A Thai Company Limited – is the most common type of company structure used to set up business in Thailand, as the process is simple and the business can engage in a wide range of activities.
This type of company is formed with its capital divided into equal shares and the liability of each shareholder is limited to the amount unpaid on the shares held.
Although operation a business as a company requires certain expenses which are needed to comply with the laws. Setting up a limited company allows investors (or company owners) and third parties have a clear picture and understanding of such business. As a result, parties such as partners of a company, it’s investors, bank or private money lenders find company reliable. Registering company allows third parties examine company’s status regarding various matter; it’s profile, financial state, shareholders, directors and etc.
A company is a legal entity which is established for the lengthy period; this is encouraged by the laws. Normally, the company operates until owners find it appropriate to dissolve it. Limited company cannot be easily dissolved as some other types of businesses. From the investors point of view, it is always preferred to invest in solid, lasting business and not one-day enterprises. Apart from that, all the company management is normally performed by its Directors, which are assigned by the shareholders.
Registration Process of a Company Limited
To set up a Company Limited in Thailand, the following steps shall be performed:
1.Request for verifying and reserving the company’s name
2.Register the Memorandum of Association
4.Hold the statutory meeting
5.Register the company
Therefore, 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). Anyway, the last step, namely, registration, only takes 1 day if steps (1), (3) and (4) were performed in advance and the application for the company registration was submitted on the same day as the Memorandum of Association. Both the company and the Memorandum 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 to set up a company. There shall be not less than 3 promoters; in case there are only two parties who agree to invest in a business, they still shall arrange a 3rd promoter, otherwise, the registrar will refuse to register the company.
As soon as the company is established, it shall have at least 3 shareholders. That’s why you shall have at least 3 prospective shareholders by the time you allot shares and start to carry on business activities; your company do not comply with this term, it gives other parties an opportunity to file a motion at the Court claiming for the dissolution of your company.
On the other hand, 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 possible to join your company.
Effect of registration
As soon as the company registration process is completed, such newly established company is recognized by the law as a separate body which is independent from its shareholders; it is called a “juristic person” or a “legal entity”. A newly established 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; no rights or duties are obtained by shareholders personally, therefore, the shareholders are not held personally responsible to third parties. For example, if a company is granted a permission to carry on a certain business activity, its investors (i.e. shareholders) are not able to possess this right personally. Apart from this, a company’s creditor is not able to sue its shareholders claiming for debt repayment.
Furthermore, any data enlisted in the company establishment documents which was submitted to the registrar is considered as already acknowledged by third parties. Therefore, the aforementioned third parties are not able to declare that they had not had this 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 which specifies the name, address, business objectives of such company, company’s capital, number of shares, value of shares, names of promoters (there shall be at least 3 promoters) etc. The registrar has a special form used to register Memorandums of Associations.
Articles of Association
This document specifies agreements or policies with respect to relations between company’s shareholders, such as shareholders’ rights and company’s operational policies while carrying on business activities, as well as agreements concerning the following corporate matters:
A.Shares and shareholders;
E.Dividends and reservey
The Company Limited must prepare its financial statement once a month and at least one auditor shall audit the statements every year. An ordinary shareholder’s meeting must approve the financial statement within 4 months from the closing date, and submit the financial statement to the Department of Business Development within 1 month from the date of the financial statement’s approval.
The director shall prepare a list of the names of all shareholders holding shares at the time of the annual shareholders’ meeting and a list of persons who are no longer shareholders from the date of the last shareholders’ meeting, and submit the lists to the Department of Business Development, within 14 days of the date of the meeting.
The annual shareholders’ meeting must be held within 6 months from the Company Limited’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; and
A request for the relocation of the Company Limited’s head office must be filed with the registrar (if applicable).
Corporate lawyers at Juslaws & Consult can guide you through your Thai company setup, including all the complexities of registering your Company Limited and ensuring that you comply with the various reporting requirements.