New Requirement For New Thai Companies: Paid-Up Share Capital

[Arkady]

Can america still hold 100% of a company??

I recall reading an article a few months ago that the USA had an agreement with Thailand that American Citizans could obtain a 100 % of a Company but please do not take my word for it if I can route out where I found the article I will post it !!!!!!!

The Treaty of Amity and Economic Relations between Thailand and the US is still in force. It continues unless either party gives one year's notice which has never happened. A lot of Thais of the bureaucrat and Thai chamber of commerce type don't like it because Thais get few benefits from it that are not available to all foreigners in the US but the Thai Ministry of Foreign Affairs has always counseled the nationalistic hotheads against scrapping it for fear of trade retaliation from the US that would certainly be forthcoming, if they did scrap it without providing the same benefits in another form. The US has made this point quite clear.

The company formed is known in the legal trade as a treaty company. It may have US shareholders (individual or corporate) and Thai shareholders but not other nationalities. You need to apply for an alien business licence at the Business Development Dept and provide information verifying the nationality of the US shareholders, as well as some additional information required for alien business licence applications but due to the treaty this is less onerous than for standard alien business licences. The BDD processing time varies according to the xenophobia level at the time but can be between 3 weeks and several months. Once you have the licence Americans can own 100% of the shares and engage in all businesses that are not specifically excluded in the treaty. Sorry, but land ownership is not allowed. Nearly all services are allowed though, except banking, logistics and transportation. I think the minimum capital required for a treaty company is 3 million baht.

[Arkady]

It is my understanding that a Thai Limited Com pany now only requires 3 shareholders of which 1 must be a Thai national, the Thai shareholder would hold 51% of the company shares the other 2 shareholders could be farang correct me if I am wrong !!!!!!!

Yes, some years back rules were changed from 7 to 3 shareholders. Majority or 51% Thai ownership of shares. At same time funds should be proven - i.e. no moneyless nominees.

Actuall not much news, apart from you now have to follow the rules.

You may have two share-classes (A and B shares), where each preferred share fx. have 10 votes, and a normal share 1 vote.

It is my understanding that a Thai Limited Com pany now only requires 3 shareholders of which 1 must be a Thai national, the Thai shareholder would hold 51% of the company shares the other 2 shareholders could be farang correct me if I am wrong !!!!!!!

Yes, some years back rules were changed from 7 to 3 shareholders. Majority or 51% Thai ownership of shares. At same time funds should be proven - i.e. no moneyless nominees.

Actuall not much news, apart from you now have to follow the rules.

You may have two share-classes (A and B shares), where each preferred share fx. have 10 votes, and a normal share 1 vote.

Yes, only 3 shareholders now needed instead of 7 as previously. In non-public companies you may still different classes of shares with foreigners having voting rights disproportionately high relative to their shareholding. The military appointed legislature installed after the 2006 coup tried to prevent this but its draconican Foreign Business Bill failed in the legislature because of in fighting, since some hard liners thought it was too soft.

The BDD has never mandated checks on Thai shareholders in new companies with foreign involvement before. You are confusing this with Land Dept regulations that require checks on companies with foreign involvement that apply to transfer land titles to their name.

[TheChiefJustice]

This is bound to be extended to cover registrations of new foreign shareholders or new foreign directors of companies that previously had no foreign participation. Otherwise it is too easy to add the foreigners some time after registering the company. If so, it will create a lot of trouble for established Thai companies that genuinely want to appoint a foreign director or bring in a foreign shareholder. It would also restrict the ability of Thais to sell shares to foreigners, particularly if they have many Thai shareholders who refuse to disclose their assets. I guess they will introduce exemptions for public companies and companies over a certain size of paid up capital.

It only applies to new registrations. There are no plans to extend its coverage.