The US-Thai Treaty of Amity

Business Services

What is the US-Thai Treaty of Amity?

The US-Thai Treaty of Amity aims to provide favorable business conditions for US investors, enabling them to conduct business activities in Thailand with relative ease. While a normal establishment requires a 51% ownership by a Thai, the treaty grants American companies permission to own a majority stake or full ownership of businesses, branch offices, or representative offices in Thailand and exempting them from many restrictions imposed by Thailand’s Alien Business Law of 1972. The treaty offers American entrepreneurs a pathway to establish businesses in Thailand while enjoying special privileges and incentives.

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Key things to consider

The Treaty of Amity allows American citizens and companies to hold the majority of shares in a company, with 50% of the company’s directors required to be American citizens. Under this treaty, American companies are exempt from most restrictions on foreign investment imposed by the Foreign Business Act, enabling them to operate on the same level as Thai companies. However, the application process includes certifying documents at the US Embassy, which can take some time.

Additional Information:

  1. Restrictions:  Despite the advantages, the treaty imposes specific limitations on American investors, such as prohibitions on participating in reserved activities like communications, transportation, banking, and land ownership.
  2. Nationality of the Board: At least 51% of shares being held by American citizens and at least 50% of directors being American citizens.
  3. Minimum Capital Requirements: Businesses protected under the treaty must fulfill minimum capital criteria outlined in the Foreign Business Act (FBA), which varies based on whether the business activities are restricted under the FBA or not.
  4. Registration Procedures: To secure protection under the treaty, businesses must complete administrative procedures, including document submission and certification by the Commercial Service office at the US Embassy in Bangkok. This involves submitting various documents such as articles of incorporation and an affidavit of the manager or corporate officer.

FAQ

What benefits do companies gain from registering under the Treaty of Amity Thailand?

Registering under the Treaty of Amity Thailand provides American investors with the unique advantage of holding a majority of shares in businesses engaged in specific activities. This allows them greater control and participation in the Thai market, which is otherwise restricted under the Foreign Business Act.

While the Treaty of Amity offers significant benefits, the registration process can be more time-consuming and costly compared to other business setups in Thailand. Additionally, treaty-protected companies may face increased scrutiny and regulatory requirements, which could impact their operational flexibility.

No, the Treaty of Amity does not grant foreign-owned companies, including those with American ownership, the right to own land in Thailand. Despite being able to hold a majority of shares in Thai companies, land ownership remains restricted to Thai nationals.

While Amity Treaty companies with majority US ownership enjoy privileges similar to Thai limited companies, there are certain limitations. These include restrictions on specific activities such as land ownership, domestic trade in agricultural products, and engagement in professions reserved for Thai nationals. Additionally, Amity Treaty companies must adhere to activities explicitly approved by the Ministry of Commerce to ensure compliance with regulations.

In summary, the US-Thai Treaty of Amity streamlines business ventures for American investors in Thailand, providing benefits alongside specific requirements to ensure compliance with Thai laws and regulations.

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