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 LawUS-Thai Amity Treaty Certification: What Is an American Company?

US-Thai Amity Treaty Certification: What Is an American Company?

Transcript of the above video:

As the title of this video suggests, we are discussing the US-Thai Treaty of Amity and a question that often comes up with respect to, especially an American Company looking to either set up an American subsidiary here in the Kingdom or to buy or is engaged in a Merger and Acquisition with a Thai operation, the question becomes, "How do we go ahead and purchase an operation or merge with an operation or set up an operation?" and the next question is, specifically in a corporate sense, "Is your company considered American?" and what I mean by that is, in a Corporate sense an American individual is fairly clear and the terms of the Treaty are relatively clear with respect to that. With respect to a company in the United States, is it considered American? Basically, what this comes down to is the amount of ownership as well as overall control of the Enterprise.

So, the US-Thai Treaty of Amity is a bilateral agreement. As a result, there can really be no third parties involved in the practical application of the provisions of the Treaty. As a result, if you have got an American Company, it is established under the laws of the United States, it is incorporated for example in the state of Nevada, it is considered an American Company but is primarily owned by someone with a Canadian passport. It is an LLC owned solely by someone with a Canadian passport. That would not be considered an American Company pursuant to the terms of the Treaty. That would be considered a Company incorporated in America but not owned by an American. So there is sort of a flow through analysis to the ownership and the control. The Board of Directors of an incorporated entity or the management board of an LLC or the partnership structure of a limited or unlimited partnership in the United States or for that matter I guess a sole proprietorship if you want to look at it that way. All of these things, you have to look at it: you have to do a flow through analysis. Is that considered American insofar as its ownership as well as its overall control structure? Is it considered American for purposes of the Treaty? If it is, essentially looking at it from a 51% ownership, 51% control, thereby only American Nationals only American citizens can control and own that company then "yes, it will be able to do business in the Kingdom utilizing the Treaty." Again, a very simple analysis is an LLC. It is American. It is organized under the laws in the United States. It is incorporated there but it has a third country National, for example someone from the UK or someone from Europe or a Japanese passport holder any of those people, that is not going to be considered an American company. That is going to be considered a company registered in America but that is not American for purposes of Treaty certification.