“ Expand business to the world ”
Thailand is regarded as the gateway to ASEAN and an excellent strategic investment location. The rise in the number of foreign investors who are interested in investing in Thailand is due to important factors such as the size of the market, the country’s robust macroeconomic stability and growth, and its position as a major production and exporting hub.
If you can see the opportunities and wants to do business in Thailand, we can assist you in setting up a business in Thailand with the best solution to your objectives and needs. There are many different types of legal entities that can be chosen for business registration to meet your business objective and conditions.
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The most common type of business entity conducted by foreign investors in Thailand is a limited company. The ownership and management of a corporation that is created with capital that is divided into shares of equal value are kept apart by law. The shareholder’s liability is just for the outstanding balance on the shares they own. Any documents that must be signed in order for the corporation to be bound can only be signed by the director(s). The following characteristics must be met in order to form a limited company:
1. There must be at least three shareholders and one director.
2. Physical address for registration
3. Limited company (Thai Majority) ; Thai citizens must own at least 51% of a company’s shares, No Foreign Business License required
4. Limited company (Foreign Majority) ; Foreigners can own over 49% of a company’s shares, Foreign Business License required.
A limited partnership is a type of corporate entity where two or more people agree to join together on a venture with a similar goal and distribute profits. In order to be registered, a limited partnership requires at least two or more promoters.
Under the Civil and Commercial Code of Thailand, there are two types of partnerships: ordinary partnership and limited Thai partnership.
1.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.
2.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.
A Public company is a company established for the purpose of offering shares for sale to the public and the shareholders shall have the liability limited up to the amount to be paid on shares, no minimum amount of registered capital and public company must be registered as a legal entity. The requirement for public company registration are as follows:
A minimum of 15 promoters is required for formation and registration of a public company.
The board of directors must have a minimum of 5 members, at least half of whom must have a domicile in Thailand.
Each share of the company shall be equal to value and be fully paid up at only one time.
No less than one half of the total number of promoters have their domicile in Thailand
The promoter shall subscribe for shares and all the shares so subscribed must be paid up in money in an aggregate amount equal to not less than 5 percent of the registered capital and the shares cannot be transferred within two years form the registration, except with the approval of the shareholders at a meeting of the shareholder.
The Regulation of the Office of the Prime Minister BE 2529 (AD 1986) defines a representative office as a Thailand-based office of a foreign corporation engaged in international trade. It facilitates import and export of goods by head office. Representative office has the following characteristics:
1. A legal entity formed in accordance with foreign legislation with a Thai office established solely for the purpose of providing services to their overseas head office, affiliated firms, or group corporations
2. Provide services to the head office, associated company, or holding company without earning revenue for all of those services, with the exception of funds received from the head office to support the Representative Office’s expenditures
3. The Representative Office is not permitted to accept purchase orders, make sales offers, or engage in business negotiations with any natural or juridical person.
A branch office is a legal entity that was founded in Thailand in accordance with foreign law and is regarded as the same legal entity as the head office. The Branch Office will not be restricted from conducting business in Thailand alone but also include the head office located elsewhere in the world. The branch office differs from a representative office in such a way that it is permitted to carry out a more wide variety of operations , including the sale and purchase of goods, signing of contracts, and the provision of services whether or not they generate income. If the business operation nature is a restricted business under the Foreign Business Act B.E. 2542 (FBA), it needs to apply for obtaining Foreign Business License (FBL) at the Ministry of Commerce before starting the operation.
The investment capital must be at least 3 million baht and cannot be less than 25% of the expected average annual operating costs of the business for the first three years, according to the requirements of the Foreign Business License.
Foundation is a non-profit organization established with the purpose of supporting charities, religion, arts, science, literature, education, or any other public interest . Foundation are set up using money donated by individuals, families or corporations which is in turn, invested back. Donated money from foundation must not be the benefit or interests for any person, except used for operation in pursuant to the objective
The requirements for foundation registration
1. Foundation is required to have a minimum capital of at least THB 500,000 and THB 250,000 in cash, both of them cannot be withdrawn but must be kept in the bank account.
2. The foundation must set up regulations, and it cannot be against the law.
3. To establish and run the foundation in accordance with the goals, a board of directors must consist of at least three persons.
4. To be registered under the Commercial and Civil Code, the revision edition B.E. 2535, a foundation must have a legal name and address.
5. Foundations are taxable; the tax rate is 2% or 10% depending on the source of income. Foundations are legal entities that have the right to sue, engage in contracts, hire employees, and sponsor visas and work permits.
A joint venture is defined as a group of individuals (natural or juridical persons) that enter into an agreement in order to operate a business together. Whether it is an incorporated or unincorporated joint venture, at least one of the partners must be a juristic person, and the joint venture must have the following two characteristics:
1. A joint venture is one in which both parties invest and split profits and losses.
2. The partners share the responsiblity and the rights of any third parties involved in the joint venture.
A joint venture must also apply for a taxpayer identification card since the Revenue Department considers a joint venture as a legal entity for the purposes of calculating tax liability.
Foreign Business License (FBL).
According to list 3 in Foreign Business Act 1999 which allowed the foreigners to do business in Thailand with over 49% foreign ownership. If you are the foreigner who wishes to do a business under this category, you have to apply for obtaining a Foreign Business License (FBL) before you can commence operation.
It is important to be aware of the qualifications and requirements for foreigners who wish to submit an application for a foreign business license. The following requirements are listed in Section 16 of the FBA .
1. being at least twenty years old, resident in the Kingdom, or having obtained temporary entry permission under the Immigration Law;
2. not being an incompetent or almost incompetent individual;
3. not having been disciplined for a period of not less than five years prior to the date of the license application, or having been ordered to pay a fine in settlement of any violation of this Act or the National Executive Council Notification No. 281, dated 24th November B.E. 2515 (1972);
4. not having had a license issued under this Act or under National Executive Council Notification No. 281, dated 24 November B.E. 2515 (1972), revoked five years prior to the date the license application was submitted.
U.S - Thai Treaty of Amity
The Treaty of Amity and Economic Relations between the Kingdom of Thailand and the United States of America, also known as the US-Thai Amity Treaty, was signed on May 29, 1966, and it grants special rights and privileges to American residents who seek to operate businesses in Thailand. In fact, American residents gained two significant trade benefits via the Thailand Treaty of Amity:
1. According to the Thailand Treaty of Amity, American corporations are allowed to own the majority of the shares in a Thai company, branch office, or representative office.
2. American businesses are permitted to operate on the same terms as Thai businesses and are exempt from the majority of the foreign investment restrictions imposed by the Alien Business Law of 1972.