To: All Foreign Chambers of Commerce and Business Associations 

Dear All, 

As you are all aware, the Ministry of Commerce Memo 102/2549 of July 20, 2006 which outlined new provisions for screening applications for establishment of Partnerships and Limited Companies and became effective as of August 15, 2006, has created quite a stir recently in the business community.  This document requires applications for business license with shares of 40% or greater, or with aliens being authorized directors to disclose certain information related to the validity of funds and source of funds used to set up the company.  As reported in both the President’s Council meeting (Aug 28) and the F4C meeting (Aug 31) a meeting would be held between a representative from the Board of Trade, representatives from the Ministry of Commerce (Commercial Registration Department) and me during the afternoon of August 31 to discuss this issue.  Therefore, I would like to summarize the results of this meeting.

• The intention of the provisions is to reduce the burden of MoC staff in analysing applications and making the analysis more transparent/standardized among the various officers making the analysis.  Not all applications will be screened for disclosure and source of fund requirements, only those as stipulated in the provisions of the memo.  Furthermore it was stated that there are numerous companies that are operating in violation of the Foreign Business Act, often due to the unreliable declaration of information given during the application.  Notably, this is more prevalent in provincial areas and often related to the purchase of residential/”business” property.  This has necessitated the issuance of this memo.
• The Deputy Director General responsible for this issue assured us that the provisions are only targeted at new business applicants, not companies that are restructuring (financial or management), or renewing their licenses, and not retroactive.
• Only the validity and source of funds of Thai shareholders will be scrutinized, not any alien investments.  This is supported by the wording in the July 20 memo stating “all Thai partners or shareholders shall submit (information concerning) the source of capital together with the request of registration.”
• It was agreed that the MoC will submit a letter of explanation to the Board of Trade and Foreign Chambers of Commerce to clarify these issues.
• It was agreed that future similar memos should be better communicated to the private sector, either prior to release or after, depending on the circumstances at the time.
• We reassured the MoC that the Board of Trade and JFCCT fully supports the existing laws in Thailand and does not condone or promote any violation of such.  Further more we assured them that we would work cooperatively with the ministry in promoting transparent and proper practices for business operation in what ever capacity we can.

Yours truly,

JFCCTPeter J. van HarenChairman