Thailand’sForeign Business Act (FBA) generally restricts foreign owned businesses from engaging in any “service business” without first obtaining a foreign business license or qualifying under another exemption (more information on the restrictions on foreign owned businesses under the FBA can be found here). Service businesses fall under Annex 3 of the FBA, which lists those businesses in which Thais are not yet in a position to compete with foreigners. The Department of Business Development, which is responsible for registering Thai limited companies and confirming their compliance with the FBA and other laws, has broadly interpreted the “service business” restriction in Annex 3.
However, once it has been determined that Thais are in a position to compete with foreigners in a business listed under Annex 3, the Thai Ministry of Commerce may issue regulations allowing foreigners to engage in such business. On 18 March 2013, the Ministry of Commerce did just that by issuing regulations allowing foreigners to engage in certain securities-related businesses without having to first obtain a foreign business license or qualify under another exemption to the FBA, stating that the basis for such regulations was that Thais are now in a position to compete with foreigners.
The regulations are effective as of 19 March 2013 and cover services relating to securities (14 types), futures contracts (3 types), and capital market trusts as follows:
1. Securities business and other businesses involving securities and securities exchanges:
a. securities trading;
b. investment consulting;
c. securities distribution;
d. borrowing and lending securities;
e. mutual fund management;
f. private fund management;
g. venture capital management;
h. credit provision for securities business;
i. financial consulting;
j. securities registrar services;
k. management of assets for clients of securities companies futures business operators;
l. private fund custodial services;
m. mutual fund supervision;
n. representation of bondholders.
2. Futures business:
a. futures trading;
b. futures consulting;
c. futures fund management.
3. Acting as a trustee under the laws on trusts for transactions in the capital market.
While the FBA may no longer be an impediment to foreign ownership of these securities-related businesses, other hurdles under Thailand’s securities laws remain for foreign applicants, such as the licensing requirements for such businesses under the Securities and Exchange Act B.E. 2535, Derivatives Act B.E. 2535 and Trust For Transactions in Capital Markets Act B.E. 2550 and related regulations.
last updated on 27 March 2013