Over the past years, several investors are coming to Thailand due to the exceptional growth of Thailand’s economy. This is to address the country’s increasing demands in the different markets in the economy and, of course, hoping that investments return with the most gains. Improved policies and regulations that are geared towards liberalization and free trade, social and political stability are the main reasons why investors are confident in doing business in Thailand. The country’s strategic location, presence of infrastructures and efficient labour force, contributed to its strong economy. The solid support of the government also made these possible, causing foreign investors to turn its eyes to Thailand’s already booming economy.
As many investors are flocking to Thailand, there are concerns about registering a company in the country. When starting a business in Thailand, one must have the necessary information about business law and registration. For foreign and offshore companies, it is recommendable to secure assistance from a Thailand lawyer offering legal service to obtain sufficient information in starting a business and successfully attend to problems one may face such as dispute resolution and intellectual property issues, and other problems under contract law. Provided below are different business structures and simplified steps designed from the Thai business law which are necessary in forming a Thai business.
Types of Business Structures
There are three general types of partnerships:
- Unregistered ordinary partnerships,
- Registered ordinary partnerships, and
- Limited partnerships.
There are two types of limited companies, of which are listed below.
- Private Limited Companies. This type has the same basic characteristics with the international business law, particularly Western businesses. It is formed using a process leading to the registration of a Memorandum of Association (Articles of Incorporation) and Articles of Association (By-laws) providing as constitutive documents. Three shareholders are required for a private limited company, one of which must be Thai. It may be fully owned by foreigners under some certain conditions.
- Public Limited Companies. Subject to compliance with the prospectus, approval, and other requirements, public limited businesses registered in Thailand may offer shares, debentures and warrants to the public and may apply to have their securities listed on the Stock Exchange of Thailand (SET). There should be a minimum of 15 promoters for the formation and registration for the memorandum of association of a public limited company. Promoters must hold their share for at least two years before it can be transferred. A minimum of 5 members is necessary for the Board of Directors, and half of them must be Thai.
This type may be described as a group of person bound to an agreement to form a business together. Under the civil and commercial law, it has not been formally acknowledged as a legal entity. Under the Revenue Code, the income for the joint venture is subject to corporate taxation, and this classifies it as a single entity.
Forming a Thai Company
- Company name registration: Submit at least 3 promising names to the Business Development Office. There are certain names that are not allowed by the office’s name reservation guidelines. The names must not be the same or relatively close to other companies.
- File memorandum of association: Submit the memorandum of association with the list of the company directors and shareholders to the Commercial Registration Department.
- Hold statutory meeting: This is in order to formalize the list of shareholders and appointment of directors.
- Submit an application to register the company: Shareholders must submit payments to the Ministry of Commerce and must be signed within 30 days of the approval of the name registration.
- Tax registration: Obtain a tax ID from the Revenue Department within 60 days of registration or the start of registration.
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Our law firm, SBC Interlaw, has a long history in Thailand with a wealth of experience in legal counsel, litigation, and dispute resolution. SBC is a law firm in Thailand and a highly committed company with passion to serve our clients. Our law firm is based on a commitment to ensuring quality customer service at all times. Our background and expertise in international law and international business law has given our company a competitive edge in addressing foreign clients’ concerns, and it is this commitment and client-focus that serve as the core values of the firm. Do drop us an email or simply give us a call if you would like to know how SBC’s Asian lawyers can be of service to you by clicking here.