Setting Up a Foundation
What is a foundation?
Foundations are commonly used as a vehicle for philanthropic individuals to share their blessings with the less fortunate. The Thai Commercial and Civil Code defines a "foundation" as assets arranged only for the purpose of charity, religion, arts, science, literature, education, or any public interests that are duly registered under the regulations of the law. These organizations’ objectives are generally for the benefit of the society. Organizations, such as foundations are non-profit. They are allowed to collect donations in support of their objectives. However, no trustee, director, or any member may directly benefit from the profits earned by the foundation incidental to its operation.
Its key features are the following:
- A board consisting of at least three (3) persons who are going to conduct the businesses of the foundation according to its regulations;
- It has been established solely for non-profit purposes; and
- It is established for purposes of charity, religion, arts, science, literature, education, or any other purpose intended to benefit the public.
How do I set up a foundation?
The Thailand Ministry of the Interior has prescribed the rules and regulations for setting up foundations through the legislation of The Ministerial Regulations of Regulations, Operation and Registration of the Foundation B.E. 2545 (2002).
The application form for the registration of a Thailand Foundation may be submitted to the registrar of the district which has jurisdiction over the place where the principal office of the Foundation will be established. Along with the application, the following documents are likewise necessary:
- List of assets of the owners
- List of allocated assets for the Foundation and registered document indicating the promise to donate these assets
- Copy of testament if an asset was given to the Foundation by virtue thereof
- Name, address and profession of all the members of the board of directors of the Foundation
- Regulations of the Foundation
- Copy of ID card or other types of Identification cards issued by the government and copy of the house registration of the owners and members of the board of directors (if he is a priest or a foreigner, other documents reflecting his status and address would suffice)
- Map of the principal office and its branch offices (if any) and the written consent of the landlord or owner of these properties.
- Minutes of the meeting convened for the establishment of the Foundation
The assets of a Foundation must have a value of 500,000 baht, with at least 250,000 baht in cash. Certain charitable objectives allow a Foundation to have assets of only 250,000 baht in value, with only 100,000 baht in cash.
Upon receipt of the aforementioned papers, the District Office will inspect the correctness of the application. Thereafter, the District Office will have the application transferred to the Ministry of Interior. If the Foundation has any objectives that are relevant to any other government department, the Ministry of Interior will send the application to that department for their consideration.
The entire application process may take up to one year after which the applicant will be informed of the Ministry of Interior's decision.
Criteria for Approval
Once the application for registration is received by the Registrar, the following criteria for approval need to be met:
- A foundation must have an official name. The official name must bear the word “foundation” all throughout its existence.
- The foundation must have a principal office and must specify the owner of the premises being used.
- The foundation must have its by-laws and regulations. It must be shown that its objectives are clear and realistic.
- The regulations and objectives of the foundation must not be contrary to law and public morals. Also, these regulations and objectives must not endanger public order or national security.
- It must be in conformity with the provisions of the Thai Civil and Commercial Code.
- The foundation shall not be involved in political activities.
Registration of the foundation with the appropriate government authority is clearly advantageous. The registration itself benefits the foundation. Upon the registration, a foundation can legally enter into contracts with other local organizations in Thailand. As such, it would be easier for the foundation to carry out its objectives through partnering with other civic groups. Likewise, raising funds and seeking donations to effectively carry out the foundation’s objectives can be a lot easier once the organization is registered and has a legal personality.
Once the foundation is registered it shall comply with its regulations and objectives as approved by the Ministry of Interior. Amendments are not encouraged. However, the foundation may effect amendments to its regulations only when it so warrants. Section 127 of the Civil and Commercial Code provides that the amendment of any particulars in the regulations of the foundation can be made only for the following reasons:
- To make the implementation of the objectives of the foundation possible; or
- The change or circumstance makes the objective of the foundation become less beneficial or making it unable to carry on the activities which fulfill its objectives and the objectives so amended are related to the original objectives.
It is likewise important to note that the Registrar shall have, to a certain extent, the authority to inspect, control and supervise the management of the foundation to ensure conformity with the regulations of the foundation. This may even include the dismissal of a committee member or the entire committee in severe cases of wrongful actions, and the appointment of a new committee member or committee.
Dissolution of a Foundation
Under Section 130 of the Civil and Commercial Code, a foundation is dissolved on the following grounds:
- Upon such cause as provided in the regulations;
- If formed for a definite period of time, by the expiration of such period;
- If formed for any objective, upon fulfillment of such objective or it has become unattainable;
- Bankruptcy; and
- By an order of the Court to dissolve the foundation.
The Court may, on the application of the Registrar, the public prosecutor or any interested person, order a foundation to be dissolved when it appears that the objectives of the foundation are contrary to law, public morals and has endangered public peace and national security or the foundation has stopped doing business for at least two (2) years.