The U.S.-Thai Treaty of Amity: Advantages, Procedures, and Key Considerations

by
Treaty of Amity Company Thailand

Introduction


The Treaty of Amity and Economic Relations between the USA and Thailand, signed in 1966, offers significant benefits for American businesses operating in Thailand. This comprehensive guide outlines the advantages, limitations, eligibility requirements, and registration procedures for companies under this treaty.

What is the U.S.-Thai Treaty of Amity?


The U.S.-Thai Treaty of Amity allows U.S. citizens and businesses incorporated in the U.S., or those majority-owned by U.S. citizens, to enjoy certain privileges when operating in Thailand. It grants national treatment, enabling American companies to engage in business activities on similar terms as Thai companies and exempting them from most restrictions on foreign investment imposed by the Foreign Business Act of 1999.

Key Advantages of the U.S.-Thai Treaty of Amity

  1. Ownership Rights: U.S. citizens and companies can own 100% of the capital in Thai companies.
  2. National Treatment: American companies can operate on the same basis as Thai companies, exempt from most restrictions on foreign investment specified by the Foreign Business Act.

Limitations Under the U.S.-Thai Treaty of Amity


Despite its benefits, the treaty imposes restrictions on American companies operating in Thailand in the following areas:

  1. Communications
  2. Transport
  3. Fiduciary functions
  4. Banking involving depository functions
  5. Exploitation of land or other natural resources
  6. Domestic trade in indigenous agricultural products

In these sectors, American companies may face additional regulations or restrictions, similar to other foreign entities operating in Thailand. It’s important to note that while the Treaty of Amity provides many advantages, it does not override specific Thai laws governing these particular industries.

These limitations are in place to protect certain strategic sectors of the Thai economy. American investors interested in these areas should seek specific legal advice, as additional permits or licenses may be required, or alternative business structures might need to be considered.

For activities outside these restricted areas, American companies can generally operate with the same rights and privileges as Thai companies under the Treaty of Amity.

Eligibility Requirements

Eligibility Requirements To qualify under the U.S.-Thai Treaty of Amity, a company must meet the following criteria:

  • American shareholders must have majority ownership of the shares (at least 51%).
  • The majority of the directors must be U.S. or Thai citizens.
  • If there is a director of a third nationality, they must co-sign with a U.S. or Thai director.
  • The registered capital of a Thai company under the Treaty must be at least 3 million baht.
  • If the major shareholder is a U.S. company, it must be located in U.S. territories.
  • All criteria must be maintained up to the ultimate ownership level. This means American shareholders must have majority ownership at all levels of ownership from the entity applying to the ultimate parent company.

Company Formation Procedure

Step 1: Company Registration at the Ministry of Commerce

  1. Register the company with the Department of Business Development, Ministry of Commerce.
  2. Obtain and translate into English the following documents:
    • Certificate/Certificate of Incorporation: Document certifying that the company has been registered as a juristic person according to the Civil and Commercial Code.
    • Commercial Registration Department Certificate: Document certifying that the company has been duly registered as a juristic person, stating the names of the Managing Director and/or Directors, and its registered capital.
    • Company Objectives: A detailed list of the company’s objectives.
    • Memorandum of Association: Agreement made by a minimum of two individuals who are founders of the company.
    • Affidavit: Articles defining the powers of the company, list of directors, and rules for the company’s internal governance and external activities.
    • Articles of Association: Document specifying the regulations for the company’s operations (similar to bylaws).
    • List of Shareholders: A complete list of all shareholders.

Related article:

How to Register a Company in Thailand

Step 2: Obtaining a Verification Letter at the U.S. Embassy Commercial Service

  1. Fill out the Treaty of Amity Certification Letter request form:
  2. Provide the original and translated documents:
    • The original documents, once verified, will be returned to you with the official letter. Ensure these include the following:
      • Certificate/Certificate of Incorporation: Document certifying that the company has been registered as a juristic person according to the Civil and Commercial Code.
      • Commercial Registration Department Certificate: Document certifying that the company has been duly registered as a juristic person, stating the names of the Managing Director and/or Directors, and its registered capital.
      • Company Objectives: A detailed list of the company’s objectives.
      • Memorandum of Association: Agreement made by a minimum of two individuals who are founders of the company.
      • Affidavit: Articles defining the powers of the company, list of directors, and rules for the company’s internal governance and external activities.
      • Articles of Association: Document specifying the regulations for the company’s operations (similar to bylaws).
      • List of Shareholders: A complete list of all shareholders.

  3. Additional documents required if major shareholders are U.S. citizens:
    • Submit notarized copies of their passports. These must be verified and signed by either a U.S. Notary Public or the American Citizen Services Section of the U.S. Embassy in Thailand.
      • To request notarization services from the U.S. Embassy, contact American Citizen Services at:
  4. Additional documents required if major shareholders are U.S. companies:
    • Submit the following documents related to the American parent companies, verified and signed by a U.S. Notary Public:
      • Articles of Incorporation
      • By-Laws
      • Affidavit with the following information:
        • Company name and address
        • Date and place of registration
        • Registered capital
        • Names and nationalities of shareholders
        • Names and nationalities of the board of directors, binding signatories
      • Notarized passports of American major shareholders

  5. Submit original and one photocopy of documents to the U.S. Embassy’s Commercial Section:
    • The certification letter is usually issued within 3-5 business days. Faster service may be available upon request. For any queries, please contact the U.S. Commercial Service.
U.S. Commercial Service, U.S. Embassy Bangkok
GPF Witthayu Tower A, 3rd Floor, Room 302
93/1 Wireless Rd., Lumpini, Pathumwan, Bangkok 10330

Payment accepted online via credit card.  The client will receive an email when the letter is ready.

Step 3: Submitting Documents for the Foreign Business Certificate (FBC) to the Ministry of Commerce

  • The application is in Thai, so consulting a lawyer or having a Thai person handle it is advised.
  • The Ministry of Commerce charges 2,000 baht for the application and 20,000 baht for the FBC issuance.
  • The FBC is typically issued within 1-2 weeks.
Contact Information for the Ministry of Commerce
Bureau of Foreign Business Administration (Treaty of Amity)
Department of Business Development, Ministry of Commerce
Nonthaburi 1 Road, Muang District, Nonthaburi Province
Tel: 02-547-4426

How long does it take to register under the U.S.-Thai Treaty of Amity?

The entire process typically takes about 1-2 months:

  • Certification Letter: Obtaining a certification letter from the U.S. Commercial Service usually takes 3-5 working days. Expedited service is available.
  • Ministry of Commerce Approval: After receiving the certification letter, it takes an additional 2-3 weeks for the Ministry of Commerce to process the application.

Work Permits

The U.S.-Thai Treaty of Amity does not grant any special privileges related to visas and work permits. Standard rules apply, and companies must meet specific requirements for work permits. For every foreign worker, a minimum registered capital of 2 million Thai Baht is necessary. Additionally, the company must employ 4 full-time Thai staff per work permit issued to a foreigner.

Conclusion

The U.S.-Thai Treaty of Amity offers significant advantages for U.S. businesses in Thailand, but it’s crucial to understand its limitations and requirements. While it provides unique opportunities, careful consideration is necessary before proceeding with company formation under this treaty.

For personalized guidance on establishing your company under the U.S.-Thai Treaty of Amity, please email us or use the contact form below. Our experienced team is ready to assist you in navigating this process and ensuring compliance with all relevant regulations.

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