As a Foreign Investor, if you want to start a business in Thailand, you have multiple options to do so. The first approach is forming a new company. This involves a procedure that calls for the conclusion of numerous legal requirements. However, there is another option. It refers to the purchase of a Shelf Company in Thailand. It is also known as a Ready-made company in Thailand for Foreigners. This will be a good choice for business owners who want to start running the company right away. Although, such Thai companies have legal registration, yet they do not carry out any commercial activities. It is typically dormant in Thailand.
Our specialists in Thai Company Registration can help businessmen who want to purchase a shelf company with this issue.
What is a Shelf Company in Thailand?
Incorporation of a ready-made or shelf company in Thailand is in accordance with legal steps. Henceforth, after a small duration of operation, it is put on sale. The main advantage of shelf company is that the investor can launch his venture on finalization of the purchase. Therefore, he need not go through Thailand’s company registration process.
There is a transfer of ownership from the present owner to the buyer during this process. A Shelf Company already holds a registered business address with an existing board of directors. However, the new owner will need to name new directors for the company.
Buyers should generally have easy access to the following company information:
- Age of the Business: Typically, businesses are at least a year old.
- Name of the Company: A shelf company has a distinctive name that also includes the abbreviation of the business type.
- Company Address: This is the company’s address that is essential for registration. However, new owner can modify this later.
- Capital of the Company: This includes the number of fully paid-up shares, their value, and the fully paid-up capital. It may increase later.
- Company Tax Status: A general description of the taxes applicable for the company, along with financial statements, if necessary.
- Additional Information: The business may have received prior approvals from Thai departments in some circumstances.
Verifying all of the information that is available about an existing business is crucial. Investors will be able to confirm that the purchase is legitimate and the company is indeed debt-free. Some businesses on sale in Thailand may have existing involvement in certain commercial endeavors. The trades can be like consulting and services firms, trading, and import/export. Later on, the new owner can modify the nature of the business.
Advantages of Acquiring Shelf Company in Thailand
The main advantages of Shelf Company are the following:
- Credibility: This is precisely what an older firm would give to its buyer; in addition, it can also make it simpler to get investment funds. A company that has been there for a longer period of time tends to have more credibility in front of customers, creditors, banks, and business associates.
- Easier Processes: A company that has been in business for some time may have better options and chances when submitting requests for work permits. In some circumstances, it may even be helpful for people seeking business visas. Careful consideration is mandatory for these types of companies as there may be some restrictions on the ability to apply for a visa for a foreign director; none of our agents can give you more information.
- Efficient and Time Saving: When compared to the time required to prepare the paperwork and submit it in order to form a new company, the time required to transfer ownership when purchasing a ready-made corporation will be substantially less.
- Economical and Cost Saving: However, this depends on the costs of the off-the-shelf company provider, and due diligence is necessary when making the purchase to ensure that the price is reasonable. In some circumstances, purchasing an existing legal entity can prove to be a more cost-effective business decision because the costs will be lower.
Foreign investors may purchase the shelf company and utilize it for activities like capital raising and open a local bank account. The business can enter into agreements and apply in advance for the necessary permits and licenses, all of which enable the foreign investor to keep a presence on the Thai market as soon as they begin doing business there.
Entrepreneurs can operate a shelf company from a virtual office in Thailand.
How to Purchase a Shelf Company in Thailand?
The following things will need modification after the transfer of ownership when foreign investors willing to start business in Thailand buy a ready-made business:
- Director of the Company
- Company Name
- Company Seal
- Shareholders
- Company Address
The process of purchasing a shelf company might often take one or two days to complete before the transfer of ownership. The company must nonetheless submit VAT returns on a monthly basis. This indicates that the business had no revenue, even if the shelf company holds registration for Value Added Tax (VAT) but was inactive in commercial operations.
In addition to the real price of purchasing the legal organization, purchasing a ready-made business will also incur transfer costs, regulatory fees, and costs for implementing new changes (the most substantial of the overall costs). To start a business in Thailand with new registrations, the buying expenses will be higher. For a set annual fee, certain businesses that sell shelf corporations permit customers to keep the company’s original registered address. The corporation might relocate to a different address or employ a virtual office service in a Thai city as an alternative.
In some circumstances, the buyer could additionally be paid for extra services including providing the required Thai shareholder and a local Thai address. Due to Thai law’s need that businesses have both Thai and foreign shareholders, this is a crucial subject to consider. The presence of at least one Thai national is usually necessary. One of our Thailand business formation specialists can provide more information on the rules governing foreign investments.
The Bottom Line
For many investors, purchasing a Thai shelf firm makes sense. Immediately after the transfer of ownership of the company, there is no requirement of immediate business transactions. Some investors may decide to just use the shelf company to preserve their intellectual property. Entrepreneurs who want to register a trademark in Thailand, for example, can buy a shelf business and use it to do so. This guarantees their ownership of the distinctive trademark, despite the possibility that it won’t be used immediately away.
The total costs in a Shelf Business for purchases and transfers are comparable to those incurred when establishing a new legal entity. This will make your process to start a business in Thailand economical. The total costs will, of course, be determined by whether or not the investor chooses to acquire an older business. In return, a senior firm may offer special advantages, such as the capacity for the investor to finalize commercial agreements in Thailand that he would not have been able to do if he had worked with a start-up or a company incorporated in the most recent year.
The new owners may think about trademark registration in Thailand after the ownership transfer.
As long as business owners conduct thorough due investigation and buy a legit organization from a reliable provider, buying a shelf company is a viable alternative. Although the transfer procedure is not difficult, one must abide by all legal procedures strictly. Foreign business owners can begin trading in Thailand immediately after the transfer of the shelf company to the new director.
Please get in touch with our experts, who can also assist you with starting a new business in Thailand, if you require further information on the shelf company. You may also email us at [email protected].
