Thailand's Foreign Business Act and BOI Incentives for Acquirers

Thailand's Foreign Business Act B.E. 2542 does not ask who controls a company. It asks who holds the capital: a company registered in Thailand becomes a foreigner under section 4 once half or more of its shares are held by non-Thais, which is why almost every structure in the country stops at 49 per cent foreign equity. Cross that line in a restricted activity and the company needs a Foreign Business Licence from the Department of Business Development, a Cabinet resolution, or an exemption through Board of Investment promotion, an IEAT industrial estate or a treaty. There is no fourth option, and the one most often sold to foreign buyers, a Thai nominee holding 51 per cent, is a criminal offence.

So the question for an acquirer is not whether you can own the target but which exemption it already sits inside, and whether that survives your purchase. A Thai company with BOI promotion is a different asset from one without it, because the promotion attaches to a defined project and its conditions rather than to the shares you are buying. The rules below are those in force in September 2026, and Thailand has been tightening enforcement rather than loosening the rules: the Department of Business Development replaced its registration requirements for foreign-participation filings on 1 August 2026, the second tightening in eight months. Thai counsel, and the BOI itself where promotion is involved, has to confirm the position on your activity before you commit.

Who counts as a foreigner under the Foreign Business Act?

Section 4 treats four things as a foreigner: a natural person who is not Thai, a juristic person not registered in Thailand, a juristic person registered in Thailand with half or more of its shares held by either of the first two, and a juristic person in which those parties have invested half or more of the total capital. The test runs up the chain, so a Thai company owned 51 per cent by another Thai company that is itself foreign majority is a foreigner too.

Two consequences matter in a deal. The test is capital, not control, so buying 49 per cent and taking board control does not make the company foreign for FBA purposes, which is why the 49 per cent structure is so common in genuine joint ventures. And because the test is mechanical, an acquisition can flip a company's status overnight: a Thai target that has traded lawfully for twenty years without a licence becomes an unlicensed foreign operator on the day your share transfer is registered. That risk has to be closed before signing, not after. Law firm summaries of section 14 also put a minimum capital floor of THB 2 million on an unrestricted business and THB 3 million on each business needing a licence, rising with the number of work permits the company needs.

What the three lists mean for a buyer

The List 3 catch-all is where most mid-market deals land, because the residual category for other service businesses is drafted widely enough to capture consulting, agency, software and distribution work nobody thinks of as regulated. The Act's own annexes are the place to check, activity by activity, because the classification decides whether your deal takes eight weeks or eight months.

Why nominee structures are the wrong answer

Section 36 of the FBA prohibits a Thai national or Thai company from holding shares or operating a business as a front for a foreigner, and it prohibits the foreigner from arranging it. A briefing published by Chambers and Partners on 8 April 2026, written by the foreign direct investment group at the Bangkok firm KAP, records the penalty as imprisonment of up to three years, a fine of THB 100,000 to THB 1,000,000, or both, and it applies to the Thai nominee as well as the foreign beneficiary.

Enforcement has changed materially, and it changed twice in 2026. Order of the Central Partnership and Company Registration Office No. 1/2569, issued on 16 March 2026 and effective 1 April 2026, required an investment confirmation letter, signed by the managing partner or authorised director rather than by the shareholders, for amendment filings that brought a foreigner in as a partner or as an authorised signatory. Order No. 2/2569, issued on 14 July 2026, repealed both that order and Order No. 2/2568 before it, and from 1 August 2026 one regime covers incorporation and amendment alike: an investment clarification letter tabulating what each Thai shareholder paid, from which bank and account and on what date, supported by three months of that shareholder's statements, plus the confirmation letter carried over from March. DFDL's July 2026 note on the order sets out the document list. It bites where a foreigner subscribes for less than half the registered capital, or where the register is entirely Thai but a foreigner is an authorised or joint signing director.

For a buyer that creates a specific diligence task. Trace the original subscription payments for every Thai shareholder, ask for the share certificates and any loan agreements or share pledges between the Thai shareholders and the foreign party, and read the shareholders' agreement for buy-back rights or irrevocable proxies. Those documents are what a prosecutor would read. If they exist, the structure is not fixable by warranty: it has to be restructured into a licensed or promoted vehicle before completion, or the deal becomes an asset purchase into a clean company.

How to get to majority foreign ownership legally

Four routes exist, and they are not interchangeable.

• BOI promotion. A promoted company can be wholly foreign owned in activities that would otherwise be restricted. It obtains a Foreign Business Certificate from the DBD under section 12 of the FBA rather than a licence, which is a notification process rather than a discretionary one.
• Treaty of Amity. The 1966 US-Thailand treaty lets US nationals and US-majority companies operate on the same footing as Thais in most sectors. The conditions are specific: at least 51 per cent of shares held by US citizens or US companies, and at least half the directors US citizens. The treaty does not reach List 1, communications, transport, fiduciary functions, banking, or the exploitation of land and natural resources.
• IEAT estates. A company operating inside an industrial estate under the Industrial Estate Authority of Thailand Act B.E. 2522 can hold land for its business under section 44 of that Act with an IEAT licence, including areas above the Land Code limits.
• Free trade agreements. The Thailand-Australia FTA is much narrower than the Amity treaty: full Australian ownership is available in only a small number of activities, with majority ownership up to 60 per cent in certain others. The Japan and ASEAN agreements work similarly, activity by activity.

The BOI's Investment Promotion Guide 2025 sets corporate income tax exemption at up to eight years for activities in groups A1 and A2, with merit-based additions taking the total to no more than 13 years for A1+, A1 and A2. Promotion also carries the right to own land for the promoted project, work permit and visa facilitation, and machinery and raw material duty exemptions depending on the activity. Minimum capital investment for a promoted project is THB 1 million, excluding land and working capital, unless the activity list says otherwise.

Preferred shares and weighted voting get floated as a way to hold 49 per cent of the capital and most of the votes. Thai companies can issue preference shares, and control arrangements in a properly documented joint venture are legitimate. The limit is that none of it changes the FBA test, which counts capital rather than votes, so it cannot make a restricted business lawful; and where the Thai shareholding is passive, funded by the foreign party and stripped of economic rights, the arrangement starts to look like the structure section 36 prohibits. Where that line falls in a particular cap table is a judgement for Thai counsel on the actual documents, not something this article can settle.

Can a foreign-owned company own the land?

Not under the Land Code, which is the general rule and the reason so many Thai factories sit on long leases. The exceptions are the ones above: BOI promotion carries a right to own land for the promoted activity, and IEAT section 44 permits ownership inside an industrial estate. A 30-year lease, registered at the land office, is the fallback.

Find out whether the land under the operating site is owned, leased or held by a related party, check the remaining lease term against your hold period, and check whether the right to own it depends on a BOI promotion that expires. A promoted company that loses its promotion can be required to dispose of land held under that right.

Does Thailand require a merger filing?

Yes, and it has two forms under the Trade Competition Act B.E. 2560. Norton Rose Fulbright's Thailand competition fact sheet sets out both. A pre-closing approval from the Trade Competition Commission is mandatory and suspensory where the transaction would create a monopoly or a dominant position. Dominance turns on a market share above 50 per cent with turnover above THB 1 billion in the previous year, or being one of the top three with a combined share above 75 per cent while holding at least 10 per cent. Everything else that reaches THB 1 billion in sales in the relevant market, on the part of any merging party or combined, is a post-closing notification, due within seven days of completion. Pre-merger review runs 90 calendar days with a possible 15-day extension.

Seven days is the number to write into the completion checklist. It is shorter than almost any other filing deadline in the region, and it lands in the week everyone is dealing with funds flow and employee announcements.

How the timeline runs, and what to do from where you are

A deal in a restricted activity runs on the licence, not on the negotiation. A Foreign Business Licence application is typically a two to three month exercise from complete filing. A List 2 approval is longer and less predictable, because a Cabinet resolution sits on top of the committee review and nobody publishes a reliable average for it. A fresh BOI application adds its own cycle of submission, presentation and approval before the Foreign Business Certificate can issue. Build the sequence backwards from that.

• Screening a target. Establish the FBA classification of every revenue line before valuing anything, and ask for the actual Foreign Business Licence, Foreign Business Certificate or BOI promotion certificate rather than a description of it.
• Buying a BOI-promoted company. Take the promotion certificate and its conditions to the BOI before signing. Promotion is granted for a defined project, so confirm what a change of shareholding does to it and whether your plans for the business need a variation or a fresh application. Assume nothing transfers automatically.
• Finding a nominee structure in diligence. Price the restructuring, including tax on a real share transfer, and make it a condition precedent rather than a warranty.
• A Thai owner selling to a foreign buyer. Sort out the classification, the land title and the shareholder funding trail first; those are the items that cost sellers price rather than time. The wider preparation sequence is in our guide to how mid-market deals get done in Thailand.

If you are assessing a Thai acquisition or preparing a Thai company for a foreign buyer, you can start a confidential, no-obligation conversation about what your business looks like to a buyer. Buyers new to the region may also want our walkthrough of how to acquire a company and our guide to cross-border M&A in Asia, which compares these approval regimes side by side.

Frequently Asked Questions

Can a foreigner own 100 per cent of a Thai company?

Yes, in activities the Foreign Business Act does not restrict, and in restricted activities where the company holds a Foreign Business Licence, a List 2 Cabinet approval, BOI promotion, US Treaty of Amity status or an applicable FTA carve-out. Without one of those, half or more foreign capital in a restricted activity is unlawful.

What happens if a company is found to use nominee shareholders?

Section 36 of the FBA carries imprisonment of up to three years and a fine of THB 100,000 to THB 1,000,000, or both, for the foreigner and the Thai nominee alike, according to KAP's April 2026 briefing on nominee enforcement published by Chambers and Partners. Since 1 August 2026, under Central Partnership and Company Registration Office Order No. 2/2569, the DBD has also required an investment clarification letter and three months of bank statements for each Thai shareholder on incorporations and amendment filings involving foreign participation, which means the funding trail is checked at the registry rather than only in a prosecution.

How long is a BOI tax holiday?

Corporate income tax exemption of up to eight years for activities in groups A1 and A2, per the BOI's Investment Promotion Guide 2025, with merit-based additions capped so that the total does not exceed 13 years for A1+, A1 and A2 activities. Other groups receive shorter exemptions or duty-based incentives instead.

Does a BOI promotion transfer when the company is sold?

The promotion belongs to the company and its approved project, so nothing needs to be transferred on a share sale. What can bite is the promotion's own conditions, some of which set shareholding requirements for the activity, and the BOI expects changes in shareholders to be reported. Read the conditions printed on the certificate rather than relying on a general rule, confirm the position with the BOI before signing, and budget for a variation or a fresh application if the buyer intends to change the project.

When is a Thai merger filing due?

Pre-closing approval is required where the deal would create a monopoly or a dominant position, with review of 90 calendar days plus a possible 15-day extension. Otherwise, where any party's or the combined sales in the relevant market reach THB 1 billion, notification to the Trade Competition Commission is due within seven days of completion.