Are you planning for a Holding Company Registration in Thailand? Irrespective of the fact as whether you are a Thai or a foreign business owner, you may proceed with that. But before everything, you must know what is a Thai Holding Company and what are its features and privileges. The purpose of this guide is to comprehensively guide on the same. For further assistance, we are always reachable to help you with the best corporate law and accounting services in Thailand.
A Thai holding company primarily exists to hold and control the shares or assets of other companies. It is applicable to both domestic and foreign companies. A holding company cannot purposefully engage in direct business operations. However, it can manage its investments in other companies, known as subsidiaries. Holding companies are common in Thailand, due to their various benefits and advantages.
Key Features & Functions of a Thai Holding Company
Ownership and Control
The purpose of a holding company in Thailand is primarily to have ownership and control over other companies. It achieves this by acquiring a significant portion of shares or assets of these subsidiary companies. Acquisition of such shares or assets is the “holding company’s investments.”
Risk Management
By holding diversified investments in multiple companies, a Thai holding company can evenly distribute its risk. If one subsidiary faces financial difficulties or legal issues, the other companies may remain active. Furthermore, these companies can provide aid to the subsidiary at risk. This provides a buffer against potential losses.
Asset Protection
Holding companies can offer asset protection by separating the ownership of assets from the operational risks. This structure can help shield the holding company’s assets from potential liabilities incurred by its subsidiaries.
Tax Planning
In some cases, holding companies can facilitate tax planning strategies. Depending on Thailand’s tax laws and the countries in which its subsidiaries operate, a holding company may be able to optimize tax efficiency within legal boundaries.
Consolidation of Financial Statements
A holding company typically prepares consolidated financial statements that include the financial results of all its subsidiaries. This provides a comprehensive view of the overall financial health of the entire group of companies.
Financing and Investment
Holding companies can raise capital through debt or equity financing and then use these funds to invest in new businesses or expand existing ones.
Dividend Income
The holding company can receive dividend income from its subsidiaries, providing a steady stream of revenue.
Governance and Decision-making
The holding company’s board of directors exercises control over the group and its subsidiaries. This centralized governance can lead to more effective decision-making and resource allocation across the group.
It’s important to note that while holding companies can offer various advantages, there are also legal and regulatory considerations to keep in mind. The establishment and operation of a holding company in Thailand must comply with the country’s corporate laws and relevant regulations.
Foreigners may own a holding company in Thailand, provided that there is a genuine Thai partner in the business venture. This local partner will be a shareholder that must invest his own capital. It is prohibited under Thailand’s company laws to have a local Thai partner who hasn’t invested his own capital and holds company shares owned by somebody else. It is thus important to partner with genuine shareholders to operate your business under this structure.
Benefits of Holding Company Registration in Thailand
Foreign investors choose to open a Thai Holding Company due to its ability to evolve and expand into new companies. It can be through local and/or foreign subsidiaries irrespective of their connections with their present business activities.
Additionally, setting up a Thai Holding Company helps foreigners avoid difficulties when applying for a listing on the Exchange. Holding companies can acquire subsidiaries that have various firm structures and subsidiaries on the list of the Exchange. Through this, they have better chances of having their stock listings without encountering any problems.
Eligibility to Start a Holding Company in Thailand
There is no need to find a wealthy Thai investor to set up a holding company in Thailand. All you need is a local person you can trust, who can fork over 51% of the registered capital of 100,000 baht.
You can set up a second company to hold a majority of the company shares and then offer shares from the operating company. This second company, being an investor, has a substantially lower capital than the operating company as its purpose of existence is to hold the operating company’s majority of shares.
What you need then is a Thai investor who can finance the holding company’s capital that is much lower than the 51% of the usual 1 million baht required from regular investors. Applying for a holding company can take five to seven days to complete.
As a result of this arrangement, both the operating and holding companies will be recognized as Thai companies that will be allowed to be involved in any business activity. This is because 51% of the operating company will be held by the holding company, whilst 49% will be held by foreign owners. This 51% is to be held by the true local investor, whilst 49% is to be held by the foreign owner.
Steps of Holding Company Registration in Thailand
A holding company falls under the Thai Limited Liability Company (LLC) Category. Although LLCs allow companies to be 100% foreign-owned, holding companies require the majority of the company’s shares (at least 51%) to be owned by a Thai national.
To open a holding company, follow the steps of setting up a Thai Limited Company:
- Reserve a Company Name
- File the Memorandum of Association
- Organize a Statutory Meeting
- Holding Company Registration
- Tax Registration (Corporate Income Tax, Value Added Tax, and Withholding Tax)
- Open a Corporate Bank Account
Get Work Permits and Visas
All foreign employees and directors must get a work permit before being allowed to do business in the country. The company can be eligible to sponsor one non-immigrant foreign member if they meet the Ministry of Labour and Immigration Bureau requirements.
If you’re considering setting up a Thai holding company or incorporating any type of business entity in Thailand, it’s advisable to consult with Thai legal and accounting experts who can provide tailored advice based on your specific business goals and circumstances. Therefore, for the best professional results, email us at [email protected].
