structure companies in such a way to sort of comply with the FBA but provide some protection to a foreign national wishing to work in a company or invest in a company here in Thailand, in my opinion, probably the better long term strategy to undertake is going to be seeking a foreign business license and just operating pursuant to the rules of the Foreign Business Act and within the scope of the license issued by Thai authorities.