Thai-us Treaty Of Amity

[PvtDick]

Am I correct in assuming that 100% American-owned companies set up under the Treaty of Amity cannot own land? What if the company was set up under the Treaty of Amity, but later transfers at least 51% of its shares into Thai names?

[Indo-Siam]

As I understand it, such a company may own land, but only if at least 40% of shares are held by Thais.

If Thais own 51% of shares of a company, it cannot be US Amity Treaty Company, but it can own land. Cheers!

Steve

Indo-Siam

[PvtDick]

Thanks, Steve.

So, for an American, incorporating an Treaty company would allow you to own land while still controlling a majority of the shares in the corporation. Quite a big advantage for Americans over other foreigners...wonder why I've never heard anyone mention this before?

[PvtDick]

Related question:

If a Thai person can own a controlling share of a Treaty company, does that mean I could never sell out to a Thai national? Or is there some way to convert a Treaty company into a normal company?

[Indo-Siam]

To be covered under Amity Treaty, at least 50% plus one share of company must be held by US Citizen(s). Also, at least 50% of directors must be US citizens. If an Amity Treaty company experiences shareholder changes that give Thais majority ownership - it loses its Amity Treaty status - but - who cares? All that Amity status does is give owners the same rights that Thai majority owned companies already have!

Note: Amity Treaty protection is NOT awarded generically to a company. It is approved to allow a company with majority of shares held by US citizens to pursue specific activities that are otherwise prohibited to foreign majority-owned companies - unless they obtain an Alien Business License.

The catch here is: to apply for Amity Treaty status (or for other foreigners - for an Alien Business License), you must be seeking to pursue a restricted activity. The list of restricted activities is at:

http://www.thailawforum.com/database1/foreign5.html

So - if you had a small manufacturing company - you are out of luck - you cannot obtain Amity Treaty status - because manufacturing is not a restricted activity - all companies can pursue manufacturing - including those having 100% foreign share ownership.

Good luck!

Steve Sykes

Managing Director

Indo-Siam Group

Bangkok

[email protected]

www.thaistartup.com

[PvtDick]

Thanks, Steve. Helpful as always. For the record, I already own a Treaty company (I hold all but 6 shares), and was curious if my company could own land, or could be sold to a Thai.

[Indo-Siam]

Out of curiosity - are you familiar with a performer named Maynard Ferguson?

This is a long shot - if this makes no sense to you, then you aren't the guy!

Cheers!

Indo-Siam

[PvtDick]

I'm the guy! Who are you?

[Indo-Siam]

One project I directed for my www.bangkokstaff.com business unit back in late 2003 was in support of an IP study for Nomura Research Institute. As part of that study, I obtained help from attorney EK at T&G. One topic that came up was execution of raids on pirate manufacturers and major distributors. That led to a review of past participants in such raids, including the now defunct Pinkertons operation in Thailand. That brought up some names - I'm rusty at such work these days, but I'm still a fairly quick lerner. Applying some intellectual force, I achieved a majeure breakthrough - and along the way stumbled upon a photo (part of a tribute website that is now non-operational) of a certain monarch holding a jam session with a visiting musician.

All of that was part of research that I carried out in order to be ready for a Phase II of the Normura project - which never materialzied. But I continually work to add bits and pieces to my networking web in Thailand - you never know when catalogued information will become useful.

So - in this thread - considering your user name, and your corporate structure - I made a lucky guess. I don't think there are all that many people in your line of work here, so the odds were reasonably good.

Some people like doing crossword puzzles - I prefer playing around with real world puzzles - I guess just to practice problem solving skills.

Cheers!

Steve Sykes

Managing Director

Indo-Siam Group

www.thaistartup.com

[PvtDick]

Well done, Steve...do you need a job?

[Indo-Siam]

Like you, I have my own company, where I serve as Managing Director. My business is providing support to other businesses. I am the creator of employment for 6-8 Thais at any given time - and I work hard to bring in work to keep them all profitably employed.

So - I am not in need of formal employment for another employer. I am happy to perform work as a subcontractor to other businesses - I personally believe that in accomplishing tasks in Thailand, the best approach is to employ a team - a sharp foreigner, paired with a sharp Thai partner. So - I typically seek out work that requires the planning and problem solving skills that foreigners are better at, along with the language and execution skills that Thais are better at.

At any rate, I'd be happy to sit down and see where I and/or my company might be able to help your business earn profit, by performing tasks where we have some relative strength. I also might have some work to refer to your company from time to time.

Cheers!

Steve Sykes

Managing Director

Indo-Siam Group

[email protected]

[Indo-Siam]

Awright - my "As I understand it ...." about land ownership under Amity Treaty has been proven to be a faulty understanding.

List 1 activity at Alien Business Law - see last page of sequence at: http://www.thailawforum.com/database1/foreign.html

So - land ownership requires majority Thai share ownership. QED

I knew there was a reason why I have kept my company out of the practice of land dealings.

Estne volumen in toga, an solum tibi libet me videre?

Cheers!

Steve

Indo-Siam

[GuestHouse]

That might explain

Sentio aliquos togatos contra me conspirare

Whcih is a bit of a worry..

[gwkenny]

Sorry, I hardly ever read this board else I would have replied earlier. I am surprised how misinformation abounds as factual information is readily available.

There are a number of restrictions that the Amity treaty does not cover. As indicated previously, land ownership is not something that is covered.

Information is very readily available on the net: from the BOI as well as US Commercial Services.

The following is a good website (US Commercial Services) about registering for the treaty and also lists the restrictions:

http://www.buyusa.gov/thailand/en/78.html

Steve, you stated: "The catch here is: to apply for Amity Treaty status (or for other foreigners - for an Alien Business License), you must be seeking to pursue a restricted activity."

I believe this is factually wrong. I never saw anything with regards to this before and it never came up in my discussions with US Comercial Services or Thai Goverment offices when I setup my Amity Treaty company.

If it is not factually wrong, it really is a moot point.

When you setup a company in Thailand you have to file something called the Memorandum of Association (MOA). The MOA includes a list of objectives for your company (basically it's a list of all the different areas of business that your company may engage in). The "standard" list is quite all encompassing and without even looking, I'm sure there's tons of stuff on it that's in the restricted list. So no need to worry about this point at all if it is true.

g-

[Indo-Siam]

George -

It is absolutely true, and not a moot point. Great exmple: A small manufacturing company that doe not qualify for BOI promotion (because it is not pursuing an eligible activity) cannot obtain Thai-US Amity Treaty protection - because manufacturing is NOT an activity that is prohibited to majority foreign-owned companies. The Department of Foreign Busines will NOT accept an Amity Treaty application from a company seeking to pursue a non-restricted activity.

My company has never had an Amity Treaty application "disapproved" - but it has had one application "not accepted" - this was for a Thai consulting company involved with opium eradication programs in Afghanistan. The business concept was to recreate in Afghanistan a successful opiuim poppy eradication program carried out by Thailand a generation ago (the Royal Doi Thung project). The Department of Foreign Business (DFB) decided that the actual revenue-earning part of this business would occur outside Thailand - and that none of its activities inside Thailand would violate restrictions of the Foreign Business Act - and therefore returned the application as unacceptable. The American fellow who set up this company just wanted to base it somewhere other than Afghanistan (!) - and Thailand was the one other country involved in the sceanrio.

In this latter case, we even got US Ambassador Darryl Johnson involved - and the DFB people were quite amazed, in that he speaks quite fluent Thai (based on Peace Coprs service in Thailand early in his professional career) - but they held their ground - a US-owned COMPANY is not generically entitled to Amity Treaty protection. It is only entitled to removal of restrictions on activities prohibited under the Foreign Business Act

Cheers!

Steve

Indo-Siam

[gwkenny]

Steve:

Well that seems to be an unfortunate problem.

As you and I know, Thais can be sticklers to the rules and regulations.

As I stated before, it is a MOOT point if you take the GOVERNMENT'S recommended list of objectives as your own. You do not have to be a BOI approved company.

Just from memory, farming and selling of produce is on the restricted list.

Among the list of objectives on the list supplied by the government is: 16. To trade in fresh food, dry foodstuffs, finished foodstuffs, canned goods, food condiments, beverages, liquor, beer, cigarettes and other foodstuffs; and 24. To engage in the activities of farming, gardening, plantation work, salt farming, forestry work, rubber plantations, animal raising and cattle breeding.

Around the office though, this is the fun one: 13. To operate ...MASSAGE parlors...

There's over 40 some odd business objectives from quarrying, ice making, consulting, travel companies, photograpy, and tailoring. It covers basically everything. Including stuff on the restricted list.

If you are lucky enough to get a peek at the business objectives of some really large corporations you are going to find that all the business objectives basically look the same. Why do they look the same? Cause they use the example list supplied by the goverment. And all those companies are not involved in all of the objectives supplied. Usually not even a fifth of the objectives supplied.

If someone cut out all the business objectives to only list 3 or 4 (which are not on the restricted list), well then they got some pretty bad advice somewhere. If you file using the standard list of business objectives you will have no problem as they are pretty all encompassing. I don't know why your client got singled out. Someone must of got a bee stuck up their butt somewhere.

Government officials are actually happy to talk with potential investors (well, if you can find one that speaks English!!!). Anyone who is reading this should do what I did. Talk to some government officials and get the low down. That's what they get paid for.

It's not that hard to form your own company over here. Even one under the Amity treaty (though that's expiring pretty dang quick). If anyone cares, the Company's core business that I started is Consulting and is registered under the Treaty of Amity and is recognized as such by the Thai Government. It is not a BOI approved company. Who knows, one day it may even go into rice farming, but it will probably go into selling foodstuffs fairly shortly though that wasn't in the plans at formation.

g-

[Indo-Siam]

The list of restricted business activities that foreign-majority-owned businesses are not allowed to pursue without an Alien Business License, or US-Thai Amity Treaty protection, is at: http://www.thailawforum.com/database1/foreign5.html

Consulting falls under List 3, Activity #21 - so a company can receive Amity Treaty protection to pursue that - and virtually any other service business.

Cheers!

Steve

Indo-Siam

[stevehaigh]

please excuse me if i am misinterpreting this conversation, but LIST ONE, item 9 say that Land trading is included in "The businesses not permitted for aliens to operate due to special reasons". i don't know if this is only with reference to "Amity Treaty" companies.

i have a regular thai company, i own 49%, my lawyers own 51%. i created the company for the sole purpose of buying, building and selling land. is there a problem with this?

thanks

[PvtDick]

The restricted activities do not apply to your company, because your company is majority Thai-owned. As long as Thais control 51% or more of the shares, the fact that you, as a foreigner, own a minority is of no consequence.

[Sumitr Man]

i have a regular thai company, i own 49%, my lawyers own 51%

I seriously hope you sleep with your lawyers....

...and, next time you see them, ask them if they are members of the Law Society of Thailand. IME, on two different occassions, the LST have informed a member of theirs that there may be ethical questions that need answering where a lawyer holds shares in a client's company as a de facto nominee (which is against the law - in particular, see Section 150 of the Civil and Commercial Code of Thailand). On both occassions, to avoid LST investigation/sanctions, the lawyers were compelled to sell the shares they held to a third [unrelated] party.

OTH, you may be located in Pataya, where I understand this type of practice is very common indeed .

[Bobcat]

With certain specified exceptions (eg BOI approval), a company which is owned more than 49% by foreigners OR half or more of whose shareholders are foreigners CANNOT own land. See Section 97 (Chapter 9) of the Land Code.

Regards,

Bob

[gwkenny]

lol

So Steve, your saying business consulting falls under List 3 #21. As quoted in your reference it is: Other categories of service business except that prescribed in the ministerial regulations

Think we'll both agree that this is pretty broad. But if this is the case, in the point where you mentioned a rejection (not approved) you were transferring knowledge from Thailand to Afghanistan. Couldn't that be classified as a "service business"? Geez what about laundry services?

Arguing semantics here with you is non-conducive to anything!

All I'm saying is that it is NOT hard to setup a Company. Even under the Amity treaty. You are making a mountain out of a mole hill. AGAIN, when filing, if you use the business objective SUPPLIED by the governement, you should have no problems. There's lots of restricted objectives in that list. US Commercial Services is generally pretty helpful. They've been working with the Thai gov't for quite some time.

If anyone is thinking of doing it, they should just do what I did. TALK to the gov't officials who get paid to help people start companies. Tell them what you want, and they'll basically tell you how to present the information.

If you don't have Thai staff already, then using an organization to do all the forms and filings can be very useful.

If someone as stupid as I can do this, most anyone can. It ain't that difficult.

Bobcat: For all practical purposes you are right. But there are legal circumstances where foreign owned entities (and even persons) can own land. But anyone with that kind of money isn't going to be looking for advice here

g-