What is the application for a Foreign Business License (FBL) and Foreign Business Certificate (FBC)? What is the difference?

FDI Get to know Foreign Business License (FBL), Foreign Business Certificate (FBC) What is the meaning, including the application procedures and required documents?

Doing business or working in Thailand for foreigners or aliens is subject to legal requirements, including specific procedures. Applying for a license or business operation certificate for businesses with foreign shareholders in Thailand involves two main types: Foreign Business Certificate (FBC) and Foreign Business License (FBL), which differ in terms of business permission and types of permitted business. 

Detailed information of FBL and FBC 

• A license that allows foreign companies to operate business in Thailand or Foreign Business License (FBL) 

It is a license that allows foreign companies to conduct business in Thailand in accordance with the requirements of the Foreign Business Act B.E. 2542. This license is granted to foreign companies that have applied for permission and have been approved by the Ministry of Commerce.

Procedures for applying for FBL 

 The FBL application process requires verification according to criteria set by the Ministry of Commerce, such as having Thai partners holding at least 51% of shares or having a business in an approved category.

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• A certificate issued to foreign companies wishing to conduct business in Thailand or Foreign Business Certificate (FBC)

It is a certificate issued to foreign companies wishing to conduct business in Thailand. The application for this certificate is limited to certain types of businesses as specified in the Foreign Business Act B.E. 2542, especially according to List 3, which includes businesses that foreigners cannot operate by themselves or can only operate with government permission.

Procedures for applying for FBC  

• The company must apply for FBC Usually, documents and information demonstrating that the foreign company will conduct business in Thailand according to the permitted types must be submitted.
• Applying for FBC usually involves having at least 51% Thai shareholders in cases where the business falls under restricted categories according to the Act.

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Applying for a Foreign Business Certificate (FBC) and a Foreign Business License (FBL) is part of the process for establishing a foreign-owned business in Thailand. The FBC authorizes the company to start business operations, while the FBL permits the foreign company to legally conduct business in Thailand according to the specified business types under the law. Both documents are essential and must be obtained in full compliance with legal procedures..

 Types of businesses required to apply for a Foreign Business License 

1. Newly established companies with majority foreign shareholders
2. Branch office of a foreign company
3. Companies promoted by the Board of Investment (BOI)

Types of businesses specified in the Act 

Some types of businesses are reserved exclusively for Thai nationals according to the schedule appended to the Foreign Business Act B.E. 2542. 

List 1 

Businesses that are absolutely prohibited to foreigners due to special reasons

List 2

Businesses related to national security or with impact on arts and culture, traditions, folk handicrafts, or natural resources and the environment; foreigners may engage in such businesses only with permission from the Minister and approval from the Cabinet.  

List 3

Businesses in which Thai nationals are not yet ready to compete with foreigners; foreigners may engage in such businesses only with permission from the Director-General and approval from the Foreign Business Committee. Details of businesses in each list will be continued in the next article.

Definition of foreigners according to the provisions of the Foreign Business Act 

Foreigners are prohibited from operating certain types of businesses, and some types may be operated only upon obtaining a license or certificate, as the case may be. 

Definition of foreigners according to the provisions of the Foreign Business Act 

1. A person who does not hold Thai nationality

2. A juristic person not registered in Thailand 

3. A juristic person registered in Thailand with at least half of its capital owned by persons or juristic persons as described in (1) or (2)

4. A juristic person registered in Thailand with at least half of its capital owned by (1), (2), or (3). 

Can foreigners hold 100% of the shares? 

It is possible, but there are legal requirements to properly register the company, with complex details and multiple steps. It is recommended to study thoroughly orConsult FDI experts in company registration to get precise answers, including satisfying work processes. 

In registering a company with foreign shareholders, it is similar to the way Thai nationals register a company but divided into two cases with the following details: 

1. Foreigners hold shares not exceeding 49% 

The company will still be considered a Thai company and can operate all types of businesses as prescribed by law because the 49% shareholding by foreigners is less than the Thai shareholding. 

2. Foreigners hold shares more than 50%

It will be considered a foreign company, which must apply for a Foreign Business License and is subject to certain restrictions.They are prohibited from owning land and from engaging in certain types of businesses.  Or prohibited from conducting business unless permitted (in Lists 2 and 3) of the Act.การประกอบธุรกิจของคนต่างด้าว To be continued in the next article... 

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In summary, Foreigners cannot hold 100% of shares in a Thai company if the business falls under restricted categories according to the Foreign Business Act B.E. 2542 (FBA), but they can hold 100% in cases where:

• They have been promoted by the BOI or
• Investing in areas or businesses that are exempted by law or
• Investing in businesses that are not in restricted categories.

In these cases, the investment requires obtaining permits or submitting applications for special privileges from relevant authorities, such as the Ministry of Commerce or BOI.

If you are looking for a consultant to help make the license application process smooth and compliant with regulations and the Act, you can contact us for consultation. Consultation is free. Consult FDI experts in company registration to get precise answers, including satisfying work processes.

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