Thailand's Foreign Business Act, explained

What the Act actually does

The Foreign Business Act (FBA) does not ban foreign investment. It restricts foreign-majority companies from operating certain categories of business without permission. The restricted categories are set out in three schedules, universally referred to as List 1, List 2 and List 3. Anything not on a list is open: a foreign-majority company can manufacture goods, export, or operate most industrial activities without an FBA licence at all. The friction is concentrated in services, trading and land-adjacent activities, which is precisely where most foreign entrepreneurs want to operate.

The Act is administered by the Department of Business Development (DBD) within the Ministry of Commerce. It sits alongside, not instead of, other regimes: sector laws on banking, insurance and telecoms impose their own foreign ownership caps, and the Land Code separately restricts foreign land ownership regardless of what the FBA says.

What counts as foreign

A company is foreign under the Act if half or more of its shares are held by non-Thais, or if it is registered abroad. The test is share capital, not control, which is why the classic structure for restricted businesses is a company that is at least 51 percent Thai-owned by count of shares. A company that is 50/50 is foreign for FBA purposes; the Thai side must hold a genuine majority.

Because the test is formal, a cottage industry of workarounds grew up over two decades: Thai shareholders of convenience, preference share structures that concentrate economic rights with the foreign minority, and outright nominees. The Act has always prohibited nominee shareholding, with criminal penalties for both the nominee and the foreigner behind them. What has changed recently is enforcement, covered below.

The three lists

List 3 is the one that matters for most clients. Its catch-all category, other service businesses, sweeps in almost any service a foreign-owned company might perform in Thailand, from consulting to software support, unless a specific exemption applies. Ministerial regulations have progressively carved some activities out of List 3 over the years, including certain regulated financial businesses and some intra-group services, but the default position remains: foreign-majority services need permission.

Capital rules and conditions that ride along

The Act carries its own minimum capital floors. A foreign company operating an unrestricted business must bring at least two million baht into Thailand; one operating a restricted business under a licence or certificate needs at least three million baht per restricted business, or a quarter of the first three years' estimated average expenditure where that is higher, remitted according to a prescribed schedule. These floors interact with the separate work permit arithmetic, generally two million baht of registered capital per foreign employee, so for most service businesses the binding constraint is staffing rather than the FBA minimum. Capital should be planned once, against both regimes and the bank's expectations, before incorporation rather than patched afterwards.

Licence and certificate holders also carry ongoing conditions: limits on the ratio of borrowing to capital, residence requirements for at least one authorised person, and annual reporting among them. Breaching a condition can void the permission itself, which is why FBL companies should treat the conditions page as part of the constitution rather than filing furniture.

Common misunderstandings

• Registering a company is not permission to operate. The registrar will incorporate a foreign-majority company with restricted objects; the offence arises when it begins the restricted activity without a licence. The registration certificate proves nothing about FBA status.
• Work permits and the FBA are separate regimes. A valid work permit does not legalise the business, and a legal business does not by itself justify the permit.
• Minority foreign shareholding does not always end the analysis. Options, financing arrangements and control agreements can be read together with the share register, and structures engineered to defeat the shareholding test attract the nominee provisions.
• Buying an aged shelf company changes nothing. The analysis attaches to shareholding and activity today, not to the age of the certificate.

The routes to operating legally

There are four realistic routes for a foreigner who wants majority ownership or full control of a restricted business.

• BOI promotion. The Board of Investment can grant 100 percent foreign ownership for promoted activities, together with tax holidays and visa facilitation. Where the activity qualifies, this is almost always the best route. Our separate briefing on BOI promotion covers the mechanics.
• A Foreign Business Licence (FBL). A direct application to the Foreign Business Committee for permission to operate a List 3 business. Approval rates vary by activity, timelines typically run four to six months, and the committee weighs whether Thai businesses can already serve the market. It suits niche, defensible activities more than general trading or consulting.
• The US Treaty of Amity. American-majority companies can register under the treaty and operate most restricted businesses with a certificate rather than a discretionary licence. Our separate briefing on Amity companies covers eligibility and the exceptions.
• A genuine Thai-majority joint venture. Where a real Thai partner holds a real majority, with real capital and real rights, the company is simply not foreign, and the Act does not apply. This is the structurally simplest route and the one most often faked, which is why it now attracts the most scrutiny.

Penalties

Operating a restricted business without permission carries imprisonment of up to three years, fines in the range of one hundred thousand to one million baht, and daily fines while the violation continues, alongside court-ordered closure of the business. Nominee arrangements expose the Thai nominee, the foreign principal and any facilitating directors to the same tier of criminal liability. In practice the more immediate damage is commercial: banks freeze accounts, licences are revoked, and the company becomes unsellable.

The 2026 enforcement climate

Enforcement has moved from theoretical to operational. Under DBD Order 2/2568, effective from 1 January 2026, Thai shareholders in companies with foreign participation must demonstrate the genuine source of their investment, typically by producing roughly three months of bank statements showing that the capital is actually theirs. The old practice of a bank balance confirmation letter arranged the week before incorporation is dead. Registrations are being questioned at the point of filing, and existing companies with implausible shareholding are being invited to explain themselves.

The direction of travel is clear: structures that rely on Thai shareholders who paid nothing, hold no real rights and expect no real return are being identified and dismantled. That does not make Thailand hostile to foreign business; the open sectors, BOI route and treaty route all function well. It makes the country hostile to pretence.

A defensible file, by contrast, is unremarkable: Thai shareholders whose funds trace to their own accounts, dividends that actually reach them, minutes showing they attend meetings, and a share of the economics no lawyer needs to explain away. Companies with that file have nothing to fear from the new scrutiny; the order was written for the others.

If you already operate through a structure you suspect would not survive a source-of-funds inquiry, the time to restructure is before a routine filing triggers the question, not after.

How to approach it

The correct sequence is: define the actual activity precisely, check whether it is on a list at all, then test BOI eligibility before anything else, then consider Amity if American, then an FBL, and only then a Thai-majority venture with a partner you would trust without the paperwork. Most structural failures come from running this sequence backwards, incorporating first and characterising the business later. Asia Global Partners runs this analysis before incorporation, with counsel and, where useful, informal soundings with the relevant agencies, so the structure chosen is one that will still look sensible under scrutiny in five years.

This briefing is general information, not legal, tax or investment advice. Thai rules change frequently and individual cases differ. Verify current requirements with the relevant authorities, including the Immigration Bureau, the Board of Investment, the Land Department, the Department of Business Development and the Revenue Department, and take advice on your own facts before acting.