Company Registration in Thailand

Introduction

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, and a 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.

Two Forms of Partnership under Thai Law

Thai law recognizes two distinct forms of partnership: ordinary partnerships and limited Thai partnerships.

According to Code Section 1025, an ordinary partnership is one in which all partners have unlimited personal liability for the partnership's debts. As opposed to this, a limited partnership is defined by Section 1077 as a partnership in which

 (1) the liability of one or more partners is limited to the amount that they each undertake to contribute to the partnership, and

 (2) the liability of one or more partners is joint and unlimited with respect to all of the partnership's obligations.

Depending on your company's needs, you can set up a corporation, a limited liability company, a partnership, or a sole proprietorship in Thailand.

Both foreign investors and local persons are given equal opportunities to set up their firms in Thailand. Following are the different types of business vehicles that a person can adopt to set up their business entities in Thailand:

• Thai Company Limited

In light of its adaptability, the Thai Limited Company has quickly become the most popular and attractive form of company organization among foreigners doing business in Thailand. In Thailand, this is the most common legal structure for a company. This organization functions similarly to a Limited Liability Corporation (LLC) in the United States or a Private Limited Company (Pte. Ltd.) in Singapore.

There must be a minimum of three shareholders and a minimum of one director for a corporation to be considered a limited liability company in Thailand. Any three or more persons may promote and form a limited company by contributing their names to a memorandum in accordance with the provisions of Section 1097 of the Civil and Commercial Code. Because directors are tasked with running the company and have fiduciary duties to both the shareholders and the business itself, shareholders' ability to get directly involved in corporate matters is constrained.

• Thai Limited Company (Thai Majority)

For a corporation to be considered "majority-owned," at least 51% of its stock must be held by Thai nationals. Thus, it does not need a Foreign Business License (FBL) because the vast majority of its shareholders are Thai. In most cases, a limited liability business controlled by Thai nationals can operate freely.

• Thai Limited Company (Foreign Owned)

A corporation in which foreigners possess more than 49 per cent is considered to be a foreign majority-owned company limited. The Foreign Business Act regulates transactions and dealings with foreign nationals and businesses. To legally conduct business in Thailand, companies with foreign ownership of more than 50 percent must first get a Foreign Business License.

• Board of Investment or BOI Thailand

BOI Thailand, the Board of Investment, offers financial incentives to both international and domestic businesspeople who invest in the agency's target industries. The Thailand Board of Investment has established criteria for qualifying projects seeking advantages and subsidies. Your company must fit into one of the BOI-approved categories in order to receive a BOI discount.

• Branch Office

Thailand's branch office law is comparable to that of a limited business. A branch office in Thailand can produce income like a company limited. These offices follow the foreign-held corporation Limited’s rules. The liability of these two constructions differs. Since the branch office is only an extension of the overseas head office, it is also liable for its activities. Yet, a Thai-registered foreign-owned limited company's liability is confined to its acts.

• Regional Office

Regional offices in Thailand, like Representative Offices, cannot conduct commercial activities. They cannot work. These businesses can only do certain tasks for the statute-designated overseas head office. Thai regional offices can only do these:

Consulting and management services; communication, coordination, and directing regional branches and associated operations on behalf of the head office;

Financial management, training, research and development, product creation, marketing controls, and sales promotion and planning.

• Company Registration in Thailand under the US-Thai Treaty of Amity

The Thai Treaty of Amity is drafted to favorably affect business operations in Thailand for American corporations and individuals. In particular, there are two important commercial benefits for American investors thanks to the Treaty of Amity:

First, under the Treaty of Amity, Americans don't need a Section 17 Foreign Business License to own a majority stake in a Thai limited company or set up a branch office or representative office in the country. Second, under the Foreign Business Act of 1999, Americans are exempt from most of the restrictions on foreign investment.

Company Registration Requirements

1. One must have at least three natural people acting as promoters (initial shareholders). At least three shareholders must be present at all times for a corporation to be operational. It should be made clear that not everyone can act as a promoter. A promoter must be at least twenty-one years old in order to legally represent the company in any official capacity. Promoter companies often have equal ownership among the promoters. Shares owned by the firm's promoters cannot be sold or transferred to anybody else until the company has been officially registered.

2. A Letter of Permission from the Landlord and a copy of the House Registration (Tabien Baan) Number for the Thai Headquarters.

3. The Foreign Business Act requires a minimum registered capitalization of 2 million THB for foreign enterprises operating without restrictions and 3 million THB for restricted businesses. Businesses with Thai ownership are exempt from this regulation (but will need to meet financial requirements to support a work permit for a foreign worker).

4. The application must include a memorandum of affiliation.

5. a legally mandated gathering must have been called.

6. A letter from the Thai shareholder's bank verifying sufficient cash in his or her personal bank account, if the Thai shareholder is a foreign investor.

7. To apply for a business license in Thailand, you must have all of your shareholders, initial promoters, and directors physically present in the country to sign certain paperwork.

Steps on How to Register a Thai Limited Company

Step 1: Registering the Company Name
To begin the registration process, Thai businesses must first submit a name reservation to the DBD. Any proposed company name in Thailand must include the word "limited" to comply with Section 1098 of the Thai Civil and Commercial Code. The DBD website is where you can reserve your desired name. Approval of this reserved name often occurs within a few days. The Business Division has rules about what kind of names can be used for businesses. Company registration documentation must include the approved name after incorporation has occurred.

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, the company’s location, and the company’s finance and business objectives.

Step 3: The Statutory Meeting

The company's bylaws and articles of formation must be written in a statutory meeting and submitted as well. The company's board of directors and auditor are also selected at this meeting.

Step 4: Registration of the Company in Thailand

Providing the Statutory Meeting has already been called, the company registration must be filed with the MOC on the same day as the Memorandum of Association. Registration applications are due no later than 90 days after the date of the statutory meeting.

Step 5: Register for VAT (Value Added Tax) and Income Tax

Registration is followed by the submission of tax documents such as an ITIN or VAT certificate. The registrar at the Department of Business Development (DBD) within the Ministry of Trade must also receive other required paperwork (MOC). Bangkok's Central Filing Office of the Revenue Department also requires the same paperwork.

Company Bank Account

Opening a corporate bank account at any of Thailand's well-established commercial banks is the next step after registering a Thai company with the Department of Business Development and receiving the Business Registration Certificate and Company Affidavit.

Thai Work Permit and Thai Visa

Employment authorization documents are necessary for every foreign national who is a director, sole director, or employee of a corporation in the United States. The Ministry of Labor and Immigration Bureau requires that your firm meet certain criteria before it can sponsor a non-immigrant B visa and work permit for a foreign director or employee, regardless of the company's shareholding.