Posts in category: Corporate

Thai Association for Your Business. Thailand boasts a strong culture of collaboration, and associations play a vital role in fostering connections within various industries. If your business aims to integrate into the Thai market and connect with local stakeholders, establishing a Thai Association can be a strategic move.

Understanding Thai Associations

Unlike Western-style business associations, Thai Associations are registered with the Ministry of Interior and function more like non-profit organizations. They focus on promoting industry-specific interests, fostering collaboration among members, and providing educational or charitable services.

Benefits of a Thai Association

• Enhanced Credibility: A Thai Association positions your business as a leader within the industry, demonstrating commitment to the local market.
• Networking Opportunities: Associations facilitate connections with potential partners, clients, and government agencies.
• Industry Advocacy: Associations can lobby for policies that benefit your industry and influence market trends.
• Community Building: Associations create a platform for knowledge sharing and collaboration, fostering a supportive business environment.

Steps to Establishing a Thai Association

1. Define Objectives: Clearly outline your association’s purpose, target audience, and activities.
2. Draft Regulations: Prepare a document outlining the association’s structure, membership rules, fees, and management procedures. This document must be in Thai.
3. Founding Members: Gather at least ten individuals to act as founding members.
4. Registration Process: Submit the association’s regulations, founding member list, and other required documents (meeting minutes, office address proof) to the local district office.

Important Considerations

• Language: All registration documents must be submitted in Thai. Consider partnering with a Thai legal professional to ensure accuracy and compliance.
• Government Approval: The Ministry of Interior has final say on association registration. The process can take several weeks.
• Ongoing Requirements: Maintain proper accounting records and hold regular meetings as mandated by your association’s regulations.

Investing in the Future

Establishing a Thai Association requires dedication and planning, but the rewards can be substantial. By fostering collaboration and promoting your industry, you create a platform for your business to grow and contribute to Thailand’s dynamic market.

US-Thailand Treaty of Amity. A long-standing and complex relationship characterized by diplomatic cooperation, economic partnerships, and cultural exchanges exists between the United States and Thailand. The Treaty of Amity and Economic Relations, which was signed in 1966 and has been instrumental in promoting friendship and economic cooperation between the two countries, forms the foundation of this relationship. This article explores the history, salient features, and long-term effects on bilateral relations of the US-Thailand Treaty of Amity.

I. Historical Background and Treaty Origins

A. Era Following World War II:

The United States attempted to increase its influence in Southeast Asia after World War II in an effort to stop communism from spreading there.
Thailand became a vital partner in the area, providing important military installations and acting as a check on the spread of communism.

B. Financial Collaboration:

Acknowledging the reciprocal advantages of increased economic collaboration, both nations endeavored to establish their economic relations via a bilateral accord.
On May 29, 1966, the Treaty of Amity was signed, setting the stage for further investment and trade between Thailand and the United States.

II. Important Clauses in the Agreement

A. National Handling:

In a number of economic areas, the Treaty offers US people and businesses the same advantages as Thai nationals.
This clause guarantees Thai enterprises the same rights and benefits as American companies, which promotes investment-friendly conditions.

B. Control and Ownership:

The Treaty eliminates limits on foreign stock and permits US firms and persons to acquire and manage businesses in Thailand.
This clause promotes US businesses to open offices in Thailand and makes foreign direct investment (FDI) easier.

C. Settlement of Disputes:

The Treaty offers procedures for resolving disagreements between US investors and the government of Thailand.
International arbitration or diplomatic channels may be used to settle disputes, creating a predictable and stable environment for investment.

III. Effect on Mutual Understanding

A. Growth in the Economy:

Thailand’s economy has benefited greatly from the Treaty of Amity, which has encouraged entrepreneurship and drawn in foreign investment.
Billions of dollars have been invested in Thailand by US corporations, resulting in the creation of jobs, technology transfer, and economic progress.

B. Commerce Relations:

Increased exports and imports have resulted from the Treaty’s facilitation of bilateral trade between the United States and Thailand.
Increased market access and lowered trade barriers have helped both nations, fostering fair and mutually beneficial commercial partnerships.

C. Cultural Interaction:

The Treaty of Amity has improved people-to-people contacts and cultural links between the two countries in addition to fostering economic cooperation.
The American and Thai people now have a better knowledge and admiration of one another because to educational programs, exchange visits, and cultural activities.

IV. Relevance to Today and Prospects for the Future

A. Adjusting to Shifting Circumstances:

In spite of shifting geopolitical and economic conditions, the Treaty of Amity remains a pillar of US-Thailand relations.
Both nations have reaffirmed their dedication to respecting the Treaty’s tenets and looking into new opportunities for collaboration.

B. Developing Prospects:

The Treaty of Amity offers fresh chances for cooperation in cutting-edge fields including digital technology, renewable energy, and healthcare in today’s globally integrated society.
The United States and Thailand can confront common issues and seize chances for mutual prosperity by utilizing their individual strengths and experience.

V. Final Thoughts

The Treaty of Amity between the United States and Thailand is evidence of the two countries’ long-lasting friendship and strategic alliance. This historic agreement has improved commerce, stimulated economic growth, and encouraged cross-cultural exchanges between the United States and Thailand for more than 50 years. The Treaty of Amity continues to provide a foundation for collaboration and cooperation as both nations negotiate the challenges of the twenty-first century, guaranteeing a better and more affluent future for future generations.

The Thailand Board of Investment (BOI) stands as a pivotal agency in Thailand’s economic landscape, driving foreign direct investment and spearheading economic growth. Established with a mission to attract and facilitate investments, the BOI plays a crucial role in propelling Thailand’s industrial and technological advancements. This article delves into the significance, functions, incentives, and application process of the Thailand Board of Investment, shedding light on its instrumental role in fostering business growth and development.

I. The Genesis of Thailand Board of Investment

Established in 1954, the Thailand Board of Investment is a government agency operating under the Office of the Prime Minister. It was created to encourage and facilitate both local and foreign investment in Thailand’s priority industries.

II. Objectives of the BOI

A. Promoting Investment: The primary goal of the BOI is to promote and facilitate investment in industries that align with Thailand’s economic development goals.

B. Enhancing Economic Competitiveness: By offering a range of incentives, the BOI aims to bolster the competitiveness of Thailand’s industries on the global stage.

C. Stimulating Technological Advancements: The BOI encourages the adoption of advanced technologies and innovation to drive industrial growth and enhance productivity.

III. Priority Industries and Investment Promotion

The BOI classifies industries into various categories, offering different sets of incentives to attract investments. Priority industries include sectors like manufacturing, agriculture and agro-industry, mining, and services.

IV. BOI Investment Incentives

A. Tax Privileges: The BOI offers tax exemptions or reductions on corporate income tax for a specified period, depending on the industry and location.

B. Import Duty Exemption or Reduction: Eligible projects may enjoy exemptions or reductions on import duties for machinery, raw materials, and essential components.

C. Land Ownership and Use Rights: Foreign investors can receive rights to own land for promoted activities, which is otherwise restricted.

D. Permission for Foreign Workers: The BOI provides permissions for foreign experts, technicians, and skilled workers to work in Thailand.

V. Application Process

A. Eligibility and Project Proposal: Investors must meet the eligibility criteria and submit a comprehensive project proposal detailing their investment plan.

B. BOI Application Submission: The application, along with the required documents, is submitted to the BOI.

C. BOI Evaluation and Approval: The BOI reviews the application, and upon approval, the investment project is granted BOI promotion privileges.

VI. BOI and Economic Growth

The BOI has been instrumental in attracting a substantial influx of foreign direct investment, catalyzing industrial expansion, technological advancement, and job creation in Thailand.

VII. Challenges and Future Endeavors

While the BOI has played a pivotal role in Thailand’s economic development, it continues to evolve to address new challenges and capitalize on emerging opportunities in the global business landscape.

Conclusion

The Thailand Board of Investment remains a cornerstone of Thailand’s economic success, driving investment, technological advancement, and industrial growth. By offering a range of incentives, the BOI continues to be a magnet for local and foreign investors, propelling Thailand’s position as a competitive player in the global market. As it adapts to new economic landscapes and embraces emerging industries, the BOI stands poised to play a pivotal role in Thailand’s future economic prosperity.

Foreign Business License (FBL) is a permit granted to foreign companies or investors that would like to operate in businesses that are restricted under Thai law. This is only possible when the majority of the company shares are owned by Thais.

List 2 – Businesses related to national security and culture. List 3 – Businesses that Thai are not yet ready to compete with.

The Process

A Foreign Business License (FBL) is a certification that allows you to legally operate a company in Thailand. It is a complex process that can take months to complete. For this reason, it is important to apply for a FBL with the help of a law firm. The best option is to choose a firm with extensive experience and a team of experts.

The FBA is a set of regulations that organizes business activities into three categories. These categories vary in the degree of restrictions on foreign ownership and operation. The most restrictive category is List One, which includes businesses that are reserved for Thai nationals and those that affect national security and public order, culture, traditions, folklore handicrafts and natural resources.

Businesses classified in List Two and List Three are permitted if they are promoted under the Investment Promotion Act or granted permission by the Foreign Business Committee. They must also comply with the provisions of the FBA concerning minimum capital and schedules for capital remittance.

Requirements for FBL

The requirements for a foreign business license in Thailand vary depending on the type of business and the expected privilege. The application will need to provide detailed information on the business such as financial record and supporting documents, previous business record of the company, machinery information, requirement of foreign expert and if applicable work permit & visa arrangement.

List Two: Businesses related to national safety and security or with impacts on arts, culture, traditions, folklore handicrafts or natural resources and environment. The minimum capital required for these types of businesses is set by the Ministerial Regulation.

Some businesses are exempted from the FBL, including those that are promoted under investment promotion or granted permission for the operation of industry or for trade for export or are specified in Lists Three and Four annexed to this Act or by virtue of a treaty such as the Treaty of Amity with the United States. In such cases, a majority of shares must be held by Thais.

Time Frame

Generally, it takes about four months to submit an application for a Foreign Business License. However, the time frame may vary based on the complexity of the application and the number of supporting documents required.

The Thailand Foreign Business Act (FBA) was established in 1999 to limit which types of businesses a foreigner can perform in the country. The Act organizes business activities into three categories. The first category is strictly prohibited for foreigners, the second is reserved for Thai nationals and the third is restricted under certain circumstances.

The process to obtain a foreign business license is complicated and lengthy. Typically, the application is reviewed by the Cabinet or Foreign Business Committee depending on which category the company applies for. The approval process is more likely when the authorities view the company as providing significant benefits to the country. Foreign companies that operate in Thailand under BOI privileges or US Amity Treaty may not need a foreign business license and can apply for a certificate of business operation.

Appeals

The presiding MOC official in charge of the inspection will normally not allow an application to proceed until he is satisfied that all documentation has been submitted. Moreover, the MOC will not issue a foreign business license until it receives the minimum capital amount specified by ministerial regulations.

The MOC also has strict rules on intellectual property rights (IPR) relating to patents, trademarks, designs, layout-design of integrated circuits, and geographical indications. As a member of the World Trade Organization, Thailand generally adheres to international standards on IPR.

In the case of a rejected FBL, the Ministry of Commerce will notify the applicant within 15 days, in writing, and expressly state the reason for the rejection. The applicants have the right to appeal this decision. A majority of the shares in a limited company must be held by Thai shareholders or legal persons registered in Thailand. In addition, the company must remit 50 percent of its profits to the government for its first year of operations.

A Representative Office is a Thai business entity which is responsible for non-expenditure activities of the Foreign company. It cannot generate income and its expenditures must be borne by the head office.

Setting up a Representative Office is much easier than incorporating a branch or limited company in Thailand. The Department of Business Development usually issues a certificate within two to four weeks.

Legal Requirements

A representative office of a foreign company can engage in a wide range of activities, like buying and selling goods and rendering services. It is not subject to corporate income tax, except for interest on funds it receives from the head office.

It is allowed to report on business movements in Thailand to the head office. It can also source products and services for the head office. This helps companies save money by eliminating the cost of importing raw materials.

The representative office needs to submit documents containing the company name, capital, place, directors and authorized signatories. It should also include a description of the reason to establish the Representative Office along with its estimated budget for the first three years. It should specify the number of foreign and Thai staff, nationalities and shareholdings. Additionally, the company must provide the work permit ratio of four Thai employees for every one foreign worker. The foreign head office must also certify that the representatives are qualified to manage the business activities of the Representative Office.

Requirements for a Local Manager

The representative office acts as a liaison between the company’s head office and its offices in other countries and does research for commercial information, advising the parent office of market trends. In addition, the representative office can do marketing and exhibit samples of goods at trade fairs for the parent company.

In the past, establishing a representative office was difficult because it required a Foreign Business License (FBL) that would take months to obtain. However, now the process is much easier for foreign companies wanting to establish a presence in Thailand.

To set up a representative office, the foreign company is required to submit certified copies of its articles of incorporation and power of attorney for the local manager. These documents should be notarized and/or certified by a Thai consulate or embassy abroad. Additionally, the passport and non-immigrant visa of the local manager must be provided. Upon submission, the Department of Business Development will issue a certificate for the representative office, enabling it to commence operations within two to four weeks.

Requirements for a License

Generally, foreign companies want to set up representative offices in Thailand for market research and business support. These offices can be 100 percent foreign-owned and are allowed to hire up to two work permit holders. However, they cannot earn revenue in Thailand and are not taxable.

In order to operate a representative office, the company must submit a letter from the head office that confirms its location and financial statement. It also needs to submit a notarized power of attorney for the manager and proof of identity.

A representative office in Thailand must have at least 2 million baht in capital. It also must not engage in any revenue-generating activities and can only provide services listed under List Three (21) of the Foreign Business Act. In addition, the representative office must remit money to its head office or affiliated company/group of companies. Moreover, it can only receive funds to cover expenses, and it has no authority to accept purchase orders or offer for sale or negotiate for carrying on business with any person or juristic person.

Requirements for a Business Address

Foreign companies that wish to conduct marketing and business support activities in Thailand without obtaining a foreign business license can establish a representative office. This type of office is not allowed to earn revenue and can only provide important information back to the company’s head office.

Requirements for a representative office include an application to the Ministry of Commerce. This must contain a declaration that the applicant and their directors satisfy the requirements of Section 16 of the Foreign Business Act. Additionally, a notarized power of attorney from the foreign head office to the local manager must be submitted.

A representative office must also submit a minimum capital infusion of either 3 million baht or 25% of the estimated expenses for its first three years of operation, whichever is higher. This must be brought/transferred into Thailand according to a predetermined schedule. This is an ideal option for foreign businesses that want to test the waters in the Thai market before incorporating a company limited.

A Limited Company is a legal entity that can be operated for a long period of time. Normally, it cannot be dissolved easily. The first step is to reserve the name of the company. This can take a few days to complete. Then, a statutory meeting must be conducted.

Choosing a Company Name

One of the first steps in registering a business is choosing a company name. It should be unique and represent what the business does. It should also be easy to pronounce for non-English speakers. The company name should not be related to the names of governmental units or the royal family. It should also not be against public morals.

Once the company name is chosen, a statutory meeting must be held. During this meeting, the company charter and articles of association are drafted. Moreover, the responsibilities of directors and auditors are assigned at this time. In addition, it is mandatory for a limited company to have its head office located in Thailand along with a copy of house registration (Tabien Baan) number and Letter of Consent obtained from the landlord.

Memorandum of Association (MOA)

When it comes to setting up a limited company in Thailand, it is essential to prepare a Memorandum of association (MOA). This document outlines all the important details about the business, such as its financial state, shareholders list, and directors. It also ensures that the company is registered in accordance with the law and is a trustworthy investment for both investors and third parties.

One of the main requirements for a limited company is its capital requirement, which must be at least 1 million baht. The company must also have at least four local employees for each foreign worker employed, if it wants to apply for a work permit. The MOA is filed with the Department of Business Development along with a stamp duty of 200 baht. It also includes a statement of the company’s objectives and principles at the time of its formation.

Articles of Association (AoA)

A Thai company’s articles of association are a public document that outlines how the company will be run, governed, and owned. The articles can put restrictions on the company’s powers – for example, they can prohibit the directors from pursuing certain courses of action without shareholder approval. Your corporate lawyer in Thailand can help prepare the documentation and submit it to the Ministry of Commerce.

The documents should include information about the company’s structure, including details of its directors and shareholders. They should also contain a description of the purpose of the company. This is important because it demonstrates that the company has a clear purpose and will be sustainable for the long term. The documents are also enforceable against third parties, unlike private Shareholder Agreements.

Conduct a Statutory Meeting

Once the MOA has been approved by DBD, the company must hold a statutory meeting. This meeting is a crucial step in the drafting of the company charter. It will contain information such as the company name, address, intended scope of business activities, the number and type of shares issued, the signatures and details of shareholders, and a declaration that the liability of the shareholders is limited.

The company must also arrange annual shareholder meetings and submit accounts to the registrar. If a company fails to meet these requirements, it may lose its right to register. In addition, a foreign company cannot purchase land in Thailand without the cabinet’s approval. Moreover, a foreign director must retire at least once every three years. This requirement is subject to future changes in the law.

Company Registration Proper

In Thailand, the registration of a Limited Company is an important step. This process includes the reservation of a company name (in accordance with the guidelines set by the Department of Business Development) and convening a statutory meeting. This meeting should include details of the company’s shareholders, address, and registration number, intended scope of business activities, province of registered office, declaration that the liability of the directors is limited, and a list of members.

Our team of proficient lawyers, fluent in English, possesses extensive expertise in assisting entrepreneurs throughout the company registration process in Thailand. We also offer guidance on work visas and immigration matters. Our goal is to simplify and expedite the process for you, ensuring full compliance with Thai law.