General

There are no generally applicable limitations on the level of foreign ownership of shares in companies incorporated in Thailand. However, there are wide-ranging limitations on activities conducted by non-Thais including by foreign individuals and companies where, in effect, more than half of the shares are held by non-Thais.

The majority of the restrictions on activities being undertaken by non-Thais are contained in the FBA.

The FBA prescribes a wide range of business activities as restricted businesses which are reserved for Thai nationals and therefore cannot be carried out by “foreigners” (as defined in the FBA) at all or cannot be carried out by “foreigners” without an appropriate license or exemption. These restricted businesses are further categorized into three Schedules attached to the FBA, depending on the level of protection accorded to the relevant business:

• Schedule 1 lists the businesses reserved for Thai nationals for “special reasons” and there is a total prohibition on “foreigners” engaging in those businesses
• Schedule 2 lists the businesses reserved for Thai nationals because they affect national security or arts, culture, tradition, local handicrafts or natural resources and the environment. Foreigners are prohibited from engaging in those restricted businesses, except with a license from the Minister of Commerce and approval from the Cabinet
• Schedule 3 lists the businesses reserved for Thai nationals because Thai nationals are not yet prepared to compete with foreigners. Foreigners are prohibited from engaging in those restricted businesses, except with a license from the Director General of the Commercial Registration Department of the Ministry of Commerce and an approval from the Foreign Business Committee.

The Committee reviews applications under the FBA and makes its recommendations to either the Minister of Commerce or the Director General, whichever is applicable. In addition to the FBA, certain other acts contain industry-specific restrictions.

There is no clear and uniform definition of a “foreign” company under Thai law. Each act adopts a slightly different definition.

Land code

The Land Code generally prohibits a foreign national (individuals or companies) from owning land in Thailand. There are some exceptions to this general prohibition. Foreign individuals can own units in a condominium building, provided the total foreign ownership in the relevant building does not exceed 49 per cent of the total floor space. Foreign companies can be granted the privilege to own land in certain circumstances, such as:

• for the purposes of carrying on a business “promoted” by the Board of Investment (see below)
• pursuant to the Petroleum Act B.E. 2514 (1971), which allows an oil concessionaire to own land to carry on its business
• pursuant to the Industrial Estate Authority of Thailand Act B.E. 2522 (1979), which allows foreign business operator to own land in certain industrial zones (see below)
• where the Minister of Interior, under specific conditions, waives the prohibition on foreign land ownership.

Industry-specific restrictions

Both the Life Insurance Act B.E. 2535 (1992) and Non-Life Insurance Act B.E. 2535 (1992) set foreign ownership limits for companies carrying on insurance business at 25 percent less one share – in other words, Thais must hold more than 75 percent of the total issued shares. In addition, no fewer than three quarters of the directors of insurance companies must be Thai nationals. The insurance regulator (the Office of Insurance Commission (OIC)), the Thai insurance regulator, has the discretion to increase the foreign shareholding limit in a particular case to 49 percent of the total issued voting shares and increase the limit on foreign directors to not more than half. In addition, the Minister of Finance, upon recommendation from the OIC, has the discretion in a particular case to increase the foreign shareholding limit beyond 49 percent of the total issued voting shares, and increase the limit on foreign directors to more than half, if the operation of the insurance company may have an adverse effect on the insured or the public.  

• limited period exemptions from or reductions in corporate income tax in respect of income derived from the Promoted Activities
• exemption from or reduction of import duties on imports of raw material, components and machinery used in the Promoted Activities
• the right for foreigners to own land used in the Promoted Activities
• permission to bring in foreign skilled workers
• exemption from tax for dividends derived from Promoted Activities
• permission to remit foreign currency abroad.

• a guarantee against nationalisation
• protection from competition from the government
• protection against government price control.

• the right for foreigners to own land used in the industrial operation
• permission to bring in foreign skilled workers
• the operations located within an export and processing industrial estate may receive exemptions from import/export duties, VAT and excise tax on imports of raw material, components and machinery and exports of goods manufactured.