To start a business in Thailand, business owners have two partnership options. An ordinary partnership involves two or more individuals sharing unrestricted responsibility. A limited partnership, on the other hand, consists of at least two people but provides limited liability to the limited partner, whereas the general partner has unlimited liability. Using the second concept, you can register a LLP in Thailand. It will be a Limited Liability Partnership firm in Thailand.
Understanding the intricacies of forming a limited partnership in Thailand can be challenging for business owners. Konrad Legal is here to offer assistance. Our legal team can assist with the preparation and submission of the necessary documentation on your behalf, ensuring a smooth process. Additionally, we can provide clarity on how liability is distributed within a limited partnership structure, helping you make informed decisions about your business.
Benefits of a Thai Limited Liability Partnership (LLP)
The allure of benefits draws many individuals to establish a limited liability partnership firm in Thailand.
Among the partners, the ordinary partner gains the most significant advantage due to limited liability. The ordinary partner is only held accountable for the amount of capital they invested. For instance, a limited partner who contributes 1 million Baht to the business may only lose that specific sum, even if the partnership incurs additional expenses, thereby limiting the extent of their potential losses.
In Thailand, a limited partnership provides entrepreneurs with operational flexibility. The Thai government permits limited partnerships to engage in various activities without limitations. Businesses can operate in various industries, although they may require licenses based on the scope of their operations. If necessary, Konrad Legal can assist you in acquiring the necessary licenses.
Additionally, existing partners have the authority to decide whether or not to admit new partners into the business. Unanimous approval from all partners is required before a new partner can be integrated into the business.
Furthermore, this partnership enables foreign ownership of up to 49 percent without the need for a foreign business license. This makes it convenient for foreigners seeking to establish businesses in Thailand to collaborate with nationals. It is noteworthy that if a foreign shareholder holds more than 49 percent of the business, they must obtain a foreign business license in Thailand to obtain which, we have dedicated services to help you.
Drawbacks of an LLP in Thailand
Unfortunately, there are also some drawbacks to consider before starting a limited partnership in Thailand.
First, the general partner has unlimited liability for the debts and obligations of the partnership. Assume that both partners invest 1 million Baht into the business. The limited partner is only liable for that amount, but the general partner’s liability is not limited, and can lose much more money. This puts the general partner at greater risk when operating the business.
Some also view business management as a drawback when operating a limited partnership in Thailand. The general partner has full control of the day-to-day operations. The limited partner cannot assume control of the daily operations without upgrading to a general partner.
Also, unlike an ordinary partnership, partners must file paperwork to set up a limited partnership. In addition, they must go through steps to dissolve the partnership. While many view this as an obstacle, we make the process of documentation and paperwork easy for the partners. The legal team can even help dissolve the partnership if needed.
Legal Requirements for LLP in Thailand
There are certain requirements in place for setting up a limited partnership in Thailand.
First, if the general partner is a foreigner, they will need a work permit or a non-immigrant business for business or work purposes. A foreign business license is also necessary if a foreign partner invests more than 49 percent into the business.
Thailand’s government requires 2 million Baht in capital to start the business. The partners do not need to contribute equally.
Timeline for Setting Up a Limited Partnership in Thailand
It takes approximately one week to set up a limited partnership in Thailand if you proceed correctly. This is the reason our clients choose us to ensure that the entire process goes smoothly and you can start your business fast.
To begin the process, the partners must complete and apply for registration to the Department of Business Development. Along with the application, the partners must settle the applicable fees.
The application can be cumbersome sometimes. It must include data and information related to the partners and the business as a whole comprising the objectives and nature of the same.
If you’re ready to set up a limited partnership, contact Konrad Legal today by emailing us at [email protected]. You will receive a quote and then can move ahead with us in the process of registering your limited liability partnership in Thailand.
