A foreign national may wish to start a business in Thailand for various reasons. A foreigner may be able to purchase property, live in Thailand, or work in Thailand by forming a Thai company. The Royal Thai Government gives importance to foreign businesses for their contribution to the Thai economy. Many foreigners seek to start a business in Thailand for a variety of reasons. So, how can you start a business in Thailand?
This article will provide a general outline of how to start a business in Thailand. There are several phases with Thai-language forms and paperwork in association with various Thai government offices. A foreigner who is going through this process should seek the advice of an educated and professional English or Thai-speaking attorney.
Company Registration in Thailand
There is one point that needs clarification. Unless the company is part of a special Board of Investment (BOI) programme, the majority of shares in a Thai corporation must have Thai ownership. This means that foreigners cannot own more than 49% of a Thai company. This may not be the limitation on possession of a Foreign Business License in Thailand. Foreign-owned enterprises that are distinctive and do not compete with Thai businesses usually succeeds in getting a Foreign Business License.
Companies come in a variety of formats and incorporation eligibilities. A private limited corporation is the most common type of business. Shareholders have limited responsibility in a private limited corporation, however, directors may have limitless liability. A minimum of three promoters is required for a private limited company. The promoters can be Thai or foreigners, but they must be non-juristic genuine people who own stock in the company.
The Process to Start a Business in Thailand
The promoters start the procedure by reserving the company’s name with the Department of Business Development. The promoters must submit at least three names that are distinct from existing reserve names and do not break any ministry regulations. One of the three names will be chosen by the DBD.
The promoters must next submit a Memorandum of Association with the Department of Commercial Registration. The Memorandum must have the name of the firm, the quantity and value of the shares, and, the names of the promoters of the firm. Following the filing of the memorandum, the firm must organize a statutory meeting to determine the details of the shares, the directors, and the promoters’ remuneration. If the company will hire foreign workers, it must meet certain minimum capital requirements and employment standards.
The directors must submit an application to register the company in Thailand within three months of the statutory meeting. The shareholders and promoters must pay for the new company’s shares and sign all of the registration documents during the application procedure. Within 60 days of incorporation or the start of business, new companies that may be subject to income tax must get a tax ID from the Revenue Department.
Following registration, the company can begin the process of obtaining business permits and launching its new venture. The new business must keep track of and record income and costs in accordance with the Civil and Commercial Code, the Revenue Code, and the Accounts Act. In order for the corporation to keep its position, it must provide financial reports.
The Civil and Commercial Code of Thailand
Thailand’s Civil and Commercial Code, like the legislation of other countries, allows for the formation of partnerships. Foreign investors, on the other hand, rarely create partnerships because of the challenges of the Foreign Business Act of 1999.
In general, foreign investors benefit more from forming a limited company. It is because the majority of Thai-owned corporations with foreign directors are “Thai nationals” for the purposes of the Foreign Business Act. Partnerships, on the other hand, are still “foreign nationals” if the managing partner is a foreign national, even if they create with a majority Thai financial input.
However, there can be certain circumstances. Firstly, it can be a business operation without violating the Foreign Business Act. Secondly, it can be the possession of a Foreign Business License or a Foreign Business Certificate. Thirdly, it can be in compliance with the Thai-US Treaty of Amity, foreign nationals can form a partnership in Thailand. The following are some noteworthy points about how a partnership operates:
- Unregistered ordinary partnerships, registered ordinary partnerships, and limited partnerships are the three types of partnerships.
- The unregistered ordinary partnership refers to a contract-based commercial partnership that does not establish a legal entity. The partners are jointly and severally liable for the partnership’s responsibilities and must oblige by the conditions of their partnership agreement.
- The limited partnership differs from a traditional partnership. The partners’ liability is split between managing and non-managing partners. The responsibility of non-managing partners has restrictions in the number of their respective contributions.
- A crucial feature of a partnership is that, depending on the circumstances, the partners are personally liable for the partnership’s responsibilities or the amount of their contribution.
Your Take!
After the completion of the registration process to start your company in Thailand, you must get certifications and licenses. These must be in adherence to the regulations of the Civil and Commercial Code, the Revenue Code, and the Accounts Act.
There are various other provisions as well which you must know and comply with to start a business in Thailand. Book your session of a free consultation with us by writing us a mail at [email protected]. Since 2013, we have successfully incorporated more than 1000 business entities in Thailand. We will be happy to help you to Start A Business in Thailand.
