Thailand Limited Company Registration
What is a Thai limited company?
A Limited Company, particularly a Private Thai Limited Company, is the most popular form of business structures in Thailand. Its key features are:
- It is owned by a minimum of three shareholders.
- The liability of each of the shareholders is limited to the par value of their shares.
- Shareholders’ participation in the company is limited as the directors are managing company affairs.
Section 1096 of the Thai CCC (Civil and Commercial Code) has provided that "A limited company is that kind of which is formed with a capital divided into equal shares, and the liability of the shareholders is limited to the amount, if any, unpaid on the shares respectively held by them."
The incorporation of a Private Limited Company requires the following:
- At least 3 natural persons as promoters (initial shareholders). Three shareholders are required at all times throughout company operation.
- Head office located in Thailand along with copy of House registration (Tabien Ban) number and Letter of Consent obtained from the land lord.
- 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 an expat).
- 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.
Brief Procedures to Register a Thai Limited Company
Reserve Your Proposed Company Name
The Thai limited company name reservation must follow the guidelines of the Department of Business Development (DBD) of the Ministry of Commerce amongst other guidelines. Thai companies wished to register their company names must first reserve their company name with the DBD. Section 1098 of the civil and Commercial Code provides 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.
File a Memorandum of Association
The Memorandum of Association of the Thai limited company must to be filed with the relevant Thai authorities. The Memorandum of Association contains the following:
- The name of the proposed company;
- The part of the Kingdom in which the registered office of the company shall be situated;
- The objectives of the company;
- A declaration that the liability of the shareholders shall be limited;
- The amount of share capital with which the company purposes to be registered and the divisions thereof into shares;
- The name, addresses, occupations, and signatures of the promoters and the number of shares subscribed by each promoter.
Convene a Statutory Meeting
The Thai limited company must convene a statutory meeting to make all the appointments. It is a general meeting held immediately after shares have been subscribed. The business to be transacted at the statutory meeting are as follows:
- The adoption of the regulations of the company, if any;
- The ratification of any contracts entered into and any expenses incurred by the promoters in promoting the company;
- The fixing of the amount, if any, to be paid to the promoters;
- The fixing of the number of preference shares, if any;
- The fixing of the number of ordinary shares or preference shares to be allotted as fully or partly paid-up;
- The appointment of the first directors and auditors and the fixing of their respective powers.
To establish a Thai limited company, it has to be registered with the Thai government. The Department of Business Development of the Ministry of Commerce has been tasked to receive business development and promotion duties, the registration duties and the promotion of trade association and chamber from Department of Internal Trade and new duties, namely, service and e-commerce business promotion as well as perform its original duties such as business registration duties, business supervision, and business services. When a company is not duly registered with the DBD, then, it has no legal entity and right to conduct its business operations in Thailand.
VAT or SBT Registration
Depending on its business activities, a Limited Company may have to register for the Value Added Tax or Specific Business Tax.
Value Added Tax (VAT) has been implemented in Thailand since 1992. VAT is an indirect tax imposed on the value-added of each stage of production and distribution. Any person or entity who regularly supplies goods or provides services in Thailand and has an annual turnover exceeding 1.8 million baht is subject to VAT in Thailand. Service is deemed to provided in Thailand if the service is performed in Thailand regardless of where it is utilized or if it is performed elsewhere and utilized in Thailand.
Specific Business Tax (SBT) is another kind of indirect tax likewise introduced in 1992 to replace Business Tax. Certain businesses that are excluded from VAT will instead be subject to SBT. Any person or entity who engages in certain businesses in Thailand is subject to SBT instead of VAT. The following businesses are subject to SBT:
- Business of finance, securities and credit foncier;
- Life insurance;
- Business with regular transactions similar to commercial banks such as provisions of loans, provisions of guarantees, exchange of currencies, issuance, purchase or sale of bills or transfer of money abroad by different means;
- Sale of immovable property in a commercial or profitable manner; and
- Sale of securities.
Registration of the Incorporation Papers
Thai limited companies must also follow accounting procedures specified in the Civil and Commercial Code, the Revenue Code and the Accounts Act. A balance sheet must be prepared once a year and filed with the Department of Revenue and Commercial Registration. In addition, companies are required to withhold income tax from the salary of all regular employees.
Thai limited companies are the most common form of business registration in Thailand. We are a full service Thai law firm. Let our Thai lawyers or any of our foreign lawyers provide you with guidance when registering your limited company in Thailand.
Limited Company Registration Packages
Note: All packages are exclusive of VAT and government fees.
COMPANY REGISTRATION + VAT APPLICATION + PREPARATION OF BOARD RESOLUTION
COMPANY REGISTRATION + VAT APPLICATION + PREPARATION OF BOARD RESOLUTION + ORIGINAL WORK PERMIT + VISA EXTENSION