Foreign Business Act

Definition

Thai legislation restricting or requiring special licensing for foreign majority ownership in defined categories of business, from services to certain retail and agricultural activities.

Why it matters for a secondary

A foreign buyer eyeing a majority secondary stake in a Thai company has to structure around the Foreign Business Act — often via a licensed structure or a minority position — before a deal can close.

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How it works in practice

The Foreign Business Act restricts the activities in which majority foreign-owned companies may engage in Thailand, organised into lists of prohibited and restricted businesses. Whether a company counts as foreign turns on shareholding, so a secondary purchase that pushes foreign ownership past a threshold can change what the company is legally permitted to do.

A concrete illustration

A foreign fund buys a block that takes non-Thai shareholding above 50% in a company operating in a restricted service category. The company may then require a foreign business licence — or a restructuring — to keep operating as before. The share purchase was straightforward; its consequence for the business was not.

What people most often get wrong

This is the clearest case in the region where a secondary transaction can change the target's own regulatory position rather than merely transferring a claim on it. Nominee arrangements designed to disguise beneficial foreign control are unlawful and have been enforced against.