Can a Chinese-invested factory in Thailand be 100% foreign-owned?

01How the Foreign Business Act decides whether your company is foreign

Start with how the test works. The Foreign Business Act (FBA) decides whether a company is a foreign company by looking at whether non-Thai shareholding reaches 50% — Thai shareholders have to hold more than half before the company is not treated as a foreign juristic person. Whether a foreign juristic person is then restricted is a second question: whether the business falls on one of the FBA's three restricted lists.

Manufacturing itself is generally not on any of the three lists. A Chinese-invested manufacturer setting up a plant in Thailand can normally be wholly or majority foreign-owned, without finding a Thai shareholder to make up a ratio. But "we are a factory" holds only in one case — producing to your own drawings and selling goods you produced yourself; taking contract manufacturing work to drawings or specifications set by the customer is characterised differently. What actually goes wrong is almost always one of the four things below. See how the three restricted lists work.

02Manufacturing is not automatically unrestricted: who owns the drawings decides

This is the item most often skipped over, because it changes neither the scope of business nor the registered capital. It turns on one thing only — who decides the drawings and the specifications.

• Producing to your own drawings, formula or method, and selling goods you have produced yourself: this is manufacturing, outside the schedules annexed to the Foreign Business Act, whether sold domestically or exported, and no foreign business licence is required.
• Taking contract manufacturing work to drawings or specifications set by the customer (rap jang phalit): the business is characterised as a service business falling under item (21) of List 3, and a foreign company needs the permission of the Director-General of the Department of Business Development (DBD) with the approval of the Foreign Business Committee.

The basis is ruling No. 9 of the August 2026 rulings issued by the DBD's Foreign Business Administration Division — that ruling is the one that states where contract manufacturing lands. Two other rulings in the same month write "not contract manufacturing" into the conditions of a no-licence conclusion, but only No. 9 states item (21) as the landing point, so it should not be described as a line consistently taken across several rulings. The trigger is either the drawings or the specifications being set by the customer; both do not have to be met.

Why this matters particularly for Chinese-invested plants: a good many "Thai factories" are in substance in-group contract manufacturers — producing to the parent's drawings, with the goods passing back to the group to sell. On paper the scope of business reads as manufacturing; in character the business may sit on the service side of the line, and the company itself usually does not know it.

Two things to be clear about. First, this is the position taken in a ruling by the administering division, not a statutory provision; an individual case follows the position the authority currently takes. Second, how this line interacts with the notification-based waiver available under promoted status (see the section on adding a business line later) — which prevails, and whether they can be combined — is something we have not been able to verify in published text. Until that is settled, do not assume that holding a promotion certificate removes the need for a licence.

03Do not let listed activities slip into your scope of business

This is where companies come unstuck most often. At registration the objects clause tends to pick up trading, retail, distribution, leasing and installation engineering services alongside manufacturing — and those are precisely the items sitting on the FBA's second and third restricted lists, where a foreign company needs a licence before it operates. The situations we see most:

• Reselling group products. Beyond selling what the plant makes, taking other products of the parent company and selling them in Thailand is trading and distribution in nature, and lands on a list.
• Charging for installation and commissioning. Installing equipment for customers and billing engineering services separately may be treated as a listed engineering service.
• Renting out plant or equipment. Renting spare capacity to outsiders is leasing, which is also within the scope of the lists.

Operating a restricted business without a licence, or outside the scope of one, carries imprisonment of up to three years or a fine of 100,000 to 1,000,000 baht under section 37 of the FBA. It is not something you settle afterwards by filing a form.

04Registered capital, and money that has actually been paid in

The FBA sets a minimum capital requirement for a foreign company operating in Thailand, and restricted-category business is held to a higher standard. One authoritative guide records that standard as not less than 25% of the estimated average annual operating expenses for the first three years of operation, but published versions differ on this point, so the figure that applies to you should be taken from the current published text of the Department of Business Development (DBD) rather than from any secondary summary.

Breaching the minimum capital requirement carries a fine of 100,000 to 1,000,000 baht, plus a further daily fine of 10,000 to 50,000 baht.

What matters more is that the money is real. A Thai shareholder with no capacity to fund the subscription, no trace of involvement in the business, and a dividend arrangement that plainly does not match the registered shareholding is exactly the pattern regulators and due diligence teams look for when they screen for nominee structures.

Nominee shareholding is a criminal red line, not a fallback option. Putting shares in the name of a Thai friend or employee to make up the Thai ratio is a criminal offence under section 36 of the FBA: imprisonment of up to three years or a fine of 100,000 to 1,000,000 baht. A foreign party that knowingly goes along with it commits the offence too, and directors may be personally liable. It should not appear in any structure. See where the nominee line falls.

05Adding a business line later touches the lists again

Being clean at incorporation does not keep you clean. A year or two in, plenty of plants add trading, after-sales repair, or a group shared function — finance, HR or IT shared services. Every addition means running the lists again.

There are two lawful routes. One is to apply to the Department of Business Development (DBD) for a Foreign Business Licence (FBL) covering the List 3 activity. The other applies where the company already holds BOI promotion and the business falls within the promoted scope: under section 12 of the FBA it only has to notify and collect a certificate, the authority must issue that certificate within 30 days of receiving the application, and the corresponding FBA restrictions are waived for the promotion period.

One further point to keep in view: in August 2026 two ministerial regulations were published in the Royal Gazette. The one covering service businesses lists intra-group shared services — administration, human resources and information technology — together with treasury centre activities and others, as not requiring a foreign business licence. Be precise about the mechanism: this does not move those activities off the restricted lists. It waives the licence requirement under an exemption that List 3 of the Foreign Business Act already provides, so the activities stay within the Act and only this one step falls away. The exemption carries conditions: the shared services item is limited to legal entities related to one another and covers administration, HR and IT, not a finance shared centre; and how it ranks against the section 12 BOI route is something we have not yet been able to confirm in the published texts. Whether it applies to your company has to be checked item by item.

06Why there is no generic answer here

What the three have in common is that the conclusion depends on how the objects clause in your articles is written, how the capital is actually paid in, and which route you take when you add a line of business. None of that has a general answer. It has to be worked through by our advisers, clause by clause, against your articles of association, your BOI approval and the contracts the business actually performs.

Thai rules on foreign market access are in the middle of several parallel amendment tracks. What is above reflects the rules at the date checked; before acting on a specific case, take the current published texts of the DBD and the BOI as authoritative. What the company and shareholding engagement covers.