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and face up to 3 years in prison. However, the law did not prohibit foreigners from being the majority in the board of directors and also did not prohibit having different classes of shares with differing voting rights. This loophole allowed thousands of foreign-controlled businesses to operate in
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in 1999 that limited foreign ownership of certain Thai industries. Its predecessor was the Alien
Business Act of 1972, enacted by a military junta. Industries which must be majority-owned by Thais included the newspaper business, radio stations, television stations, rice farming, animal husbandry,
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Thailand is currently bound by several agreements such as the U.S. – Thai Treaty of Amity and
Economic Relations of 1833 (the “US-Thai Treaty of Amity”), Thailand – Australia Free Trade Agreement (TAFTA), Japan – Thailand Economic Partnership Agreement (JTEPA), ASEAN Framework Agreement on Services
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1. The draft proposes to extend the definition of alien (foreign individuals or companies) as being that any company where foreigners hold half or a majority of the voting rights would be classified as alien and thereby restricted from participation in businesses regulated under the
171:(AFAS), and ASEAN Comprehensive Investment Agreement (ACIA). Only the US-Thai Treaty of Amity allows U.S. nationals and/or companies to hold majority or whole of the shares in companies to engage in business on the same basis as Thai companies but with certain requirements, i.e.:
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2. limited grandfathering is included. All foreign owned companies as under the new definition and that have been operating for a year have to apply to the
Ministry of Commerce for a certificate with a year. Once the certificate has been issued they have to adjust their
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fishing, land trading, mining, wholesaling and retailing, restaurants, and all service businesses. The law criminalized nominees, any Thai who held shares on behalf of a foreigner. Nominees could be fined 100,000 to 1 million
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promoted under the
Investment Promotion Act B.E. 2520 (1977) or granted written permission for the operation of the business under the Industrial Estate Authority of Thailand Act, B.E.2522 (1979).
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in
December 2006. A second draft was done in March and the third and final draft was approved by the cabinet in April 2007. The main points of contention are :
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The Treaty of Amity between the United States and
Thailand, however, prevents US nationals/entities from engaging in the following restricted activities:
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FBA issues regulations from time to time. It is to exclude certain foreigners’ service business activities, as detailed in
Ministerial Regulations.
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3. All other countries such as
Malaysia, Vietnam, China and India are opening their markets to foreign investment yet the draft
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not listed under List One, List Two or List Three except for certain business i.e. manufacturing and exporting activities.
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or voting profile to conform to the new definition of the act within 3 years. This would exclude most service businesses.
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Foreigners must notify the
Director-General of the DBD in order to obtain a foreign business certificate.
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2. Foreign companies in
Thailand had for years structured their companies into different classes of
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by narrowing the definition of alien closes the Thai market and makes Thailand look as if it has a
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specifically described in the FBA as exempt from a foreign business licence requirement;
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3. 100% foreign ownership was allowed for retail and wholesale businesses under the
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member countries, provided foreign equity investment was limited to 49%. The draft
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The foreign business community have objected to the draft on the following bases.
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by virtue of a treaty to which Thailand becomes a promoter of the business.
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M.R. Pridiyathorn critiques proposed changes to foreign investment policy
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A minimum of 51% of shares must be of the citizens of the United States;
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At least half of the directors must be citizens of the United States.
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Department of Business Development, Ministry of Commerce, Thailand
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British Chamber of Commerce Thailand,(Draft FBA and Objections)
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member had equal national treatment of businesses of all
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A foreigner can engage in business activities that are:
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per shop. That has now been abolished under the new
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Domestic trade in indigenous agricultural products.
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Banking services that include depository functions;
146:Exceptions in Foreign Business Act for Foreigners
201:Land or other natural resource exploitation; and
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91:Objections of the foreign business community
78:capital was fully paid or 20 million
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74:with the condition that 100 million
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46:The first draft was issued by the
42:The new draft Foreign Business Act
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217:Original document of the Act (
250:Konrad Legal Company Limited,
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289:Foreign relations of Thailand
26:National Legislative Assembly
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192:Fiduciary responsibilities
284:Foreign trade of Thailand
264:U.S.-Thai Treaty of Amity
48:Thai Ministry of Commerce
20:was a law enacted by the
115:eliminates those rights.
135:Foreign Business Act
128:Foreign Business Act
113:Foreign Business Act
84:Foreign Business Act
72:Foreign Business Act
57:Foreign Business Act
18:Foreign Business Act
198:Property ownership;
240:, 23 November 2006
230:2010-11-16 at the
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238:Who can own what?
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279:Thai legislation
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273:Categories
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38:Thailand.
141:strategy.
258:See also
228:Archived
101:Thailand
30:Thailand
120:shares
103:as a
80:Baht
76:Baht
35:baht
16:The
109:WTO
105:WTO
99:1.
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