Thailand is a popular destination for foreign entrepreneurs and multinational corporations seeking to enter Southeast Asia and establish a presence. However, before entering the Thailand market, many are unsure whether foreigners may own 100% of a company in Thailand
The answer is yes, foreign investors may incorporate a business entity in which they own all of the issued shares, so long as certain requirements are met. Some activities are reserved for Thai-owned companies, while others require a Foreign Business License, investment promotion or other exceptions. Becoming acquainted with these intricacies before incorporating your company may spare you legal and financial headaches down the road.
For guidance on your international expansion plans, contact Vorx Consultancy.
Can Foreigners Own 100% of a Company in Thailand?
A foreigner may own 100% of a company in Thailand, provided its intended operations are foreign-own business activities that are either permitted by law or for which the company may obtain the relevant approval
The Foreign Business Act B.E. 2542 (1999) generally imposes a restriction on companies with 50% or more of their shares owned by foreigners: they are deemed foreign-owned companies. This does not always prohibit such business from operating, however; the restrictions which apply to them depend on their intended activity.
the fact that a foreign individual or company owns 100% of an incorporated business does not make that enterprise automatically foreign-own. As explained above, Thai and foreign ownership may apply to various categories of activity depending on each activity’s specific legal status.
Recommended Reading:
Before exploring foreign ownership rules, learn more about setting up a business in Thailand and understand the key registration steps, legal requirements, and compliance obligations for foreign entrepreneurs.
Which Business Activities Allow 100% Foreign Ownership in Thailand?
As mentioned above, the eligibility of an activity category depends on the relevant law. Thus there is no single list of all permissible activities which may be conducted by a 100% foreign-owned company. full foreign ownership may be possible in the following circumstances.
- Eligible export activities: Some aspects of manufacturing related to exports, and certain types of other activity, could potentially be amenable to a foreign-own structure.
- Eligible technology or software businesses: This includes qualifying categories of technology, software and innovative activity enterprises eligible to 100% foreign ownership.
- Eligible service businesses: Some service activities companies may be organized as a company which is foreign-owned in its entirety, subject to obtaining or being eligible for the relevant permit, investment promotion or exception.
- Eligible manufacturing activities: Certain production activities may be foreign-own, depending on the requirements for such production (e.g., if they are subject to any special regulations). Note that foreign-own manufacturer companies may be subject to additional restrictions.
For guidance on your international expansion plans, contact Vorx Consultancy.
When Can a Foreigner Own 100% of a Thai Company?
Full ownership is generally possible when at least one of the following conditions is met:
- The proposed business activity is not restricted under the Foreign Business Act or other applicable laws.
- The company obtains a Foreign Business License where required.
- The business qualifies for investment promotion or another applicable statutory exemption.
- The investor qualifies under an international agreement that grants relevant ownership rights.
For example, an eligible manufacturing project may be able to operate with full foreign ownership without relying on the same approval route as a restricted service business. A promoted investment project may also receive foreign ownership benefits subject to its approved activities and conditions.
The key step is to classify the intended business correctly before incorporation. A company registration certificate alone does not authorise every restricted activity.
Recommended Reading:
Compare Thailand with other destinations by exploring the countries that allow 100% foreign ownership and understanding how ownership rules vary across jurisdictions.
When Is 100% Foreign Ownership Restricted in Thailand?
The Foreign Business Act divides restricted activities into three lists.
List 1 — Activities generally prohibited to foreigners: These include specified activities such as rice farming, certain types of animal farming, and trading in land, subject to any applicable statutory exceptions.
List 2 — Activities involving protected interests: This category covers specified businesses connected with national security, culture, arts, traditional customs, natural resources and the environment. Special approval requirements apply.
List 3 — Activities where Thai businesses are considered not yet ready to compete: Certain service and commercial activities fall within this category. Foreign investors generally need a Foreign Business License or a qualifying exemption to conduct the restricted activity legally.
Other laws may impose additional ownership or licensing conditions. This is why investors should check the exact activity rather than assume that an industry is entirely open or restricted.
For guidance on your international expansion plans, contact Vorx Consultancy.
Four Ways to Establish a 100% Foreign-Owned Company in Thailand
- Conduct an unrestricted activity
If the relevant activity is unrestricted, it may be possible to establish a 100% foreign-owned company without needing to obtain an FBL. There are some additional requirements specific to the activity that may apply, however, beyond just the FBL.
- Obtain a Foreign Business License (FBL)
By obtaining an FBL from the relevant authority, a company owned by foreigners may be entitled to conduct a specific foreign business on a temporary basis. The determination of eligibility is made per the applicable law, so it is important to consult the requirements before attempting an FBL application.
- Apply for Board of Investment (BOI) promotion
A 100% foreign-owned Thai company may obtain investment promotion from Thailand’s Board of Investment for qualifying activities in designated industry categories. Promotion by BOI generally entitles the recipient company to certain benefits, such as eligibility for 100% foreign-owned company status or other investment-specific benefits. Note that not all companies are necessarily eligible.
- Determine whether one qualifies under a mutual-treaty provision
For eligible US investors, the US-Thailand Treaty of Amity may apply to certain companies of a category deemed eligible. Please note that the requirements for qualification do apply in this case, as well. The most suitable category depends on the nature of the applicant’s business activity, ownership structure and the relevant approval requirements.
Is the 49% Foreign Ownership Limit Mandatory?
No, the 49% limit is not a general restriction on foreign ownership of a company in Thailand. It determines the line between foreign-own and Thai-own business companies, however: Thai law considers a company with 50% or more of the capital belonging to foreigners to be a foreign-owned company. For such an enterprise to operate in Thailand, permission must be obtained as described above.
A Thai-own structure may make sense for some businesses: however, the tax advantages of a Thai ownership structure only apply when actual control of the company is exercised by Thai residents. A nominee or trust arrangement to conceal foreign ownership is likely to result in the parent company’s liabilities being imposed on the nominee. As noted above, Thai-majority company structure is not required per se, unless an FBL or other approval requires a Thai-own business structure.
For guidance on your international expansion plans, contact Vorx Consultancy.
What Should You Check Before Registering a Company in Thailand?
Before you go ahead and register a company in Thailand, make sure you are familiar with the basic tenets of foreign business ownership which apply to your situation to avoid unexpected hurdles during the process.
Business activity determination: Always remember to compile a complete list of all activities a company will be involved in some may be ineligible even if the primary activity is eligible.
Ownership type consideration: Depending on your eligibility, a foreign owner structure might be necessary to obtain investment promotion from the BOI or other relevant authorities.
License consideration: Determine the eligibility for and requirements for an FBL, BOI or other required approval.
Document requirements: Determine and accumulate the necessary documents (e.g., those pertaining to shareholder requirements, registration and supporting documents, capital, accounting, corporate tax, reporting and other requirements).
Tax requirements: Familiarize yourself with the requirements in terms of accounting, tax, reporting and other requirements. If the foreign owner plans on working for the company in Thailand, apply for the appropriate work visa.
How Vorx Consultancy Can Help With Thailand Company Formation?
Selecting the appropriate structure is only the beginning. Foreign investors, entrepreneurs and multinational corporations should consider engaging the services of a professional consultancy experienced in foreign business ownership, local requirements and compliance rules applicable in Southeast Asia to navigate the intricacies of starting a business in a foreign country. Vorx Consultancy offers company formation services, corporate compliance assistance, and expert consultation on business expansion and incorporation-related needs for multinational clients. We can help you determine the best business structure for your purposes and the requirements and steps you will need to take to set up business in Thailand.
Planning to establish your business in Thailand? Connect with Vorx Consultancy for expert guidance.
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Final Thought
Foreign business owners and enterprises might find starting a company or expanding their operations in Thailand presents some difficult questions, including whether foreigners may own 100% of a company in Thailand, but the answers are not quite as simple as a yes-or-no response. Depending on the category of your intended business activity, various restrictions, licensing and other requirements might apply. Determination of eligibility should be made prior to taking any further steps toward company formation in Thailand.
