The US Treaty of Amity between the United States and Thailand
The US Treaty of Amity
The Treaty of Amity is a treaty between the United States and Thailand for the sole purpose of promoting trade, cultural understanding, commerce and the reciprocal legal rights between these two countries.
This treaty provides American and Thai nationals the right for operating in the counterparts’ country with equal rights as those offered to its own nationals. Furthermore, the national treatment involves reciprocal rights with respect to the business and investment purposes. Though there are significant exceptions, this treaty encompasses national treatment to the US and Thai majority business bodies engaged in commercial initiatives in the counterparts’ territory.
The Treaty of Amity between the United States of America and Thailand allows American companies for maintaining a majority stake or wholly owning its company, representative offices or branch in Thailand. The ability of having all American shareholders is of prime significance to companies which feel uneasy in providing controlling ownership to others of their company.
Conversely, some U.S. businesses pursue joint ventures with their Thai partners and allow them to have a major stake, acknowledging their enhanced familiarity with the Thai local regulatory framework and business culture. Another important feature of this Treaty is that the American companies are treated at parlance with the Thai companies in many respects, and are also exempted from several restrictions imposed on the foreign investment by the Alien Business Act. However, following restrictions still apply to companies established under the Treaty:
- Buying land
- Engaging in any business in Thailand related to inland communication
- Engaging in communication industries and inland transportation
- Engaging in any fiduciary functions
- Engaging in banking which involves depository functions
- Engaging in any domestic trade with respect to indigenous agricultural products
- Exploiting the land or any other natural resources
The process by which the US citizens can utilize the Treaty of Amity could be puzzling to those unacquainted with all the relevant steps, procedures and rules. There are several consulting firms in Thailand which has experienced personnel for helping you at every step. These startup consulting firms will ensure that the process of establishing your Amity Company is done correctly, quickly and smoothly, avoiding any unnecessary delay or cost.
US Treaty of Amity Requirements:
A minimum of 51 percent of shares must be held by American citizens
A minimum of 50 percent of directors must be American citizen(s)
US Treaty of Amity Registration Process
For receiving protection under the Treaty of Amity, the U.S business organization should pursue administrative process for obtaining registration under the Treaty. The government of Thailand would not recognize any U.S based Company or its branch office unless it is registered officially. For registering under the Treaty, the U.S business organization can take the help of business consulting firms in Thailand or follow the below process:
1. In case of a sole proprietorship, a notarized copy of the passport of the owner for proving his U.S. citizenship is all which is required for seeking protection under the Treaty. They should send this information for certification to the U.S. Embassy in Bangkok.
2. In case of partnership, joint venture, branch office or limited company in Thailand, the below mentioned set of documents is required to be sent to the the Embassy in Bangkok after being notarized by the Notary Public for certification:
i. Articles of Incorporation of the Company
ii. Bylaws of the Company
iii. An Affidavit of the CEO or Manager, specifying the followings:
– Name of the Company, date of registration and registration number,
– Address of the registered office.
– Jurisdiction under which the organization is registered.
– Name, nationality, address, race and age of every director, number of shares with each, and the identification of the directors with their power for binding the company.
– Authorized share capital of the Company, number of shares and par value of each share and the amount of paid up share capital.
– Total number of shareholders, number of shares held by them and their nationalities.
3. For an applying U.S. company which is the subsidiary of a parent company, the applying company, together with the above mentioned documents, should also provide such required documents pertaining to the parent company to the U.S. Embassy in Bangkok.
4. Any U.S. based company that wishes to directly invest in a Thai company for obtain the majority stake in the Thai company, the U.S Company should show the notarized proof that majority of the directors and owners of the applying company and the company to be incorporated are the citizens of the U.S. either by birth or by naturalization.
5. After the receipt of the above documents, the company will need to furnish a document which certifies to the Thai Department of Business Development of the Ministry of Commerce that the U.S business organization is U.S owned and managed company and hence eligible for national treatment under the provisions contained in the Treaty of Amity. On certification, original copies of the documents mentioned above, along with the completed application form which could be obtained from the Department of Business Development of the Ministry of Commerce, should be provided to the Thai Department of Business Development of the Ministry of Commerce for registering under the Treaty and for completing the process.
The applying company should allow at least 4-5 weeks for completing the whole process. This typically takes less than a weeks’ time for certification; however, the registration by the government of Thailand could take few weeks to few months. Consulting with a business startup consulting firm in Thailand is advisable.
US Treaty of Amity Minimum Capital Requirements
Though the treaty-protected companies are given the advantages under the Treaty, they are still required to fulfill the minimum capital requirement as provided in the Foreign business Act. If the business is not limited under the Foreign business Act, the minimum capital requirement for the treaty-protected company is 2 million Thai Baht.
On the contrary, in case the business is required to get a Foreign Business License under Foreign business Act, the minimum capital requirement should be 3 million Thai Baht for every business activity.
Some speculate about the present status of the US Treaty of Amity, but it is suffice to say that the Treaty of Amity is still in force in the USA and Thailand and should likely to remain that way in near future.