An Entrepreneur’s Guide to Company Establishment under the US-Thailand Treaty of Amity

An Entrepreneur’s Guide to Company Establishment under the US-Thailand Treaty of Amity

The US-Thailand Treaty of Amity makes it possible to operate a one-hundred percent foreign-owned company. The company formed will be exempted from most limitations on foreign investment, which the Alien Business Law imposed. 

An Entrepreneur’s Guide to Company Establishment under the US-Thailand Treaty of Amity

This article guides you through the essential things you should know about establishing a company under the US-Thailand Treaty of Amity.

What is the US-Thailand Treaty of Amity?

Commonly known as the Treaty of Amity, the US-Thai Treaty of Amity and Economic Relations is a special economic bond between the US and Thailand. The treaty provides special benefits and rights to the American citizens who intend to start their business in Thailand.

Thailand Treaty of Amity’s Background

The treaty’s goal is to give US investors considerable benefits to operate businesses in the country for both individuals and corporations. Back in 1966, the treaty that was amended provides two significant trade advantages for the Americans:

  • American firms are allowed to hold a majority shareholding or to completely own their company, representative office, or branch office located in the country
  • American firms get national treatment, which means that the American companies may engage in business on similar terms as the local companies are exempt from most limitations on foreign investment

While the treaty gives various advantages, it is not without restrictions. The treaty stipulated several restrictions which do not permit American investors to engage in the following reserved operations:

  • Communications sectors
  • Fiduciary operations
  • Transportation sectors
  • Banking that involves depository duties
  • Land ownership, land exploitation or exploitation of other natural resources
  • Domestic trade in products of indigenous agriculture

Moreover, the following requirements must be satisfied:

  • At least fifty-one percent of shares are owned by American citizens
  • At least fifty percent of directors are American citizens

Minimum capital requirements under FBA

While treaty-protected firms have the advantage under the US-Thai Treaty of Amity, they still need to meet the minimum capital required by the Foreign Business Act. If the business is not restricted under the FBA, the capital requirement for a treaty-protected firm is at least THB 2 million. However, if the business has to acquire a Foreign Business License under the Act, every business activity will need at least THB 3 million of capital.

How to get a Treaty of Amity certification?

The process of obtaining the Thailand Treaty of Amity certification typically takes about four to six weeks. Here is the process to acquire the Treaty of Amity certifications:

  • Stage 1: Filing of the document. This is the first step to get the certification. During this phase, the applicant will get documents verifying the company has been registered under Thai regulations.
  • Stage 2: Certification by the US Commercial Service. After receiving the preceding necessary documents, the Commercial Service office will issue a certification letter to the Ministry of Commerce’s Thai Department of Commercial Registration. This letter is to verify that the applying business entity is owned and managed by an American, thereby having the right to national treatment according to the US-Thai Treaty of Amity’s provisions.
  • Stage 3: Application to the MOC. After the CS’s certification, all required documents’ original copies, together with a completed application form taken from the MOC’s Department of Registration, must be submitted to the MOC’s Thai Department of Commercial Registration to be fully registered under the treaty.

How to register a business under the Treaty of Amity?

The registration procedure of businesses under the Thailand Treaty of Amity depends on the business structure. For instance, to set up a sole proprietorship under the treaty’s protection, business owners only need to provide a notarized copy of their passport or birth certificate to prove their US citizenship. They need to submit this information for certification to the Commercial Service office located in the US Embassy in Bangkok.

On the other hand, to establish a treaty-protected Thai limited company, partnership, joint venture, or branch office, business owners need to prepare and submit a notarized copy of the following documents to the Commercial Service office for certification:

  • Articles of incorporation
  • The company’s bylaws
  • The manager or corporate officer’s affidavit, stating the following:
    • Company’s name, registration number, date of incorporation, and registered office’s address
    • Jurisdiction of which the company is registered
    • Every director’s’ name, nationality, age, race, address, number of shares held, and identification
    • The total number of shareholders, including their numbers of shares and nationalities
    • The company’s authorized capital, number of shares and par value of every share and the amount of paid-up capital

Seeking advice from a professional Business Services agency in Thailand

To ensure a streamlined and legally compliant company set up under the Treaty of Amity Thailand, business owners should engage with a competent professional services firm in Thailand. 

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