Many foreign investors are choosing to set up company in Thailand and for good reasons. The kingdom of Thailand is no longer just solely recognised for its shopping, tourism and as a destination for relaxation purposes. The country is in fact experiencing a higher level of growth rate in its economy due to the increasing number of expats making investment in various business areas and industries of Thailand. The government of Thailand has adopted a pro-business climate, ensuring the economy of the country is free and open and has established clarity in terms of dealing and transacting with foreign investors. With the jurisdiction situated at the heart of Asia, many investors are also drawn to its strategic location with beneficial trade conditions within the lucrative Asian market. With many advantages to conducting business in Thailand, foreign investors alike are starting to incorporate and reaffirm their presence in the country. Before you register company in Thailand, it can be a tricky experience for first timers and those who have no prior experience of incorporating a company. Tetra Consultants has prepared the ultimate guide on company registration in Thailand for foreigners.
1) Choose an Optimum Business Structure
The first step on the ultimate guide on company registration in Thailand for foreigners is to choose the optimum business structure to set up your business. There are four main types of business entities you can consider setting up as:
1) Private Limited Company
A private limited company is the most popular choice for foreigners who wish to set up business in the jurisdiction of Thailand. The entity is considered to be a separate legal entity and shareholders are only holding limited liability, meaning that debts and obligations are not made personally liable to the shareholders. Instead, shareholders are only liable to their own respective invested sum of share capital. To start a private limited company in Thailand, there must be a minimum of 3 shareholders and 1 director. Directors can be of any nationality but the bottom line is that foreign shareholders can only hold up to a cumulative of 49% of company’s share. Should the company wish to be wholly foreign-owned, the company must then apply for a Board of Investment (BOI) promotion.
2) Limited Partnership
A partnership involves minimally 2 or more partners running the business together. Formation of a partnership does not create a separate legal entity and each partner may be liable for the debts and obligations incurred by the partnership. Partners are not separate taxpayers and each partner will have to pay taxes according to their proportion of the partnership earnings.
3) Foreign Branch
A foreign branch is usually set up by the parent company who wishes to extend their business reach into the jurisdiction of another country, and in this case, Thailand. A branch allows for 100% foreign ownership but is not seen as a separate legal entity. Debts and obligations incurred by the foreign branch are made personally liable to the parent company.
4) Regional Offices
Regional offices are incorporated usually for the main purpose of conducting market research into the jurisdiction of interest. Unlike most other business entities, a regional office is prohibited from conducting any core-income generating activity or business operations. Instead, they are limited to the activities that mainly involve advertising and consumer research, with the main intention revolving around market testing.
2) Registering Company Name:
The second step in the ultimate guide on company registration in Thailand for foreigners is to register your proposed company name. Company names cannot be identical or replicate existing businesses and specific terms such as ‘investment’ are not allowed to be used. The company name has to be reserved with the Department of Business Development of the Ministry of Commerce of Thailand.
3) Filing the Memorandum of Association:
The third step in the ultimate guide on company registration in Thailand for foreigners is to fill the Memorandum of Association (MOA). The MOA is a document that is made through special agreement by the founders of the company. Typically, the MOA will include details like the proposed name of the company, the location of the registered office, objectives of the company, declaration of liability of shareholders, amount of initial share capital, names and addresses of the founders and numbers of shares subscribed by each shareholder. The MOA will then be submitted to the DBD once fully drafted and the registration fee will be about THB50 per THB100,000 of registered capital.
4) Statutory Meeting:
The fourth step in the ultimate guide on company registration in Thailand for foreigners is to convene a statutory meeting as soon as you register your MOA with DBD. The purpose is to adopt and come to a consensus on the Articles of Association, ratify any contracts, fix the number of preference of shares as well as the preferential rights, appoint directors and auditors and various constitutions of the company. The resolution of the Statutory Meeting will not be valid unless it is passed by a majority vote.
5) Registration the Company:
The final step in the ultimate guide on company registration in Thailand for foreigners is to register the company with the Ministry of Commerce. It is important to note that registration application must be applied for no later than three months from the date of the statutory meeting. The company director will also have to sign a statement that attests each shareholder has paid their respective share subscription.
Engage Tetra Consultants as we guide you on how to register a company in Thailand through a smooth and hassle-free process. The team provides a comprehensive service package that includes planning and strategizing with our clients to select a suitable business entity, completing the registration and documentation processes, obtaining required licenses, opening a corporate bank account, and ensuring your compliance with the government regulations.
Contact us to find out more about company registration in Thailand and our dedicated and experienced team will revert within the next 24 hours.