The Foreign Business Act (FBA) B.E. 2542 (1999) is the Thai law that sets out what foreigners can and cannot do in business in Thailand. Its core structure has remained largely unchanged for more than twenty-five years, but it is at the heart of any investment or business set-up in the country. Understanding it, with its restrictions, its exceptions and the changes now under way, is essential before choosing any legal structure in Thailand.
Last updated: October 2026
What is the Foreign Business Act?
The Foreign Business Act is the main law governing foreign participation in business activities in Thailand. Its basic principle is simple: a company is treated as “foreign” when non-Thai nationals or foreign entities hold half or more of its shares. In that case, it is subject to the restrictions of the Act and cannot freely carry out certain activities.
The Act sets out the restricted activities in three lists, according to the level of restriction. It also sets out the legal routes that allow foreign companies to operate despite these restrictions, in particular BOI promotion, the Foreign Business License and international treaties.
The Department of Business Development (DBD) of the Ministry of Commerce is in charge of applying the Act.
Who is a “foreigner” under the FBA?
Under the FBA, the following are “foreigners”:
- any natural person who does not hold Thai nationality
- any juristic person not registered in Thailand
- any company registered in Thailand in which foreigners hold half or more of the shares, or in which foreign investment represents half or more of the capital
- any limited partnership or registered ordinary partnership whose managing partner or manager is a foreigner
- any company registered in Thailand in which half or more of the shares are held by one of the foreign entities above
The definition is based on ownership of the capital, not on actual control. In theory, a foreigner can hold a minority stake (up to 49%) in a Thai company. But structures that give a foreign minority shareholder control through preference shares, special voting rights or powers of attorney are now closely examined by the DBD, which looks for nominee arrangements. They carry a real legal risk and should be avoided without specialist advice.
The three lists of restricted activities
List One: activities closed to foreigners
These activities are closed to foreigners “for special reasons”. No licence and no BOI promotion can lift this ban:
- newspapers, radio and television
- lowland and upland farming, and horticulture (including rice farming)
- animal farming
- forestry and wood processing from natural forests
- fishing in Thai waters and in Thailand’s exclusive economic zone
- extraction of Thai medicinal herbs
- trading and auctioning of Thai antiques or objects of national historical value
- making or casting Buddha images and making monks’ alms bowls
- land trading
List Two: national security, culture and natural resources
Foreigners can only carry out these activities with the permission of the Minister of Commerce, approved by the Cabinet. The company must also, in principle, be at least 40% owned by Thais (reducible to 25% with approval), with at least two-fifths Thai directors. In practice, this approval is rarely granted.
Group 1: national security or safety
- production, sale, repair and maintenance of firearms, ammunition, explosives and war materials
- domestic transport by land, water or air, including domestic airlines
Group 2: art, culture, customs and Thai handicrafts
- trading in Thai antiques, works of art and handicrafts
- wood carving
- silkworm farming, Thai silk production, weaving and printing
- production of Thai musical instruments
- production of gold and silver ware, nielloware, bronze ware and lacquer ware
- production of crockery and earthenware that is part of Thai art and culture
Group 3: natural resources and environment
- production of sugar from sugarcane
- salt farming and production of rock salt
- mining, including stone blasting and crushing
- wood processing for furniture and utensils
List Three: activities where Thais are “not yet ready to compete”
These are the activities most relevant to foreign investors. Foreigners can carry them out if they obtain a Foreign Business License from the DBD, or a certificate based on BOI promotion, IEAT permission or an international treaty. List Three contains 21 items:
- rice milling and production of flour from rice and farm plants
- aquaculture
- forestry from replanted forests
- production of plywood, veneer, chipboard and hardboard
- production of lime
- accounting services
- legal services
- architectural services
- engineering services
- construction, with some exceptions (for example, infrastructure projects requiring special equipment, with foreign capital of at least 500 million baht)
- brokerage and agency, with some exceptions (securities, intra-group trade, international trading with foreign capital of at least 100 million baht)
- auctions, except some international auctions
- domestic trade in local agricultural products
- retail, when the minimum capital is below 100 million baht, or below 20 million baht per store
- wholesale, when the minimum capital is below 100 million baht per store
- advertising
- hotels, except hotel management services
- guided tours
- sale of food and beverages
- plant breeding and propagation
- other service businesses, except those exempted by ministerial regulation
The last item, “other service businesses”, is a catch-all. It covers most services not listed elsewhere, such as consulting, management services, logistics services or property management. This is why the question “is my activity a service?” is often the key issue for a foreign company.
The legal routes: how to operate despite the FBA
1. BOI promotion: the most widely used route
A company promoted by the Board of Investment (BOI) receives a certificate from the DBD that allows it to carry out List Two and List Three activities covered by its promotion. It can be 100% foreign-owned. BOI promotion does not lift the ban on List One activities. Promotion is not automatic: the project must qualify under an eligible activity. See our complete guide to BOI promotion.
2. IEAT permission
A company authorised by the Industrial Estate Authority of Thailand (IEAT) to operate in an industrial estate can also receive a certificate for the List Two and List Three activities covered by that permission. See our article on choosing an IEAT industrial estate.
3. The Foreign Business License (FBL)
For List Three activities, a foreign company can apply to the DBD for a Foreign Business License. The application is reviewed by the Foreign Business Committee, which looks at criteria such as the contribution to the Thai economy, employment, technology transfer and research and development. By law, the decision must be made within 60 days of the application being accepted, and the DBD aims to start processing complete applications within one month. In 2025, the DBD granted 291 licences.
The minimum capital for a business that requires a licence is 3 million baht per activity, or 25% of the average annual expenses over three years if that is higher.
4. Treaties, including the US-Thailand Treaty of Amity
Some international treaties allow foreign companies to operate without a Foreign Business License, under a certificate issued by the DBD. The best known is the Treaty of Amity and Economic Relations between the United States and Thailand. It gives majority US-owned companies the same treatment as Thai companies in most sectors, except communications, transport, fiduciary functions, banking with deposit-taking, exploitation of land or other natural resources, and domestic trade in local agricultural products. It does not allow land ownership. The conditions are strict: majority US shareholding throughout the ownership chain, and a majority of US or Thai directors.
Thailand’s other agreements, such as ASEAN agreements or the agreements with Australia and Japan, can also open some activities under specific conditions.
5. Activities outside the three lists
Some activities do not appear in any of the three lists:
- Manufacturing: industrial production is largely open to foreigners, who can generally sell the products they make in Thailand and export them. Buying products from other suppliers to resell them in Thailand, however, falls under retail or wholesale trade in List Three.
- Export: exporting is not a restricted activity in itself.
A foreign company operating outside the lists must still bring in a minimum capital of 2 million baht. Some sectors, such as banking, insurance and telecommunications, are also governed by their own laws, which set their own limits on foreign ownership.
The work permit rule
Outside BOI promotion, Thai authorities generally expect a company to have about 2 million baht of paid-up capital for each foreign employee who needs a work permit, and to employ Thai staff alongside them. BOI-promoted companies follow their own rules on foreign staff. See our article on hiring foreigners in a BOI company.
The FBA reform: what has changed in 2026
The Thai government has started to relax some FBA restrictions, step by step, through ministerial regulations and a royal decree rather than a full rewrite of the Act:
- April 2025: the Cabinet approved in principle the easing of certain activities in List Three.
- 29 January 2026: the DBD presented the draft texts, covering ten categories of activities.
- 12 May 2026: the Cabinet approved the draft regulations.
- 28 August 2026: the Ministry of Commerce published Ministerial Regulation No. 5 B.E. 2569 (2026) and a regulation on derivatives in the Royal Gazette.
Since then, foreign companies can carry out the following activities without a Foreign Business License:
- Type 1 telecommunications services, for operators without their own network
- treasury centre services
- administrative, HR and IT management services between qualifying related companies
- domestic debt guarantees between qualifying related companies
- leasing space for financial service machines and vending machines for employees
- petroleum drilling services provided directly to petroleum concession holders and contractors
- certain securities and derivatives activities (lending for the purchase of securities, repurchase transactions, some derivatives dealers, advisers, fund managers and brokers)
A royal decree that would remove trading of agricultural futures on a derivatives exchange from the Act is still expected.
Important: these changes are targeted. They mainly concern large groups, intra-group services and financial activities. They do not open retail, restaurants, property, e-commerce or general consulting services to foreigners. The 49% ceiling and the three lists remain in force for all other activities. Other sector licences (telecoms, Bank of Thailand, SEC, energy) also still apply.
Enforcement and penalties: increasingly strict
The FBA is not a theoretical law. Its enforcement has stepped up considerably since 2024.
The penalties for breaching the FBA are severe:
- for a Thai national acting as a nominee for a foreigner, and for the foreigner involved: imprisonment of up to three years, a fine of 100,000 to 1,000,000 baht, or both
- a court order to stop the activity or the shareholding, with a daily fine of 10,000 to 50,000 baht for as long as the breach continues
- similar penalties for a foreigner carrying out a restricted activity without permission, with personal liability for the people managing a company that commits the offence
In May 2025, the Ministry of Commerce reported legal action against 857 nominee businesses, with damage estimated at 15.3 billion baht. It also flagged 46,918 companies with foreign shareholders as high-risk, in sectors such as tourism, real estate, e-commerce and logistics, hotels, agriculture and construction, and asked provincial task forces to investigate them.
The DBD now examines the legitimacy of shareholders, capital flows and voting structures, not just the formal split of the capital. Since 1 August 2026, DBD Order No. 2/2569 also requires Thai shareholders of companies with less than 50% foreign shareholding, or with a foreign authorised director, to provide three months of bank statements proving they genuinely paid for their shares. See our article on opening a business bank account in Thailand.
Nominee structures: illegal and actively prosecuted
A nominee structure uses Thai nationals as shareholders on paper to get around the 49% limit of the FBA, while real economic control stays with foreigners. This is explicitly illegal under the FBA and actively prosecuted.
Warning signs the authorities look for during a review:
- Thai shareholders with no demonstrable financial ability to have paid for their shares
- loans from foreign shareholders to Thai shareholders to fund their shares
- preference share structures that artificially reduce Thai voting rights
- general powers of attorney giving full control to a minority foreign shareholder
- a clear gap between the split of the capital and who actually runs the company
Nominee structures expose foreign directors and Thai nominee shareholders to criminal prosecution, court orders to stop the business and heavy daily fines.
Key points
- A company is “foreign” when non-Thais hold half or more of its shares, and it is then limited in the activities on the FBA’s lists.
- The activities are set out in three lists: List One (closed), List Two (Cabinet approval required), List Three (licence or certificate required).
- The legal routes to full foreign ownership are BOI promotion, IEAT permission, the Foreign Business License, treaties such as the US Treaty of Amity, and activities outside the lists, such as manufacturing.
- Since 28 August 2026, a new ministerial regulation exempts some intra-group, financial, telecommunications and petroleum services from the licence, but the general framework does not change.
- Enforcement has stepped up: 857 nominee businesses prosecuted and 46,918 companies flagged as high-risk in 2025.
- Nominee structures are illegal, actively detected and prosecuted.
Frequently asked questions about the Foreign Business Act
Can a foreigner own 100% of a company in Thailand?
Yes, in some cases. BOI promotion, IEAT permission, the Foreign Business License, the US-Thailand Treaty of Amity and activities outside the lists, such as manufacturing, allow full foreign ownership. For most services, trade and property activities, the limit is 49% without one of these routes.
What is a nominee structure and why is it dangerous?
A nominee structure means having Thai nationals formally hold 51% of the shares without any real economic interest, to get around the FBA limit. It is illegal and can lead to imprisonment of up to three years, a fine of up to 1 million baht and daily fines. The authorities have stepped up detection since 2024.
Does BOI promotion lift all FBA restrictions?
BOI promotion lifts the foreign ownership restrictions for the List Two and List Three activities covered by the promotion. It does not lift the ban on List One activities.
What is the Foreign Business License (FBL)?
It is a licence issued by the DBD that allows a foreign company to carry out a List Three activity. It is granted at the discretion of the Foreign Business Committee, based on the project’s contribution to the Thai economy. The decision must be made within 60 days of the application being accepted. The minimum capital is 3 million baht per activity.
What has the 2026 FBA reform changed?
Since 28 August 2026, a new ministerial regulation allows foreign companies to carry out some activities without a licence: certain telecommunications services, treasury centres, some intra-group services, petroleum drilling services and certain financial activities. The rest of the framework, including the 49% ceiling and the three lists, is unchanged.
Do US nationals get different treatment?
Yes. Under the US-Thailand Treaty of Amity, majority US-owned companies can operate in most sectors without a Foreign Business License, under a certificate from the DBD. Communications, transport, fiduciary functions, deposit-taking banking, exploitation of land and natural resources, and domestic trade in local agricultural products are excluded, and land ownership is not allowed.
Is my business covered by the FBA?
Manufacturing and export are generally not restricted by the FBA. Services, trade, property, restaurants, hotels and consulting are within its scope. Because the “other services” category is very broad, have your activity reviewed before you set up your company.
Among the other rules to know for doing business in Thailand is the PDPA, the Thai personal data protection law, which has been enforced more strictly since 2024.
Conclusion
The Foreign Business Act is the cornerstone of the rules on foreign investment in Thailand. Misunderstood, it leads to illegal structures whose consequences can be devastating: criminal prosecution, court orders and heavy fines. Properly understood, it opens solid legal routes to invest and operate in Thailand with full legal certainty.
The 2026 reform is a step in the right direction, but it remains targeted. For most projects, BOI promotion remains the safest and most advantageous route. If you want to assess the right legal structure for your project in Thailand, contact our team at our offices in Thailand.
