The Treaty of Amity allows American citizens and businesses incorporated in the US, or majority-owned by American citizens to operate companies in Thailand. These companies receive national treatment and are exempt from most of the restrictions imposed by the Foreign Business Act.
A company wishing to be protected by the US-Thai Treaty of Amity must follow certain steps and submit the required documents to the Ministry of Commerce. I helped a client through this process less than a month ago.
National Treatment
Under the Treaty of Amity, companies with American majority ownership receive “national treatment” in Thailand. This means that they are treated like Thai companies without having to deal with the foreign investment restrictions imposed by the Foreign Business Act.
This applies to sole proprietorships, partnerships, limited companies, branch offices and representative offices. However, they are still required to meet certain minimum capital requirements and work permit requirements.
Companies with American majority ownership can also lease or acquire immovable property in Thailand, subject to any restrictions imposed consistent with the Treaty of Amity. They can also dispose of their properties in Thailand.
Ownership Rights
The US-Thai Treaty of Amity allows American citizens to establish majority-shareholder companies that register in Thailand as “Amity treaty companies” and receive national treatment. The companies are exempt from most restrictions on foreign investment in Thailand, except those imposed by specific laws (such as the Telecommunications Business Act or the Banking and Life Insurance Business Act).
To qualify for the benefits of this treaty, the company must be properly incorporated under Thai law and must submit documents to the Commercial Services Office at the Embassy to verify that a majority of its shareholders and directors are American citizens. Once certified, the company can apply to the Department of Commerce for a foreign business certificate.
It is important to note that although Thailand provides for due process and compensation when private property is expropriated, the US-Thai Treaty of Amity does not guarantee that the company’s assets will be protected in the event of an expropriation. This is why a strong conflict of laws clause in contracts with the Government of Thailand is vitally important for any foreign investor operating under this treaty.
Access to the Judiciary
The Treaty of Amity allows American citizens to own 100% or nearly 100% of a company in Thailand. This can be beneficial to businesses that may need to work in countries where there are many business restrictions.
However, this is not a blanket protection and specific laws governing foreign ownership in particular industries prevail over the Treaty of Amity. It is also possible that the government will interpret the Treaty of Amity in ways that violate international law or norms.
In order to receive protection under the Treaty of Amity, companies must be registered in accordance with Thai law. In addition, the U.S. Commercial Service office in Bangkok must certify that the company is eligible to do business in Thailand. This is a complicated process and requires legal assistance. If you want to use the Treaty of Amity to protect your company, it is best to consult with a qualified Thailand lawyer. In addition, a treaty company will take more time to register than a non-Treaty of Amity company.
Restrictions
American businesses operating under the Treaty of Amity receive national treatment in Thailand, which means they can maintain majority ownership or wholly own a business in the country and are exempt from most restrictions on foreign investment placed on foreign companies by the Foreign Business Act. However, there are still a few restrictions that companies must abide by.
A company that wishes to take advantage of the benefits offered by the Treaty must first compile and submit the required documents to the US Commercial Service office in Bangkok, which will then send a certification letter to the Ministry of Commerce’s Department of Commercial Registration. The process usually takes less than a month.
The main requirement for a company to qualify as an amity treaty business is that it must have American shareholders with a majority shareholding and 50% of its authorized directors must be Americans. Also, the company must bring in at least 3 million baht worth of capital before the application for the treaty can be approved.