There are at least 17 laws and policies in Thailand which
prescribe ceilings on foreign ownership in various businesses.
Two of broad importance are the Land Code regarding the
ownership of land (ceiling of 49%), and the Foreign Business
Operation Act (FBOA) regarding the ownership of 43 categories
of businesses (ceiling less than 50%). There are exceptions
under certain free trade agreements (US, Japan and Australia),
the Investment Promotion Act, and discretionary business
licences issued by the Department of Business Development under
In practice, Thai nominee shareholders, preference shares
(for voting rights), and a majority of directors that are
foreigners are commonly found, in addition to shareholder and
other agreements, to allow more control by foreign
The Government has announced that it proposes to amend the
FBOA to clarify the restrictions regarding the controlling
power of a company (such as not allowing foreigners to vote on
50% or more of all voting rights under Articles of Association
or other agreements). However, as of November 14 2014, the text
of the proposed amendments has not been released, but a
possible grace period for existing joint ventures to adapt has
A number of foreign chambers of commerce have voiced
concerns and predicted less foreign direct investment if
foreign companies are unable to protect technology, IT, and
corporate good governance, for example.
The last effort to introduce such amendments to the FBOA was
in 2007. Proposals were made to broaden the definition of alien
by looking to upstream foreign ownership (not simply first
level share ownership), to prohibit preference share structures
which diluted voting rights of Thai shareholders among others.
No amendments were agreed.
There is strong support from foreign investors for a
reduction of the number of businesses restricted to foreign
ownership under the FBOA. There is also a need to relax
restrictions in view of Asean (Association of Southeast Asian
Nations) community agreements on trade in goods and services.
Under the Asean Framework Agreement on Services, Thailand has
agreed to permit 51% and 70% foreign ownership in some service
sectors, but provisions for this are not found in existing
Supasit Boonsanong and Prisna Sungwanna