Know the difference between public and private limited Company in Thailand and choose your business structure carefully!
If you have plans of setting up a business in the Kingdom of Thailand, of all the choices you make, the most important is your decision about the kind of legal structure you select for your company. This shifts between sole proprietorship, partnership and registering as a limited company (public/private).
This will not only affect the amount of tax you pay, but will also affect the amount of paperwork you’ll have to do, the individual risk you may have to confront and your ability to raise funds.
Here in this blog we will focus on the difference between two legal structures: Public limited company and a Private limited company (these are the most commonly used legal structures for doing business in Thailand). Knowing the differences between these structures and choosing what’s best for your business will place you in the most ideal tax and legal position.
| Public Ltd Company | Private Ltd Company |
|---|---|
| 1. Company owned and governed by the Public Company Act | Company owned and governed by the Civil and Commercial Code. |
| 2. To start a business, the public company needs a certificate of initiation after it is incorporation | A private company can start its activities soon after receiving the certificate of incorporation |
| 3. There must be at least 15 promoters during the formation and registration process | There must be at least 3promoters to register the company and a minimum of three shareholders must be maintained at all times |
| 4. The registration fee is 2,000 baht per million baht of capital for a public limited company | The registration fee for a private limited company is around 5000-6000 baht per million baht of capital. |
| 5. Statutory Meetings are compulsory. | Statutory Meetings are not compulsory |
| 6. The company should have a minimum of 5 directors, half of whom must be Thai natives. | The company should have a minimum of 3 directors, half of whom must be Thai natives |
| 7. A public company cannot be converted back to a private company. | A private company may be transformed into a public limited company |
| 8. The issue of prospectus/statement is mandatory. | The issue of prospectus/statement is not mandatory |
| 9. The shareholders of a public company can freely transfer their shares. | The transferability of shares of a private company is totally confined |
| 10. Can raise capital from the general public and need to comply with a few lawful limitations. | Limited up to a few number of individuals, and enjoys less legal restrictions |
| 11. Must submit to various SEC reporting requirements. | No obligation to unveil funds to general society and stays away from the SEC. |
| 12. Shares are listed in the stock exchange and any individual can buy and sell it. | Cannot list its shares in the stock exchanges. |
Once you have considered all the relevant factors and decided a structure for your business, you’ll need to register your business for tax and form a limited company.
Note: – Different structures have different legal requirements and procedures. You may find it difficult to go through all the steps yourself, thus hire the best legal firm in Thailand, for assistance.
