Business in Thailand
The Right Office offers a complete Company incorporation service within the Kingdom of Thailand.
Thai and Western concepts of partnership are broadly similar. There are three types of partnerships:
unregistered ordinary partnership, in which all partners are jointly and wholly liable for all obligations of the partnership
registered ordinary partnership. Upon registration, the partnership becomes a legal entity, separate and distinct from the individual partners limited partnerships. A limited partnership is one in which there are one or more partners whose individual liabilities are limited to their respective contributions, and one or more partners jointly liable without any limitation on all the obligations of the partnership.
A limited partnership must be registered.
There are two types of limited companies
, i.e. private companies and public companies. The first is governed by the Civil and Commercial Code, the second by the Public Company Act.
Private Limited Company
A private limited company in Thailand has the general characteristics of a limited company under Western legal systems. It is a legal entity, separate and distinct from those who own and/or run it. It is capable of suing and being sued in its own name.
A private limited company is formed through a process which leads to the registration of a Memorandum of Association (Articles of Incorporation) and Articles of Association (By-laws), as its constitutive documents. There must be seven promoters to register the Memorandum of Association.
Shareholders enjoy limited liability, i.e. limited to the remaining unpaid amount, if any, of the par values of their shares. The liability of the directors, however, may be unlimited if so provided in the company’s Memorandum of Association. The company is managed by a Board of Directors.
All shares must be subscribed to, and at least 25 percent of the subscribed shares must be paid up. Both common and preferred shares may be issued, but all shares must have voting rights. Thai law prohibits the issuance of shares with no par value. It also stipulates that only shares with par value of five Baht or above may be issued. There is no limit on maximum par value. Treasury shares are prohibited.
A minimum of seven shareholders is required at all times. A private limited company may be wholly owned by aliens. However, if the nature of the business of the company is restricted under the Foreign Business Act or other laws then foreign ownership, both in the number of shareholders and the percentage of shares owned, must be less than 50%.
There must be a Board of Directors with at least one director. If the nature of the business is restricted under the Foreign Business Act or other laws, then there may be restrictions on the number of foreign directors and a requirement that there should be a number of foreign directors resident in Thailand.
In general, there are no restrictions on the minimum paid up capital of a company. The capital must be sufficient for normal business operations. However, if the business of the company is restricted under the Foreign Business Act, then there may be requirements for minimum registered capital that must be observed. The amount of paid up capital is also relevant in relation to the number of foreign employees whose work permits are sponsored by the company (see below). The current guideline of the Labour Ministry is that a company should have at least 2 million Baht in paid up capital for each foreigner whose work permit is sponsored.
In practice, it takes around four weeks to register a private limited company. It is not local practice to have shelf companies available for acquisition.
The registration fee for a private limited company is 5,500 baht per million baht of capital.
Public Limited Company
A public limited company registered in Thailand may, subject to compliance with the prospectus, approval, and other requirements, offer shares, debentures and warrants to the public and may apply to have its securities listed on the Stock Exchange of Thailand (“SET”).
A minimum of 15 promoters is required for the formation and registration of the Memorandum of Association of a public limited company, and the promoters must hold their shares for a minimum of two years before they can be transferred. The Board of Directors of a public limited company must have a minimum of five members, at least half of whom are Thai nationals. Shares must have a face value of at least five Baht each and be fully paid up. Restrictions on share transfers are unlawful except those protecting the rights and benefits of the company allowed by law, and those maintaining a Thai/foreigner shareholder ratio. Debentures may only be issued with the approval of three quarters of the voting shareholders.