Setting up a Business in Thailand
Our firm specialises in setting up safe and secure company structures for foreigners. Our consulting staff have set-up thousands of companies in Thailand and have decades of combined experience in company registration and all facets of Thai law for foreigners. Contact us for a free consultation, we are ready to help.
Thailand offers a wide variety of business structures, many of which are also available to foreigners (as long as they do not violate the conditions of the Foreign Business Act). The legal form of a business can be a sole proprietorship, an ordinary or limited partnership, a representative, regional or a branch office, a joint venture, a limited company or even a foreign company. Moreover, each entity is either trading or non-trading and different rules apply towards its ownership.
Thai Limited Company
In most cases, the preferred first step to setting up a new business in Thailand is the establishment of a Thai limited company – a Thai equivalent of the Limited Liability Company (LLC). Unlike in the West, its creation does not happen immediately but instead a more formalised incorporation process takes place.
To begin the process, there are two essential documents: the Articles of Association and the Memorandum of Association, both of which must be registered with the Thai Ministry of Commerce. Articles of Association can be tailored to suit the specific needs of a company, as long as the original shareholders and promoters (if different) agree to the terms in writing.
Pros and Cons of a Thai Limited Company
Thai limited companies are the preferred route for setting up a business in Thailand, largely because they are so similar to co-operations in other developed nations. The process will, therefore, feel familiar to businesspeople, even if they have little or no experience of business in Thailand. All limited companies have directors, shareholders (both Thai and foreign in many cases), promoters, and limited liability. In this case, limited liability means that the shareholder in a Thai company can only ever lose what capital they invested.
Aside from familiarity, Thai limited companies are a popular way of doing business because they offer any number ways of generating profit. Although there are double taxation issues (on both the earnings of the company and dividends), many of these issues can be easily resolved by rolling profits into the salaries of directors and other shareholders.
Another benefit of the Thai limited company is that the rights and obligations of all parties are set down in writing, ensuring everyone has a clear understanding of their legal standing within a company, unlike some joint ventures where a number of duties and privileges can drift into a complex grey area. With a Thai limited company, all legal entitlements and responsibilities are clearly stated and available for reference when required.
Setting up a Thai Limited Company
The process can take one day. Only three mandatory shareholders are required to incorporate and register a new Thai limited company. These improvements come with an unprecedented government drive to encourage foreign business in Thailand. The door is now wide open for foreign investors, even more so following government policy changes which have streamlined the process of registering a new Thai company.
If a Thai Company is majority owned by a foreigner, the foreigner must obtain a foreign business license before engaging in business activities. However, it is worth noting that a Thai limited company that is majority owned by a Thai will not encounter such restrictions. Consequently for many, it is beneficial to form a business partnership with a Thai national, in order to meet the legal definition of a “Thai company.”
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