Economy growth in any country is likely to attract foreign investment so it’s hardly a shock to see international investors show an interest in setting up a company in Thailand. While Western powerhouses falter as unemployment is rife, Thailand seems to be having a much better time of it, perhaps because they are part of the multi-nation ASEAN economy which is one of the world’s largest. Being part of a $2 trillion annual GDP is certainly an attractive prospect for investors. They are also lured by the possibility of hiring talented Thai employees for a fraction of what they would pay for labour back home. As a result, they are more than prepared to deal with the sacrifices made when setting up a company in Thailand.
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An American Advantage
American businesses have a huge advantage over rival nations when it comes to starting up a company in Thailand. Rather than having to bow to the usual law which states a foreign company must have majority Thai ownership, American companies can enjoy 100% US ownership if they choose. Why? The Treaty of Amity in 1966 permits it. In effect, American nationals have the same rights as Thai nationals when it comes to owning and operating a business in Thailand. No legal red tape to manoeuvre around certainly seems like a worthwhile endeavour.
What’s The Catch?
Naturally, there are a few catches when it comes to using the Treaty of Amity while setting up a company in Thailand. For example, the company in question must have at least 2 million baht of fully paid up capital in order to be eligible. Additionally, American shareholders must enjoy a majority for the entire time the company is in operation. There needs to be a majority of either US or Thai directors. While you can hire directors of other nationalities, they cannot have sole signatory power.
Penalties
If you are from the United States and are setting up a company in Thailand, you must go through a specific registration process. Simply being from the United States is not enough, you must go through the correct channels. Failure to do so could result in your business being hit with severe financial penalties. If you are found to be operating a business in Thailand without following the correct procedure, you could receive a fine of up to 1 million baht. While this may not seem like much to a large multinational organisation, perhaps the potential 3 year prison sentence will act as a deterrent. It is also worth noting that a Thai national found guilty of owning shares in a company that does not adhere to the rules will be punished in a similar manner.
Therefore, it is not worth the risk when setting up a company in Thailand. It really makes no sense to try and cut corners if your business is free from Foreign Business Act restrictions. The Treaty of Amity is a Godsend for American businesses looking to make the most of the Thai market.
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