Pattaya Condo

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Wednesday, 19 December 2012 08:20

Americans Planning To Invest In Thailand Are Advised To Obtain Qualified Legal Advice. Featured

Waterfront Pattaya For Sale

Waterfront Pattaya For Sale

Such advice is particularly important given the fact that Thai business regulations are governed predominantly by criminal law, not civil law. While foreigners rarely are jailed for improper business activities, violation of Thai business regulations can carry heavy criminal penalties.

Thailand has removed tax disincentives on buying domestic financial institutions. The Financial Institutions Act passed at the end of 2007 gave power to the Bank of Thailand (the country’s central bank) to raise the foreign ownership limit in a local bank from 25 percent to 49 percent on a case-by-case basis.

The Act also allows the Minister of Finance to authorize foreign ownership above 49 percent. In January 2009, the Ministry of Finance allowed Malaysian’s CIMB Group to hold majority shares (around 93 percent) in BankThai Bank, the country’s ninth largest commercial bank.

Under the Bank of Thailand’s new five-year Financial Sector Master Plan Phase II (FSMP II), which was approved by the Cabinet in early November 2009, foreign banks, which were restricted to a single branch, will be allowed to open two more additional branches from 2010. The FSMP II will also allow existing foreign full branches to upgrade to subsidiaries and open a maximum of 20 branches and 20 off-premise ATMs.

The 2008 Life Insurance Act and the 2008 Non-Life Insurance Act requires that an insurance company must have Thai shareholders who possess more than 75 percent of total number of ‘voting’ share sold. Foreign ownership is therefore capped to 25 percent of voting share sold. The 2008 laws provide a five-year compliance period until February 2013.

If companies do not comply by 2013, they will be unable to open new branches and can be fined up to 200,000 Thai baht (approximately US$6,000) plus daily fines of up to 10,000 Thai baht (approximately US$300). However, the new laws also allow the government insurance regulator (the Office of Insurance Commission) to authorize foreign ownership up to 49 percent on a case-by-case basis. The Minister of Finance, with a recommendation from the Office of Insurance Commission, could grant approval to allow foreign ownership limit to exceed 49 percent.

Business Registration: Any entity wishing to do business in Thailand must register with the Department of Business Development at the Ministry of Commerce. Firms engaging in production activities need to register with the Ministries of Industry and Labor and Social Welfare. If the entity falls under the definition of non-Thai national as defined by the Foreign Business Act, they have to obtain a ‘foreign business license’ (or a certificate for US investors as mentioned above), which must be approved by the Council of Ministers (Cabinet) or Director-General of Department of Business Development at the Ministry of Commerce depending on types of restricted businesses.

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