This information is for reference only and is not legal advice. Consult a licensed lawyer before any transaction.
Foreign Business Act
Foreign Business Act B.E. 2542 (1999)
The information is reviewed and updated monthly against official sources.
In short
The Foreign Business Act B.E. 2542 (1999) defines who counts as a foreigner (including companies with 50% or more foreign capital), bars or restricts foreigners from listed businesses such as land trading, and criminalizes nominee arrangements used to disguise foreign ownership.
s.4: Who qualifies as a 'foreigner' (the 50% capital rule)
A foreigner includes any non-Thai individual, any company registered abroad, and crucially any Thailand-registered company in which half or more of the shares or invested capital belongs to such persons. A partnership whose managing partner is non-Thai also qualifies. This capital test, not nationality of directors, drives the whole Act.
s.4-capital: Definitions of 'capital' and 'minimum capital'
Capital means the registered capital of a limited company, the paid-up capital of a public company, or funds contributed to a partnership. For a foreign-owned Thai company, minimum capital is its own capital; for a foreign individual or overseas entity, it is the foreign currency actually brought in to start operating in Thailand.
s.5: Criteria for permitting foreign business
When authorities decide whether to let a foreigner run a business, they weigh the effect on national security, the economy and society, public order and morals, cultural heritage, natural resources, energy and environment, consumer protection, employment, technology transfer and research. Permission is discretionary and policy-driven, not automatic.
s.8: The three restricted-business Lists
The Act sorts restricted activities into three schedules: List One is fully closed to foreigners for special reasons; List Two needs Cabinet-level approval and touches security, culture or the environment; List Three covers fields where Thais are deemed not yet competitive and requires a Director-General licence with Commission approval.
List One (9): Land trading is fully prohibited to foreigners
Item nine of List One bars foreigners from the business of trading in land. Combined with the Land Code's separate ban on foreign land ownership, this is the legal root of why land-holding companies are scrutinized: foreigners cannot lawfully deal in Thai land either directly or through a controlled company.
List One (overview): Other businesses closed to foreigners
Besides land trading, List One closes media (press, radio, television), rice farming and crop growing, livestock, forestry from natural forests, fishing in Thai waters, extraction of Thai herbs, trade in Thai antiques, and the making of Buddha images. These are reserved on grounds of culture, heritage and national interest.
List Two: Security, culture and environment businesses (Cabinet approval)
List Two groups arms and military goods, domestic transport, Thai silk and crafts, antiques, and resource-related activities like mining, salt and sugar production. A foreigner may enter these only with Cabinet approval, and under section 15 generally needs at least 40% Thai shareholding and two-fifths Thai directors.
List Three: Services where Thais are not yet competitive
List Three covers accounting, legal, architectural and engineering services, most construction, brokerage, retail and wholesale below set capital thresholds, advertising, hotels (excluding management), tour guiding, restaurants and a broad catch-all for other services. A foreigner needs a licence from the Director-General with Commission approval to operate.
s.14: Minimum capital requirements
A foreigner must bring in at least the capital set by ministerial rule, never below two million baht for unrestricted business and not below three million baht for each activity that requires a licence under the Lists. The rule may also fix the deadline for remitting these funds into Thailand.
s.15: Thai shareholding for List Two businesses
A foreign company may run a List Two activity only if at least 40% of shares are held by Thais or non-foreign entities. With sound cause the Cabinet may lower this to 25%, but in such case at least two-fifths of the directors must be Thai nationals. This protects sensitive sectors from foreign control.
s.17: Application and approval timelines
Permission is sought from the Minister or Director-General. The Cabinet (List Two) or Director-General (List Three) must decide within sixty days, extendable once by up to sixty more days. Once approved, the licence issues within fifteen days. Refusals must be explained in writing, and List Three refusals carry an appeal right.
s.35: Fronting by a licensed foreigner for another foreigner
A licensed foreigner who helps an unauthorized foreigner operate, or runs a jointly owned business while presenting it as solely his own to dodge the Act, faces up to three years in prison, a fine of 100,000 to 1,000,000 baht, or both, plus a court order to stop and daily fines for continued breach.
s.36: Nominee prohibition (the core anti-nominee rule)
A Thai person or non-foreign entity who assists a foreigner in a restricted business, runs it jointly while disguising it as solely Thai-owned, or holds shares as a foreigner's nominee to evade the Act commits a crime; so does the foreigner who allows it. Penalty: up to three years' jail, 100,000 to 1,000,000 baht fine, or both, plus forced unwinding.
s.36-land: Why nominee land-holding companies are unlawful
When Thai shareholders hold stakes only to mask a foreigner's real control over a company owning land, they act as prohibited nominees under section 36 and circumvent both the land-trading ban and the Land Code. The structure is criminal for both sides, void in substance, and exposes the parties to forced share disposal.
s.37: Foreigner operating a restricted business unlawfully
A foreigner who runs a business contrary to the bans in sections 6, 7 or 8 faces up to three years' imprisonment, a fine of 100,000 to 1,000,000 baht, or both. The court additionally orders the business, undertaking, shareholding or partnership to cease, with daily fines of 10,000 to 50,000 baht for ongoing defiance.
s.41: Liability of directors and managers
Where a company commits an offence under sections 34 to 37, the directors, partners or authorized representatives who connived in it or failed to take reasonable steps to prevent it are personally liable: up to three years' imprisonment, a fine of 100,000 to 1,000,000 baht, or both. Responsible individuals cannot hide behind the legal entity.