Foreign Business License – If foreigners buying an existing Thai company

One of our foreign clients would like to buy an existing accounting and legal firm owned by Thais. They asked us if they need the foreign business license and how to obtain it. As per the Foreign Business Act, despite being a Thai registered company with majority foreign ownership, the company’s status is defined as a foreign company under the act. The activity of providing accounting and legal services is in List 3 of the act which means the company needs to have the license before starting the business operation. In this case, initially the company is owned by Thais, thus no need for the license. But once the majority of shares are transferred to foreigners, it becomes a foreign company in the view of Thailand Foreign Business law, so the license is needed.

When it comes to the process of applying for foreign business license, it is slightly different from the company registered overseas or newly set up company. Since legally, only a foreign entity can apply for the license, it means the foreigners have to own the company first and then apply for the license. It leads to the issue that if the company cannot get the permission, the company whose shares held by foreigners will not have right to do business in Thailand. Therefore, the officers allow the company to submit all documents, exclusive of the official application form (Tor tor 2), to explain the details of business to the foreign business committee. It is kind of seeking the opinion from the committee in advance. If the committee approve, the foreign investors can proceed the share transfer and officially apply for the business license by referring to the committee’s opinion. This is the extra step outside the law which the foreign business committee want to find a solution that the company can still be operating as a Thai company and the foreigners can make sure that they are qualified to do business before deciding to buy the shares from the company since there is no guarantee that the foreign business committee will give them permission to do business in Thailand. However, it will take longer than normal cases because it’s like the company submits the application twice.

Another point worth noted is normally the committee only allows a foreign company to provide accounting and legal services to an affiliated company or group of companies because there are lots of Thai companies that provide accounting and legal services.

Talk to ThaiLawyers today for information of foreign business license and due diligence service.

Read here for the required information and documents for foreign business license application.