Thailand is a country with many business opportunities for foreign investors; this includes the incorporation of partnerships and companies. There are two types of companies in Thailand, private limited companies and public limited companies. The main differences between the two is the governing law and the sale of shares. Private limited companies are governed by the Thai Civil and Commercial Code and sell shares privately. Whereas, public limited companies are governed by the Public Limited Companies Act B.E. 2535 (1992), and shares are traded on the Thai stock market.
For small businesses, setting up a private limited company is the most common way to start. There are specific requirements that should be met:
The process for the registration for the company can be completed within one day. It must be noted that all information with regards to the directors, shareholders, and any changes in the company structure will be accessible to the public.
With regards to accounting, all juristic persons, including private limited companies, must submit financial statements every year, regardless of the company’s operation status. This means that if a company ceases to operate but has yet to go through the liquidation process, it must still comply with these legal requirements. All companies have the duty to start the accounting period from the date of the company registration.
A “Thai company” means that more than 50% of the total shares are owned by Thai nationals. Therefore, for the company to maintain its status as a Thai company, the amount of shares that foreigners can own must not reach 50%. If the amount reaches 50%, then the foreign company may – if no exemption is applicable – require a foreign business license (‘’FBL’’) to operate in Thailand. Due to restrictions imposed under the Foreign Business Act B.E. 2542,
the government official will consider various criteria before granting an FBL, such as the advantages and disadvantages to the nation’s safety and security, economic and social development, size of the enterprise, local employment, etc. The approval of the license depends on the profits that will be generated for Thailand, and if it promotes Thai interests. The entire process is rather time-consuming and often unpredictable.
Besides the FBL, Thailand also offers other incentives for foreign investors, such as through the Thailand Board of Investment (‘’BOI’’). The BOI was established pursuant to the Investment Promotion Act B.E. 2520 for the purposes of promoting certain foreign and domestic investments that are regarded as welcomed in Thailand. The BOI has discretionary authority to grant specific trade, taxation, employment, financial and other benefits. BOI incentives are divided into two categories, tax incentives and non-tax incentives. Tax incentives depend on many factors such as geographic location, nature of the business, and whether the output is intended for export or domestic sale, whereas non-tax incentives are available for all businesses
Company Registration Process:
The first step of the company registration process is name reservation. To reserve a name, a promoter is required to submit an Online Name Reservation Form to the Department of Business Development of the MOC.
After the name reservation has been approved, the company must then submit the application to register its Memorandum of Association (MOA) and to register the company formation which can be done at the same time.
The MOA must include the name of the company, the province where the company will be located, the scope of the company’s business, the capital to be registered, and the names of the promoters. The capital information must include the number of shares and their par value. At the formation step, the Articles of Association (AOA) (also called bylaws of the company), the director(s) and director(s)’ authority, company’s auditor and the authorized capital, although partly paid, must all be issued.
Although there are no minimum capital requirements for companies registered as Thai companies, the amount of capital should be reasonable and adequate for the intended business operation. Please note that if the company is to employ foreigners, certain minimum paid-up capital requirements for the visa and work permits may apply.
The official fees and stamp duty regarding company registration are as follows:
|Certificate of registration
|Stamp duty for MOA
|Stamp duty for AOA
A company that have one or more employee shall register for Social Security with the Social Security Office within 30 days after the first employment. A company that has a turnover in excess of 1.8 Million THB must also register for VAT with the Revenue Department within 30 days of the date the annual turnover exceeded that threshold.
If you have any questions regarding the business operation in Thailand, feel free to contact us [email protected] or call us at +66 (0)2 117 9131-2.