With the aim of fulfilling its obligations to various bilateral or multilateral treaties and agreements, on top of easing the enforcement of regulations, the Ministry of Commerce has rescinded three previous ministerial regulations regarding minimum capital requirements for foreign companies and supplanted them with the recently promulgated Ministerial Regulation Re: Minimum Capital and the Period to Bring or Remit the Minimum Capital to Thailand B.E. 2562 (2019).
The new Ministerial Regulation, which took effect on 28th August 2019, outlines both the latest set of requirements as well as the timeframe mandated by the Thai government for foreign companies and investors to bring minimum capital into Thailand. These requirements are not uniform, and the regulation makes distinctions according to company type and the circumstances surrounding them. The provisions of the regulation are summarized accordingly:
Section 2 clarifies that foreign-owned companies that are not required to obtain a foreign business license must have a minimum capital of THB 2 million which must be fully paid up prior to commencing operations.[1] On the other hand, Section 3 requires foreign-owned companies that are mandated to obtain a foreign business license to have a minimum capital of THB 3 million. However, it also declares that if the company’s estimated three-year operational expenses exceed THB 3 million, their minimum requirement should amount to 25% of its three-year operating expenses.[2]
Section 4 of the regulation proposes that foreign individuals and branch offices do not need to pay the capital payment at once and can opt to pay them in intervals. Specifically, the regulation states that 25% of the minimum capital must be paid within three months, 50% within a year, and 25% in the subsequent years. Companies that have been in operation for only three years or less are permitted to bring in the minimum required capital within six months following the first day of operations.[3]
The regulation also states that foreign companies that have been established under bilateral or multilateral treaties such as the U.S. – Thai Treaty of Amity and the Australia-Thai Free Trade Agreement must remit the required capital applicable to them by 29th August 2029. This also applies to companies that were established prior to the promulgation of the Ministerial Regulation.[4]
Finally, the regulation states that foreign companies that have paid up or are in the process of paying up their minimum capital are required to submit evidence of the remittance to the Department of Business Development within 15 days of its transfer into the Kingdom.
Conclusion
The new Ministerial Regulation provides a clear illustration of the requirements foreign companies are subject to in the Kingdom. Through this regulation, the Thai government hopes to not only streamline the requirements surrounding foreign companies in Thailand, it also seeks to provide clear guidelines that comply with the bilateral and multilateral treaties which the Kingdom is currently under.
Therefore, Silk Legal strongly recommends foreign companies that may be affected by this Ministerial Regulation to review the progress surrounding their minimum capital requirements in order to comply with the provisions set out by the government. This is especially so given that violators are subject to fines of THB 100,000 – 1 million in addition to a daily penalty of THB 10,000 – THB 50,000.
If you seek more information or require assistance settling the abovementioned subject matter, please contact Silk Legal at [email protected] or the contact form provided.
[1] “Section 2, Ministerial Regulation Re: Minimum Capital and the Period to Bring or Remit the Minimum Capital to Thailand,” Ministry of Commerce (28th August 2019) (available at https://www.dbd.go.th/download/PDF_law/DBD_law_moc_capminimum_inth_620827.pdf).
[2] “Section 3, Ministerial Regulation Re: Minimum Capital and the Period to Bring or Remit the Minimum Capital to Thailand,” Ministry of Commerce (28th August 2019) (available at https://www.dbd.go.th/download/PDF_law/DBD_law_moc_capminimum_inth_620827.pdf).
[3] “Section 4, Ministerial Regulation Re: Minimum Capital and the Period to Bring or Remit the Minimum Capital to Thailand,” Ministry of Commerce (28th August 2019) (available at https://www.dbd.go.th/download/PDF_law/DBD_law_moc_capminimum_inth_620827.pdf).
[4] “Section 5 and Section 7, Ministerial Regulation Re: Minimum Capital and the Period to Bring or Remit the Minimum Capital to Thailand,” Ministry of Commerce (28th August 2019) (available at https://www.dbd.go.th/download/PDF_law/DBD_law_moc_capminimum_inth_620827.pdf).
