Exemption from remitting minimum capital
A company which must apply for a foreign business licence (“an FBL applicant”) to conduct a business restricted under the lists annexed to the Foreign Business Act, such as engineering and service businesses, must have minimum capital of at least THB 3 million or 25% of estimated expenditures for three years, whichever is greater.
Keywords: Mazars, Thailand, Legal, Foreign Business Licence, Ministry of Commerce
29 October 2019
The minimum capital requirement can be met in one of the two ways listed below, depending on where the business entity is registered:
- A company registered outside Thailand – The head office must remit the capital in a foreign currency to commence the business.
- A company registered in Thailand – The shareholders must remit the capital for the shares for which they have subscribed.
Instead of remitting new capital to commence a business under a foreign business licence as mentioned above, an FBL applicant may use unappropriated retained earnings derived from another business that it already conducts in Thailand in order to be exempt from remitting the minimum capital. However, the following criteria must be met:
- The amount of unappropriated retained earnings of an FBL applicant must not be less than the minimum capital required to commence the business under a foreign business licence; and
- The unappropriated retained earnings used must consist of revenue that an FBL applicant derives from another business that it already conducts in Thailand – not the same business for which the company applied for a foreign business licence.
Therefore, if an FBL applicant decides to use unappropriated retained earnings, it must submit a letter to this effect, along with updated financial statements, to the Foreign Business Administration Division, Ministry of Commerce, requesting permission to do so after obtaining written permission to conduct business from the Foreign Business Administration Division.
The exemption above does not apply to a new business that does not require a foreign business licence, such as a company conducting wholesale business or international procurement agency business, with minimum capital of THB 100 million.
Rulings issued by the Foreign Business Administration Division in May 2013, November 2014, and December 2014.