You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

September 25, 2019

Updated Minimum Capital Provisions for Foreign Companies in Thailand

Subscribe to Updates

Thailand’s Ministry of Commerce, to fulfill various treaty and agreement obligations and for ease of enforcement, has abolished the previous three ministerial regulations on minimum capital for foreign companies, and issued a single new Ministerial Regulation re: Minimum Capital and the Period to Bring or Remit the Minimum Capital to Thailand B.E. 2562 (2019).

The new regulation took effect on August 28, 2019, and sets the timeline for bringing in, or remitting, the minimum capital to Thailand for foreign businesses using privileges under treaties and trade agreements. These currently include the following:

  1. U.S.-Thailand Treaty of Amity and Economic Relations
  2. Australia-Thailand Free Trade Agreement
  3. Japan-Thailand Economic Partnership Agreement
  4. ASEAN Framework Agreement on Services
  5. ASEAN Comprehensive Investment Agreement

Foreign-owned companies established under privileges granted by any of the above treaties or trade agreements must bring or remit the required minimum capital to Thailand by no later than August 29, 2029. This remittance period requirement also applies to those companies established before August 28, 2019, that have not yet brought or remitted the minimum capital to Thailand.

The minimum capital and payment schedules for foreign-owned companies not established under one of the treaties or trade agreements above remain unchanged. A foreign-owned company not subject to a foreign business license requirement must have minimum capital of THB 2 million, and the minimum capital must be fully paid up before the company commences business in Thailand. For foreign-owned companies that are subject to a foreign business license requirement, the necessary minimum capital is 25% of the average estimated expenses for three years of operation or THB 3 million, whichever is higher. Again, the minimum capital must be paid in full before the companies are allowed to commence business in Thailand.

Foreign individuals and branch offices of overseas companies are not required to make the full capital payment at once, and instead can bring in or remit their minimum capital in tranches: at least 25% of the minimum capital within three months, at least 50% of the minimum within one year, and thereafter at least 25% of the minimum capital per annum.

Foreigners are still required to submit evidence detailing the minimum capital remittance to the Department of Business Development, Ministry of Commerce, within 15 days of it being brought into or remitted to Thailand.

Any foreigner who operates a business in violation of these minimum capital requirements will be subject to a fine of THB 100,000–1 million, plus an additional fine at the daily rate of THB 10,000–50,000 throughout the period of the violation.

For more information on these developments, or on any aspect of doing business in Thailand, please contact Tilleke & Gibbins at [email protected] or +66 2056 5555.

Related Professionals
Piyanuj (Lui) Ratprasatporn
Partner and Director, Corporate & Commercial
Thailand
+66 2056 5555
Email

Practices

Corporate/M&A

Location

RELATED INSIGHTS​ 

October 19, 2022
The Factory Act B.E. 2535 (1992) is one of the most important laws regulating manufacturing businesses in Thailand. It applies to businesses either with machinery of 50 horsepower or more in total, or with a minimum of 50 workers in a facility that conducts “factory work” as defined under related ministerial regulations. The act was recently amended to extend the period of validity for factory licenses and to make other miscellaneous changes that facilitate business. However, the act’s criminal liabilities were left unchanged, and they remain a vital tool for the authorities to exert control over relevant standards and prosecute violations. Both fines and imprisonment are available as sanctions under the law. Examples of common violations of the Factory Act and their potential penalties include: Setting up and operating a factory without acquiring a license: up to two years’ imprisonment, a fine of up to THB 200,000 (approx. USD 5,365), or both. Operating with noise level exceeding the standard set by the Ministry of Industry: a fine of up to THB 200,000. Not displaying a factory license in an open and easily visible location in the factory: a fine of up to THB 5,000 (approx. USD 134). Doing a test run of machinery prior to the start of the factory operations without notifying the authorities: a fine of up to THB 20,000. As factory activities are regulated in considerable detail, overlooking a minor change could potentially put the company at risk. The risk of violating the Factory Act increases when compliance is not a proactive policy—such as by instituting systems or safeguards to ensure adherence to the rules. Criminal Liability Violation of the Factory Act is especially a concern because criminal liability under the act is not limited to juristic persons (i.e., companies) but also applies to the director,
Read More
October 4, 2022
On August 31, 2022, the Government of Vietnam issued Decree No. 58/2022/ND-CP guiding the registration and management of operations of foreign non-governmental organizations (NGOs) in Vietnam (“Decree 58”). This decree will come into effect on November 1, 2022, replacing Decree No. 12/2012/ND-CP of the Government dated March 1, 2012, on the same matter (“Decree 12”). In general, the provisions under Decree 58 appear more detailed and stricter than those under Decree 12. In particular, there are two notable changes in Decree 58 in comparison with its predecessor: the definition of foreign NGO and the suspension and termination of a foreign NGO’s operation. New Definition of Foreign NGOs Under Decree 58, “foreign non-governmental organization” means a non-profit organization, social fund or private fund established under foreign laws; having legitimate capital sources from foreign countries; conducting development assistance and humanitarian aid activities not for profit or other purposes in Vietnam; and not receiving financial donations, calling for sponsorship, or raising funds from Vietnamese organizations and individuals. This definition has been narrowed in comparison to Decree 12, which, in addition to non-profit organizations, social funds, and private funds, also included “other social or non-profit organizations” as a category. Decree 58 further affirms that foreign NGOs must have capital sources from overseas and cannot receive funding from local sources. The last requirement had been a matter of concern in the past when foreign NGOs wanted to receive donations from Vietnamese entities. In practice, the prohibition of local funding had been known as an unwritten policy of the government; it is now officially recognized in Decree 58, and will prevent foreign NGOs from approaching local funding sources. More Specific Suspension and Termination Regulations Under Decree 12, there was no separation between the circumstances in which a foreign NGO’s operation would be suspended and those
Read More
September 27, 2022
Attorneys from Tilleke & Gibbins’ corporate and commercial group in Bangkok have contributed the Thailand chapter of the new Lex Mundi Sustainability and Competition Global Practice Guide. Featuring contributions from Lex Mundi member firms from around the world, the guide seeks to provide in-house and outside counsel with information on ESG (environmental, social, and governance) measures related to the competition regime in each jurisdiction. The chapters, which cover 44 jurisdictions around the world, are provided by member firms in the global Lex Mundi legal network. Each chapter covers the following main areas: Presence of ESG measures and sustainability agreements in the competition regime; Guidance from authorities related to ESG initiatives and competitor working groups; Calculation and reporting of ESG efforts; Precedents involving ESG and sustainability matters in the country; and Antitrust regulations that could lead to ESG litigation. To read the Thailand chapter or browse the other jurisdictional contributions, please visit the Lex Mundi website.
Read More
September 12, 2022
Throughout 2022, the Central Bank of Myanmar (CBM) has implemented a series of rules surrounding the compulsory conversion of foreign currency balances in the country. This began on April 3, when the CBM issued a notification directing foreign currency holders in Myanmar to convert their foreign earnings into Myanmar kyat (MMK), within one day, at the official exchange rate. Since then, the CBM has issued further clarifications and instructions for banks authorized to handle foreign currency, responded to some concerns from foreign investors by exempting certain foreign investment projects from the conversion requirement, and relaxed the currency conversion requirements for trade at the Chinese and Thai borders. The process has not been without some trial-and-error as well, with the CBM walking back some exemptions after they were enacted. Foreign investors and business owners, both in the country and abroad, have raised concerns about this centralized control of foreign currency flow and the depletion of foreign currency in Myanmar’s business community. To help readers understand the sometimes-surprising moves by the CBM over the past months, this article will summarize the key developments in the CBM’s efforts relating to foreign currency conversion. Establishment of Compulsory Exchange Requirement On April 3, 2022, the CBM issued Notification No. 12/2022 and Directive No. 4/2022 requiring nearly all individuals, companies, and other organizations in Myanmar to convert foreign-currency income received from abroad to MMK within one working day of receipt. These requirements took immediate effect for all transfers and applied retroactively to foreign currency balances already in the country. All authorized dealer (AD) banks (i.e., those licensed to exchange foreign currency) were instructed to convert foreign currency held in the foreign currency accounts of “internal residents”—which included locally registered companies, organizations, and offices; Myanmar branches of foreign companies; and individuals residing or established in Myanmar
Read More