Foreign Business License (FBL)

In order to have 100% or Majority Foreign Business Ownership, the company must apply for a permission to operate a business under the Foreign Business Act BE.2542 (1999).

What is Foreign Business License?

Thailand restricts and prohibits economical areas and business categories for foreigners primarily in the Foreign Business Act (A.D.1999). Under the Foreign Business Act (FBA) foreigners are prohibited from engaging in most business categories in Thailand, unless an alien business operation permit has been obtained from the Director-General of the Department of Commercial Registration with the approval of the Foreign Business Committee. Separate laws control foreign ownership of land as well as such activities as banking, insurance, finance and shipping.

Foreign business license requirements

Minimum capital at the commencement of business cannot be less than that prescribed by ministerial regulations and can in any case not be less than 2M THB. But, in the case where these require the license under List Two or Three, the minimum capital to be prescribed in the ministerial regulations for each of the businesses shall in no case be less than 3M THB. Other conditions in ministerial regulations. Conditions related to the licensee.

Foreign Business Act Restrictions

Majority Foreign Business Ownership is not permitted under Business List 1. For List 2 and 3, foreigners can still set up a wholly foreign owned company by applying for the Foreign Business License (FBL)

Prohibited activities List 1

List one.
Foreigners as described above shall be prohibited from operating the following businesses (enumerated in List One, annexed to the FBA):

Newspaper business, radio broadcasting or television station business
Rice farming, farming or gardening
Animal farming
Forestry and wood fabrication from natural forest
Fishery for marine animals in Thai waters and within Thailand specific economic zones
Extraction of Thai herbs
Trading and auctioning Thai antiques or national historical object
Making or casting Buddha images and monks alms bowls
Land trading

Given the fact that these activities touch the very essence of Thai economic culture, it seems understandable that these activities cannot be conducted by foreigners.

Controlled activities List 2

Group 1: Businesses related to the national safety or security

1. Production, selling and maintenance of:

Firearms, ammunition, gun powder, explosives
Accessories of firearms, ammunitions and explosives
Armaments, ships, air-crafts or military vehicles
Equipment or components, all categories of war materials

2.Domestic land, waterway or air transportation, including domestic airline business

Group 2: The businesses affecting arts and culture, traditional and folk handicraft

1. Trading antiques or art objects being Thai arts or handicraft
2. Production of carved wood
3. Silkworm farming, production of Thai silk yarn, weaving Thai silk or Thai silk printing
4. Production of Thai musical instruments
5. Production of gold ware, silverware, nielloware, bronze ware or lacquerware
6. Production of crockery of Thai arts and culture

Group 3: The businesses affecting natural resources or environment

1. Manufacturing sugar from sugarcane
2. Salt farming, including underground salt
3. Rock salt mining
4. Mining, including rock blasting or crushing
5. Wood fabrication for furniture and utensil production

In order to conduct a business of List two, at least 40% of the capital has to be held by Thai nationals or juristic persons that are not foreigners under the FBA. The FBA also states that unless there is a reasonable cause, the Minister (with the approval of the Cabinet) may reduce the proportion requirement but it shall not be less than 25 percent and the number of Thai directors shall not be less than two-fifths of the total number of directors.

Controlled activities List 3

The Thai legislator annexed a Third List to the FBA, listing all businesses in which Thai nationals are not ready to compete unless permitted by the Director-General with the approval of the Committee. Do note that this permission will most probably be subjected to certain conditions. The activities mentioned in List three concern amongst others:

Rice milling and flour production from rice and farm produce
Fishery, specifically marine animal culture
Forestry from forestation
Production of plywood, veneer board, chip board or hardboard
Production of lime
Accounting or service business
Legal service business
Architecture service business
Engineering service business
Construction, except for:
- Construction rendering basic services to the public in public utilities or transport requiring special tools, machinery, technology or construction expertise having the foreigner’s minimum capital of 500M THB or more
- Other categories of construction as prescribed by the ministerial regulations
Broker or agent business, except:
- Being a broker or agent for underwriting securities or services connected with future trading of commodities or financing instruments or securities
- Being broker or agent for trading or procuring goods or services necessary for production or rendering services amongst affiliated enterprises
- Being a broker or agent for trading, purchasing or distributing or seeking both domestic and foreign markets for selling domestically manufactured or imported goods in the manner of international business operations having the foreigners’ minimum capital 100M THB or more
- Being broker or agent of other category as prescribed by the ministerial regulations
Auction, except:
- Auction in the manner of international bidding not being the auction of antiques, historical artefacts or art objects which are Thai works of art, handicraft or antiques having the historical value
- Other categories of auction as prescribed by the ministerial regulations
Internal trade connected with native products or production not yet prohibited by law
Retailing all categories of goods having the total minimum capital less than 100M THB or having the minimum capital of each shop less than 20M THB
Wholesaling all categories of goods having minimum capital of each shop less than 100M THB
Hotel business, except for hotel management service
Guided tour
Selling food or beverages
Plant cultivation and propagation business
Other categories of service business except that prescribed in the Ministerial regulations

The list is not only long. A carryall clause has been inserted as well: ‘other categories of service business except that prescribed in the ministerial regulations’. This clause gives the Director-General extensive powers; every activity can be subjected to his approval, except for those expressly authorised (e.g. hotel management service).

Prohibited activities List 1

Business that an alien is not allowed to perform with special reasons.

Controlled activities List 2

Businesses involving with national safety and security and affecting art and culture, custom and tradition, local crafts or natural resources and environment.

Controlled activities List 3

business that Thai people do not have prompt operating abilities to compete with aliens.

Difference between FBL and Thai LLC

Board of Investment Company in Thailand

With approval from the Thailand BOI, you can have a 100% foreign-owned company operating physically in Thailand. There are many benefits to setting up in Thailand as a BOI company.