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For conducting business in Thailand it is mandatory for foreigners to be in the possession of a Foreign Business Operating License issued by the competent Thai authorities according to the provisions of the Foreign Business Act B.E. 2542 (A.D. 1999) (“FBA”).
II. Definitions under the FBA
According to Sec.4 FBA “Foreigner” means:
(1) Natural person who does not have Thai nationality;
(2) Juristic person not registered in Thailand;
(3) Juristic person registered in Thailand having the following characteristics:
(b) Limited partnership or registered ordinary partnership having the person under (1) as the managing partner or manager;
(4) Juristic person registered in Thailand having half or more of its capital shares held by the person under (1), (2) or (3) investing with the value of half or more of its total capital.
For the purpose of the definitions, the shares of a limited company represented by share certificates that are issued to bearers shall be deemed as the shares of foreigners unless otherwise provided by ministerial regulations.
The definition of “Foreigner”, as specified in Sec. 4 FBA, reveals that the law separates foreign juristic persons into 2 different categories:
(1) Juristic person not registered in Thailand
(2) Juristic person registered in Thailand having the characteristics as follows:
Limited partnership or registered ordinary partnership with over 50% of its capital invested by foreigner(s), or
Limited partnership or registered ordinary partnership with a foreigner as the managing partner or manager.
Sec. 4 FBA also specifies the meaning of “Capital” concerning the 3 different kinds of a juristic person registered in Thailand as follows:
“Capital” means the registered capital of a limited company or paid-up capital of a public limited company or the money invested in a partnership or juristic person by its partner(s) or its member(s).
III. Relevant Clauses
The relevant clauses are annexed to the FBA.
1. Annex 1 – Businesses Not Permitted to Foreigners
Foreigners shall be prohibited from operating a business as prescribed in Annex 1 due to special reasons (Sec. 8 (1) FBA).
Annex 2 contains businesses related to the national safety or security or affecting arts, culture, traditions, folk handicrafts, natural resources or the environment (Sec. 8 (2) FBA). Businesses in this Annex are divided into 3 categories: