Out of all the options of business structures in Thailand for foreigners, a limited company is the most preferred one. If you are a foreign investor and planning to go for a public or private limited company registration in Thailand, then this is going to be a useful blog for you. In consultation with our corporate law and accounting professionals holding more than a decade of experience, this FAQ will surely be able to answer many of your questions. Read before you go for a Limited Company Registration in Thailand.
- Can Foreigners Own a Limited Company in Thailand?
- What are the requirements for setting up a Limited Company in Thailand?
- Can a foreigner be the Sole Owner and Director of a Limited Company in Thailand?
- Can a foreigner hold the majority of shares in a Limited Company in Thailand?
- What is the process of registering a Limited Company in Thailand?
- Are there any specific restrictions on foreign ownership in certain industries?
- What are the tax implications for a Limited Company in Thailand?
- Do I need a work permit to operate a Limited Company in Thailand?
- Can I obtain a long-term visa through a Limited Company in Thailand?
Can foreigners own a limited company in Thailand?
Yes, foreigners can own a limited company in Thailand. However, there are certain restrictions and regulations that need to be followed.
In general, Thai law requires at least 51% of the shares of a Thai limited company to be held by Thai nationals. The remaining 49% of the shares can be owned by foreign individuals or entities. This means that foreigners can be minority shareholders in a Thai limited company.
There are a few options available for foreigners to legally operate a business in Thailand:
- Thai Nominee Shareholders: One common method is to have Thai nominees hold the majority shares on behalf of the foreign shareholders. However, it’s important to note that this arrangement should comply with Thai laws and should not be used to bypass ownership restrictions.
- Treaty of Amity: If you are a citizen or a company from the United States, you may be eligible to establish a majority foreign-owned company under the Treaty of Amity between the United States and Thailand. This treaty allows U.S. citizens and companies to engage in business activities on the same basis as Thai nationals.
- Board of Investment (BOI) Promotion: The Thai government encourages foreign investment through the BOI. Under this program, certain industries and activities can receive incentives and benefits, including permission for 100% foreign ownership. However, specific criteria and conditions apply, and the business must engage in activities that promote Thailand’s economic development.
What are the Requirements for Setting up a Limited Company in Thailand?
The requirements for setting up a limited company in Thailand include having at least three shareholders, a minimum registered capital of 5 million Thai Baht (approximately $150,000), and a minimum of one director.
Can a Foreigner be the sole owner and director of such Company in Thailand?
Yes, a foreigner can be the sole owner and director of a limited company in Thailand. The Foreign Business Act of 1999 governs foreign investment in Thailand, and it allows foreigners to establish and own limited companies in certain business sectors.
However, there are restrictions and regulations that you should be aware of. There are restrictions or prohibitions in some Thai business activities for foreign ownership, and they require obtaining special permissions or licenses. These activities include areas like national security, transportation, media, and certain professional services. It is important to consult with a legal professional or the Department of Business Development in Thailand to determine if your intended business activity falls under any restrictions.
In general, most foreigners establish a limited company with 51% Thai ownership and 49% foreign ownership. However, there are legal ways to structure the company to provide more control and protection for the foreign shareholder, such as issuing different classes of shares with different voting rights or through shareholder agreements.
To set up a limited company in Thailand, you will need to follow the company registration process, which includes reserving a company name, preparing the company’s memorandum of association and articles of association, and registering with the Department of Business Development. You will also need to fulfill other requirements, such as having a registered office address in Thailand and meeting the minimum capital requirements for limited company registration in Thailand.
Can a foreigner hold the majority of shares in a company in Thailand?
In general, the Foreign Business Act (FBA) of Thailand restricts foreign ownership in certain business activities. Typically, this involves those activities that are important to national security or has reservations for Thai nationals.
For most business activities, the FBA requires that at least 51% of the shares of a Thai limited company be held by Thai nationals. This means that a foreigner can hold a maximum of 49% of the shares in such a company. However, there are some exceptions and special business structures that may allow greater foreign ownership in certain cases.
One common method for foreigners-majority ownership in a Thai company is by availing of Board of Investment (BOI) promotion. The BOI offers various incentives and privileges to encourage foreign investment in certain industries or activities. Under the BOI promotion, foreign investors can get permission to hold a majority or 100% of the shares. However, it depends on the set of promoted activities and conditions.
What is the process of registering a limited company in Thailand?
To register a limited company in Thailand, you need to follow a specific process outlined by the Department of Business Development (DBD). Here are the general steps you need to follow:
- Company Name Reservation: Choose a unique name for your company and submit it to the DBD for approval.
- Memorandum of Association (MOA) Preparation: Prepare the MOA, which outlines the company’s objectives, authorized capital, details of shareholders, and other key information. All shareholders must sign it.
- Statutory Meeting: Conduct a statutory meeting with shareholders to finalize the MOA, Articles of Association (AOA), and other company details.
- Capital Deposit: The minimum capital requirement is THB 5,000 per shareholder. At least 25% of each shareholder’s subscribed shares must be deposited in a Thai bank account within 15 days after the statutory meeting.
- Bank Certificate: Obtain a bank certificate as proof of the capital deposit. The certificate should state the company’s name, and the amount deposited.
- Company Registration: Submit the completed application form, along with the required documents, to the DBD. The documents typically include the approved company name, MOA and AOA. Additionally, it includes a bank certificate, shareholder list, director details, and a signed application form.
- VAT Registration (if applicable): If your company expects to generate annual revenue exceeding THB 1.8 million, you must register for Value Added Tax (VAT) within 30 days of exceeding this threshold.
- Tax ID and Social Security Registration: Apply for a Tax Identification Number (TIN) and register your company and employees with the Social Security Office (SSO).
- Business License and Permits: Depending on your industry, you may require additional licenses or permits. Check with relevant authorities to ensure compliance.
- Register for Government Programs (optional): Consider registering for any applicable government programs or incentives, such as the Board of Investment (BOI) promotion.
Are there any specific restrictions on foreign ownership in certain industries?
Yes, there are restrictions on foreign ownership in certain industries in Thailand. For example, certain businesses related to national security, agriculture, and natural resources have specific regulations that limit or prohibit foreign ownership.
What are the tax implications for a limited company in Thailand?
A limited company in Thailand is subject to corporate income tax. Currently, it is set at a flat rate of 20%. Additionally, there are other taxes such as value-added tax (VAT), withholding tax, and specific business tax. These tax obligations depend on the nature of the business.
Do I need a work permit to operate a limited company in Thailand?
As a shareholder or director of a limited company in Thailand, you will generally need a work permit. It becomes mandatory if you plan to actively involve yourself in the day-to-day operations of the company. However, there are exceptions for certain positions or activities.
Can I obtain a long-term visa through a limited company in Thailand?
Operating a limited company in Thailand can provide certain benefits, such as work permit eligibility. However, it does not automatically grant you a long-term visa. You will still need to meet the requirements for obtaining a non-immigrant visa or a Thai work permit.
It’s important to note that Thai laws and regulations can change. Therefore, so it’s advisable to consult with a qualified Thai corporate law professional. They are familiar with the latest rules and procedures for setting up a limited company in Thailand as a foreigner.
The simplest process is to email us your requirements at [email protected]. Our team of corporate law, accounting, and tax specialists will reach back to you within 1 Thai working day.
