Company Registration in Thailand
Company Registration in Thailand is increasing due to the country’s unprecedented economic growth over the years which has been attracting investors to Thailand and addressing the country's increasing market demands while hoping to maximize the return on their investments in the process. Foreign investors are flocking to Thailand because of strong government support and incentives, sufficient infrastructure, skilled and cost-effective workforce. Doing business in Thailand is also supported by well-defined policies geared towards liberalization and free trade, social and political stability and the country's strategic location in Asia. The same reasons why doing business in Thailand is one of the most attractive investment destinations in the world.
When doing business in Thailand, you have the choice of what type of business entity which you wish to establish depending on your organizational requirement. You have several options:
Business Registration Options
Thai Company Limited
The Thai Limited Company is the most popular and appealing form of business organization among foreigners doing business in Thailand due to its flexibility. This type of business entity is most utilized in Thailand. This entity is similar to that of a Limited Liability Company (LLC) in the United States or Private Limited (Pte. Ltd.) in Singapore.
In a Thai company limited, the company is owned by at least three shareholders and managed by at least one director. Section 1097 of the Civil and Commercial Code states that any three or more persons may, by subscribing their names to a memorandum and in compliance with the provisions of the Code, promote and form a limited company. The shareholders’ direct participation in company affairs is somehow limited as the directors are responsible for managing the company affairs and in the same manner, have fiduciary duties to the shareholders and the company.
Thai Limited Company (Thai Majority)
In a Thai majority-owned limited company, the Thai nationals must own at least 51% of the shareholding of the company. Since the majority of its shareholding is Thai, then, a Foreign Business License (FBL) is not required. A limited company that is majority-owned by a Thai national generally does not encounter restrictions.
Thai Limited Company (Foreign Owned)
A Foreign majority-owned company limited is defined to be a business with over 49% foreign ownership. The business operations and activities involving foreign nationals and entities are governed by the Foreign Business Act. Business entities of majority foreign ownership are required to obtain a Foreign Business License before commencing its operations in Thailand.
Company Registration in Thailand under the US-Thai Treaty of Amity
Thai Treaty of Amity aims to provide significant advantages for U.S. corporate and individual investors to run businesses in Thailand. In particular, the Treaty of Amity provides U.S. investors with two major trade advantages:
- The Treaty of Amity permits U.S. nationals to hold either majority shares or all the shares of a Thai limited company, or to establish a Branch Office or Representative Office in Thailand without having to apply for a Section 17 Foreign Business License; and
- U.S. nationals may engage in business on the same basis as Thai nationals, and are exempt from most of the restrictions of foreign investment imposed by the Foreign Business Act of 1999.
Board of Investment or BOI Thailand provides investment incentives for both foreign and local entrepreneurs who are interested in investing in the agency's promoted activities. Thailand BOI has formulated criteria for projects applying for incentives and privileges. To be eligible for a BOI promotion, your business has to fall within the categories set by the Board.
Company Registration Requirements
- At least 3 natural persons as promoters (initial shareholders). Three shareholders are required at all times throughout company operation. It is to be understood that not just anyone can be a promoter. The minimum requirement is that a promoter must, at least, be twenty-one years old who can legally act on behalf of the company. Usually, promoters hold an equal share of the company. It is only after registration of the company that promoters’ shares can be transferred to others.
- Head office located in Thailand along with a copy of house registration (Tabien Baan) number and Letter of Consent obtained from the landlord.
- Minimum registered capitalization of 2 million THB for foreign businesses operating non-restricted and 3 million THB for restricted businesses under the Foreign Business Act. Thai-owned companies, not subject to such requirements (but will need to meet financial requirements to support a work permit for a foreign worker).
- A memorandum of association to be filed with the application.
- A statutory meeting has to have been convened.
- Letter of Certification from the bank to certify the adequacy of funds in the Thai shareholder’s personal bank account where Thai shareholders will be amongst foreign shareholders.
- All shareholders/initial promoters and directors will be required to sign part of the application documents in Thailand.
Steps on How to Register a Thai Limited Company
Step 1: Registering the Company Name
Thai companies that wish to register their company names must first reserve their company name with the DBD. Under Section 1098 of the Thai Civil and Commercial Code it is required that the name of the proposed company must always end with the word “limited”. The name reservation can be done online at the DBD website. This name reservation is normally approved within 1-3 days. Company names are subject to the guidelines of the Business Department. Once the company name is approved, this shall be used in the incorporation documents needed for company registration.
Step 2: Filing the Memorandum of Association
After registration with the Ministry of Commerce (MOC), the company can register its memorandum of association. At this point, all shares must be paid. To engage in foreign businesses, cabinet approval must be sought first.
The memorandum of association includes the company name, promoters’ names, company’s location and company’s finance and business objectives.
Step 3: The Statutory Meeting
The company must also submit its by-laws and articles of incorporation which must be drafted in a statutory meeting. It is also during the said meeting that the board of directors and auditor of the company are appointed.
Step 4: Registration of the Company in Thailand
The company registration must be lodged on the same day that the Memorandum of Association is registered at the Ministry of Commerce (MOC) provided that the Statutory Meeting has already been convened. The application for registration must be submitted no later than 90 days from the date of the statutory meeting.
Step 5: Register for VAT (Value Added Tax) and Income Tax
Tax ID cards and VAT certificates must be filed after registration. Other necessary documents must also be filed with the registrar of the Department of Business Development (DBD) under the Ministry of Commerce (MOC). The same documents must be submitted to the Central Filing Office of the Revenue Department in Bangkok.
Company Bank Account
Once the company has already been registered with the Department of Business Development and has been issued with the Business Registration Certificate and Company Affidavit, the newly registered Thai company can open a corporate bank account at any established commercial banks in Thailand.
Thai Work Permit and Thai Visa
Where directors of the company or the sole director who has signing authority over the company or a hired employee is a foreigner, they are required to have work permits. In order for your company to sponsor one non-immigrant B visa and work permit for its foreign director or employee, regardless of its shareholding, it should meet the requirements prescribed by the Ministry of Labour and Immigration Bureau.
Thailand Branch, Representative and Regional Offices
It is a common practice for multinational companies to establish a presence in Thailand but do not want to operate as a separate legal entity. The multinational company may want the Thailand office to function and operate as part of its head office overseas.
Under Thai law, branch, representative as well as regional offices are treated as extensions of the head office overseas and not as separate legal entities. Thus, these companies are foreign-owned and must comply with the requirements set under the Foreign Business Act.
Thailand Branch Office
A Thailand branch office structure is similar to that of a company limited structure. Like the company limited, a branch office can earn income in Thailand. Branch offices are likewise governed by the rules on foreign-held company limited. It is with issues concerning liability that a branch office and a foreign-held company limited structure may differ. For a company limited (foreign-owned), liability arising from the business operations or its employees is generally limited to the Thailand Company only. As for the branch office, liability arising from the actions of the business is also the liability of the head office overseas as the branch is merely an extension thereof.
Thailand Representative Office
The Thailand Representative Office is meant to provide support to the head office and engage in activities such as acquiring information of the source of raw materials, market research to report back to the head office, providing advice about the head office’s goods or services or offering news and information about new products or services of the head office.
In order to form a representative office in Thailand, at least one of the following purposes would need to be sought for the purposes of strictly the following “non-trading” activities:
- Search and procuring information about the source of goods or services or raw materials in Thailand for the headquarters overseas;
- Ensuing or checking the quality and quantity of the product ordered by the headquarters overseas;
- Offer advice regarding products offered by the head office or affiliated companies to local distributors or consumers whereby, the product must have already been distributing in Thailand;
- Disseminate news or updates regarding new products, upgrades or improved versions/formulas or services offered by the head office or its affiliated companies; and
- Reporting the economic movement in Thailand to the headquarters.
Thailand Regional Office
Just like a Thailand representative office, regional offices in Thailand are also not allowed to earn income. It is also strictly regulated to performing specific functions designated by statute on behalf of the head office overseas. A regional office is only limited to perform the following functions:
- Communicating, coordinating and directing, on behalf of the head office, the operation of branches and affiliates that are in the region;
- Providing services in consulting and management;
- Training and personnel development;
- Financial management;
- Marketing control and sales promotion planning;
- Product development; and
- Services in research and development.
Under the Civil and Commercial Code of Thailand, there are two types of partnerships: ordinary partnership and limited Thai partnership.
Section 1025 of the Code defined ordinary partnership as a kind of partnership in which all the partners are jointly and unlimitedly liable for all the obligations of the partnership. On the other hand, a limited partnership as defined in Section 1077 is that kind of partnership in which there are: (1) one or more partners whose liability is limited to such amount as they may respectively undertake to contribute to the partnership; and (2) one or more partners who are jointly and unlimitedly liable for all the obligations of the partnership.
Doing business in Thailand can be very complicated and may take you several weeks to complete the process. This is mainly due to the registration procedures and the required documents and forms being in Thai. It follows that you need someone you can trust and who is able to communicate in Thai on your behalf to be able to successfully review your company registration. Siam Legal's licensed Thai lawyers and foreign attorneys/solicitors can take care of the legal points of setting up your business thereby making sure that all the necessary requirements are met.
Furthermore, we can give you relevant pieces of advice on doing business in Thailand efficiently. Finally, at Siam Legal, we can give you a one-stop service for your convenience i.e. we can help you set up a company while getting you a Thai work permit and a Thai Visa at the same time. Consult us today about your company registration!