What is the US-Thai Treaty of Amity?
The US-Thai Amity Treaty, also known as the Treaty of Amity and Economic Relations between the Kingdom of Thailand and the United States of America was signed on May 29, 1966 to give special rights and benefits to American citizens who wish to establish their businesses in Thailand.
Background of the Thailand Treaty of Amity
The Thailand Treaty of Amity aims to provide significant advantages for US investors to run businesses in Thailand for both corporations and individuals. In particular, the Thailand Treaty of Amity provided the US two major trade advantages:
- The Thailand Treaty of Amity permits American companies to hold majority of the shares or the whole company, branch office or representative office located in Thailand.
- American companies may engage in business on the same basis as Thai companies, and are exempt from most of the restrictions of foreign investment imposed by the Alien Business Law of 1972.
While the Thailand Treaty of Amity provides the above-mentioned advantages, the US citizen is also subjected to several restrictions stipulated in the treaty. The Thailand Treaty of Amity prohibits American investors from engaging in the following reserved activities:
- Fiduciary functions
- Banking involving depository functions;
- Land Ownership, Exploitation of land or
- Other natural resources; and
- Domestic trade in indigenous agricultural products.
The following requirements must apply:
- A minimum of 51% of shares must be held by American citizens
- A minimum of 50% of directors must be American citizen(s)
Minimum Capital Requirements
Although treaty-protected companies are given advantage treatment under US-Thai Amity Treaty, they still need to satisfy the minimum capital requirement under the Foreign business Act (FBA).
In case that the business is not restricted under the FBA, the minimum capital requirement for a treaty-protected company is THB 2 million.
On the other hand, if the business is required to obtain a Foreign Business License under FBA, the minimum capital requirement must be THB 3 million for each business activity.
Here is the excerpted information on how to register a company under the Thailand Treaty of Amity:
- Phase 1: Document filing. The applicant obtains documents verifying that the company has been registered in compliance with Thai law. This is the first step in order to obtain the certification under the Thailand Treaty of Amity.
- Phase 2: Certification by CS. Upon receipt of the preceding required documents the CS office will then provide certification to the Thai Department of Commercial Registration in the Ministry of Commerce that the applying business organization is an American owned and managed company and is therefore entitled to national treatment under the provisions of the Thailand Treaty of Amity.
- Phase 3: Application to the Ministry of Commerce. After certification by the CS, original copies of all the above-mentioned required documents, along with a completed application forms, which may be obtained from the Department of Registration in the Thai Ministry of Commerce, must be given to the Thai Department of Commercial Registration in the Ministry of Commerce in order to fully register under the Thailand Treaty of Amity.
The above process can normally be completed within 4 to 6 weeks.
Registration Procedures: Thailand Treaty of Amity
To receive protection under the Thailand Treaty of Amity, the applying business organization must pursue and administrative process to show “registration under the Treaty of Amity.” In order to show “registration under the Treaty of Amity,” the applying business organization may either consult with one of the many law firms in Thailand or observe the following procedures:
- For a Thai partnership, Thai branch office, joint venture, or Thai limited company, the following documents are required to be notarized by a Notary Public and sent to the Commercial Service office at the Embassy in Bangkok for certification:
- For a sole proprietorship, all that is required to seek protection under the Thailand Treaty of Amity is a notarized copy of the owner’s passport or birth certificate to prove U.S. citizenship (either by birth or naturalization). They must send this information to the Commercial Service office at the U.S. Embassy in Bangkok for certification.
- Articles of Incorporation
- Bylaws of the Company
- An Affidavit of the Manager or Corporate Officer, stating the following:
- Name of the Company, registration number, and date of registration. Address of registered office.
- Jurisdiction under which the corporation is registered.
- Name, address, nationality, age and race of each director, number of shares held by each, and identification of the director(s) with the power to bind the company.
- Authorized capital of the Company, number of shares and par value of each and amount of paid up capital.
- Total number of shareholders, their nationalities, and number of shares owned or held by them.
- For an applying U.S. company that is a subsidiary to a larger, parent company, the applying U.S. company, in addition to the above required documents, must also provide documents pertaining to its parent company to the Commercial Service office at the U.S. Embassy in Bangkok.
- For an applying U.S. company wishing to invest directly in a Thai company to obtain a majority of the Thai company’s shares, the applying company must show notarized proof that the majority of owners and directors of both the applying company and the company to be incorporated are (or will be) U.S. citizens either by birth or naturalization.
- Upon receipt of the preceding required documents, the Commercial Service prepares a document that certifies that the applying business organization is an American owned and managed company and is therefore entitled to national treatment under the provisions of the Thailand Treaty of Amity.
- After certification by the Commercial Service, original copies of all the above-mentioned required documents, along with a completed application form that may be obtained from the Department of Business Development of the Ministry of Commerce, must be given to the Thai Department of Business Development of the Ministry of Commerce in order to register under the Thailand Treaty of Amity and to complete the process.
Please allow at least four to five weeks to complete the entire process. It usually takes less than one week to obtain certification from the Commercial Service office. But registration by the Thai government can take anywhere from a few weeks to a few months. Please note that the above description of the procedure is based on the knowledge of the Commercial Service for procedures for coverage under the Thailand Treaty of Amity.
Consulting with a legal firm in Thailand may still be highly advisable as the procedures for application under the Thailand Treaty of Amity is very complex and time consuming.