Thailand offers great business potential for foreigners willing to start a business in Thailand by setting up a Thai company and for foreign investors willing to invest in the country due to its strategic location. Steady economic growth, ample natural resources, strong export sector, and dynamic consumer market make Thailand a perfect place for foreigners to conduct business. The Foreign Business Act (FBA) governs the formation of foreign companies, Thailand company registration, and business operations of foreigners in Thailand.
A wide variety of business structures are available to foreigners, including the most popular Thai Limited Company. The process of registration of a company in Thailand depends largely on the selected company structure and can take from 3-5 business days for a simple Thai Limited Liability Company to as much as 90 days for a more complex BOI Company. (See the menu on the right for all available choices.)
Obtaining a foreign business license, registering a business, understanding civil and commercial code, and opening a company in Thailand can be difficult and challenging for those who are unfamiliar with Thai law and legal practices. Fortunately, with our broad practice and extensive experience in handling highly complex corporate matters for our international clients, setting up a company in Thailand can be done in a smooth and seamless manner.
One of the most common types of foreign-owned company structures used in Thailand is a Thai Limited Company. This type of business structure is simple, and the business entity can engage in a wide range of activities. This type of company is formed with its registered capital divided into equal shares, and the liability of each shareholder is limited to the amount unpaid on the shares held.
Reliability
When registering a Thai Limited Company, its investors (or company owners) and third parties have to present a clear picture and understanding of the business to the government. Registering a limited company allows third parties to examine the company's status regarding various matters, for example, its corporate profile, financial state, shareholders' list, directors, and more. As a result, various parties, such as all the partners of a company, its investors, banks, or private money lenders find the company reliable.
Security
A company is a separate legal entity that is established for a lengthy period. Normally, a company operates until the owners are unable to operate it and therefore make a decision to dissolve it. A Thai Limited Company cannot be easily dissolved; thus, it is always preferred that you invest in a solid, long-lasting business. All the company's day-to-day management in its branch offices is normally performed by its directors, who are appointed by the shareholders.
To set up a Thai Limited Company, you will need to follow specific steps according to the guidelines below:
STEP 1: COMPANY NAME RESERVATION
The name reservation guidelines provided by the Department of Business Development (DBD) in the Ministry of Commerce should be observed while reserving any company name. We usually ask our clients to provide at least 2-3 company names we can reserve, in case the desired one is already taken or cannot be used.
STEP 2: IDENTIFYING THE PROMOTERS, SHAREHOLDERS, AND DIRECTORS
In order to set up a Thai Limited Company, you will need to have at least two (2) promoters and shareholders, and one (1) director to register the company and set it up. In case the shareholders are both Thai and foreign nationals, or if the shareholders are all Thai nationals but the directors are foreigners, the Bank Statement Certificate of the Thai shareholders issued by the Bank in Thailand must show that the amount of money in their bank accounts is equal to or more than the cost of shares that each Thai shareholder holds is required. We usually ask for the details of the promoters, shareholders, and directors of the company, such as their passport or Thai ID Card number, age, address, occupation, contact details, etc.
STEP 3: FILING MEMORANDUM OF ASSOCIATION
A Memorandum of Association (MOA) must be filed with the Department of Business Development (DBD) in the Ministry of Commerce and s include the name of the company that has been successfully reserved, the province where the company will be located, its business objectives, the capital to be registered, and the names of the promoters. Although no minimum capital requirements have been set up, the amount of the capital should be adequate and reasonable enough for the intended business operations. Furthermore, if you have a plan to employ a foreigner, then a minimum capital of two million Thai Baht (THB 2,000,000) is required per foreigner in order to get them a Non-Immigrant “B” Visa and a Work Permit to work in Thailand.
STEP 4: CONVENE A STATUTORY MEETING
A statutory meeting is convened to make all the appointments once the share structure for the company has been defined, the Memorandum of Association and the Articles of Association are approved, the Board of Directors is elected and an uditor s appointed.
STEP 5: REGISTRATION
The Company directors must submit the application to establish the company within 3 months of the date of the statutory meeting and pay the company registration fees.
STEP 6: CORPORATE INCOME TAX REGISTRATION
All companies in Thailand must be registered for tax purposes. Businesses liable to pay Corporate Income Tax (CIT) must obtain a Tax ID card and registration number for the company from the Thailand Revenue Department within 60 days of incorporation or the start of business operations. Business operators liable for payment of the Value Added Tax (VAT) must also register for a VAT ID within 30 days of the date they reach THB 600,000 in sales.
STEP 7: OPENING A COMPANY BANK ACCOUNT
Companies can open a corporate bank account in Thailand, and make use of internet banking after they have been officially registered. Which bank and branch, what type of accounts the company requires, and who will sign the paperwork are some of the details needed to open a company bank account. The registration process usually takes at least 9 days (mostly because the statutory meeting shall be held at least 7 days before the registration itself takes place). Both the company and the Memorandum of Association shall be registered with the registrar at the Department of Business Development, Ministry of Commerce, in accordance with the documentary forms and conditions prescribed for the process.
Number of Promoters and Shareholders
Promoters are required to perform the registration process required to set up a private limited company. There can be no less than 2 promoters. As soon as the proposed company is established, it shall have at least 2 shareholders. That is the reason why you absolutely must have 2 promoters. They become at least prospective shareholders. This prevents other parties from filing a motion in court demanding the dissolution of your company. It should be noted that there are no restrictions with respect to the maximum number of promoters and shareholders. This means that you can literally invite as many shareholders as you wish to join your company.
Effects of Registration
As soon as the company registration process is completed, the newly established company is recognized by the law as a separate business entity, which is independent of its shareholders. It is called a "juristic person" or a "separate legal entity". A newly established private company has its rights, duties, and liabilities which are different from those of its shareholders. Any agreements or commitments made between the company and third parties bind merely the company itself. Therefore, the shareholders are not held personally responsible to third parties. For example, if a company is granted a permit to carry on certain business activity, its investors (i.e. shareholders) are not able to possess and execute this right personally.
Another example: the company's creditor is not able to sue its shareholders for debt repayment. Additionally, all data enlisted in the company establishment paperwork or documents that are submitted to the registrar, are considered as already acknowledged by third parties. Therefore, the aforementioned third parties are not able to declare that they did not have any information and, thus, were not able to protect their interests.
Memorandum of Association
This is an important document used for the registration of a company that specifies the name, address, business objectives, company's capital, number of shares, the value of shares, names of promoters (there shall be at least 2 promoters) of the company. There is a special form available at the registrar that is used to register Memorandums of Association.
Articles of Association
This document specifies agreements or policies with respect to relations between the company's shareholders, such as shareholders' rights and the company's operational policies while carrying on business activities, as well as agreements concerning the following corporate matters:
- Shares and shareholders
- Directors
- Shareholders' meetings
- Balance sheets
- Dividends and reserve
- Liquidator
Reporting Requirements
Any Thai Company Limited must prepare its financial statement once a month and at least one auditor shall audit financial statements every year. An ordinary shareholders' meeting must approve the financial statement within 4 months from the Company's financial year end and submit the financial statement to the Department of Business Development (DBD) within 1 month from the date of the approval of the financial statements.
The director shall prepare a list of the names of all shareholders holding shares at the time of the annual shareholders' meeting, a list of persons who are no longer shareholders from the date of the last shareholders' meeting, and submit the lists to the DBD, within 14 days of the date of that meeting.
An annual shareholders' meeting must be held within 6 months from the company's registration date, and subsequent meetings must be held at least every 12 months. Share certificates for the company's shareholders must be prepared. A shareholders' registration book must be prepared as well. A request for the relocation of the company's head office must be filed with the registrar (if applicable).
Can foreigners own (hold shares in) a business in Thailand?
Yes, they can! Not only the Thai government supports Thai-owned companies, but also provides ample support, sufficient infrastructure, efficient workforce, and a wide range of government incentives, from tax allowances to easier access visas and work permits for foreigners who wish to set up a business and register a company in Thailand. Better still, the Thai government's Board of Investment law (BOI) actively encourages foreigners to make foreign investments in Thailand.
At Juslaws & Consult, we assist our international clients in choosing the most optimum business structure and facilitate the company registration and formation.
What is the most popular business set up for foreigners in Thailand?
In setting up a new foreign-owned business in Thailand, the formation of a Thai Limited Company is the most favorable and preferable choice, mainly because it is structured to protect investment, can be set up in a few days, and offers Foreign Work Permits.
The next most popular business set up for foreigners in Thailand is a BOI company. It is heavily promoted by the Thai government and provides huge incentives, primarily with tax breaks, 100% foreign ownership, land ownership, and much more.
Since 2004, Juslaws & Consult has been advising foreign clients, individuals or companies, on how to open savings, current, multi-currency, and corporate bank accounts in Thailand with leading Thai financial institutions, such as Bangkok Bank, Kasikorn Bank, Siam Commercial Bank, Krung Thai Bank, UOB, or CIMB Thai.
Juslaws & Consult advises clients on the best options available for them related to bank accounts, within the banking industry in Thailand and relevant to their needs.
International Accounts: in addition to this, Juslaws & Consult also advises foreign clients on ways to open bank accounts in such international financial hubs as Singapore, Zurich, Hong Kong, or in offshore jurisdictions.
Juslaws & Consult is here to ensure that our clients get the best advise. Your interests are what we are determined to protect. Whatever you need, be it opening right bank accounts or dealing with complicated legal matters, you can count on us to be on your side!
In Thailand, the term "ordinary partnership" means that two or more persons agree to unite their capitals to carry on activities together, with the purpose of sharing net income derived from such activities. All partners are jointly and unlimitedly liable for the obligations of such partnership. Ordinary partnerships are considered to be a kind of contract; therefore, they are not required by law to be registered. A partnership can be incorporated by merely making an agreement between the partners without any formal registration. Nonetheless, ordinary partnerships can be registered if the partners so choose. Once the partnership is registered, it is considered a juristic person under the law of Thailand.
Characteristics
- Popular and easy to set up
- You only require a minimum of two persons
- Does not require documentary evidence or any specific legal process in order to be established
- Partners are jointly and unlimitedly liable
- Can be registered
Dissolution & Liquidation
Dissolution of this type of partnership shall include management of its properties and liabilities. As all partners invest capital and unite assets while establishing a partnership, it is quite possible that some partners advance their money during the process of carrying on activities or use part of the partnership's capital. Thus, such partnership may be a creditor or a debtor in its relations with third parties. When dissolving a partnership, debts shall be settled and assets distributed; profits or losses shall be distributed as well. Apart from this, dissolution of a partnership includes termination of a certain agreements. Liquidation means that all the assets of the partnership are brought together in order to pay off debts and repay shares' value to the partners. The rest of money (if any) is considered as income and distributed between the partners. If the assets do not cover all the existing debts, or there is not enough money to repay the shares' value, the partners shall take responsibility for losses accordingly. In most cases involving unregistered ordinary partnerships, the partners carry on a small business and there are only a few partners, as well as just a few assets, if any, and, generally, there are no debts to third parties. Thus, there is no need to perform liquidation, as the partners usually agree on to how to liquidate assets and pay off debts.
Registered Ordinary Partnerships
Though the registration of an ordinary partnership is not strictly prescribed by the law, it can still be registered. The registration process is the same as the one prescribed for limited partnerships and limited companies. The provisions of Sections 1014 - 1024 of the Civil and Commercial Code are applicable for registered partnerships. In accordance with Section 1014, the Minister of Commerce is presently responsible for the registration of partnerships and companies and issues rules governing establishment of these entities. In Bangkok, registration can be performed at the Central Business Registration Office, while in other provinces there are local registration offices.
In accordance with the provisions of the Civil and Commercial Code, the registration process prescribed for partnerships and companies is as follows:
1. An application for registration shall be submitted to the District Registration Office (in accordance with the location of the partnership's main office)
2. The applicant shall pay relevant government fees.
3. The application shall include all necessary data and documents and shall conform to the applicable laws.
At Juslaws & Consult, we have extensive experience and expertise to facilitate and assist you in setting up a company in Thailand. We can also offer you the best business solutions for your company registration in Thailand. Our firm is amongst the highest-ranking in Thai legal directories with regard to our work in company registration and business setup. You can trust us to get it done right. This type of company registration is very popular with both foreigners and Thai nationals for the reasons mentioned above. Corporate lawyers at Juslaws & Consult can guide you through your Thai Limited Company setup, including all the complexities, and ensure that you comply with the various reporting requirements, thus making your company setup fast and worry-free. Contact us for more information.
