THAI LAW - Amity Treaty between Thailand and the USA

THAI LAW - Amity Treaty between Thailand and the USA

 

Thai Law

   Thai law | The Amity treaty between Thailand and the U.S allows U.S citizens  to own more than 50% of the shares with a minimum of 50% of U.S directors in a limited company in Thailand. Under this agreement,  a company can be wholly owned by a citizen of the U.S.. Formally known as the Treaty of Amity and Economic Relations, the treaty was signed in nineteen sixty-six. The treaty grants American citizens and businesses incorporated in America the ability completely own a company in Thailand or to own the majority of shares enabling a U.S citizen to own and operate a company under the same rules as a Thai national.

Thailand law

The treaty has two distinct advantages for U.S traders; one being that it grants American companies a majority shareholding or full ownership of a company, branch office or a representative office that is within the Kingdom of Thailand. The other being that the treaty also enables an American company exemption from many of the restrictions put in place by the Alien Business Act of 1972 which has numerous limits on foreign investment. Companies that wish to apply using the benefits of this treaty  must have  50% or more of U.S. directors and have not less than of 51% percent shareholding owned by American citizens.

However, under Thai law, there are some restrictions which still apply such as not being able to operate in certain fields of business which are:

1. Communications

2. Transportation

3. Fiduciary functions

4. Banking involving depository functions

5. Exploitation of land and natural resources

6. Owning land

7. Domestic trade in agricultural products.

To set up a limited company in Thailand that under the treaty, there must be at least 3 million baht of registered capital, 25% of which has to be be paid up to show that the company is not set up for the sole purpose of obtaining work permits but that it is a legitimate business. If you have four registered Thai employees you will then be eligible to obtain one foreign work permit for your company. The entire process of forming such a company usually takes up to three months allowing for registration for VAT and Tax and approval from the Ministry of Commerce which, after receiving all the relevant paperwork can take up to 2 months.

Initial documents required include:

·      7 signed copies of the owner’s passport photo page and the current visa page.

·       Additional copies made for each shareholder.

·      The majority shareholder will be needs to give a copy of his U.S. passport, duly notarized.

·      If one or more shareholders are Thai then copies of their ID cards.

·      3 preferred names for the company in order of preference.

·      The business objectives.

Thai law

All of these documents are required for a successful application and to maintain your company as one that is registered under this treaty.

It is required to set up a Thai limited company first.  This company is then used to apply under the rules of the treaty.  It can be complex but not difficult if you know the procedure well.

The main benefit is that you will be able to own, or be a major shareholder of the company.

THAI LAW - Amity Treaty between Thailand and the USA