General overview on Thai company incorporation.
The company registration in Thailand requires only a few straightforward steps. The laws are very encouraging to investors who want to start a company in Thailand. The setting up process is relatively smooth and painless, but requires some skills which our Thai lawyers possess.
TYPES OF ENTITIES IN THAILAND
A Limited Company in Thailand is established by at least three shareholders. At least 51% of the total shares must be held by Thai nationals. The management control is assured by having at least one director, which can be Thai or foreigner, while the major decisions are taken by the general meeting of the shareholders.
A Public Limited Company is subject to compliance with the prospectus, approval, and other requirements; public limited companies registered in Thailand may offer shares, debentures, and warrants to the public and may apply to have their securities listed on the Stock Exchange of Thailand (SET).
A minimum of 15 promoters is required for the formation and registration of a public limited company, and the promoters must hold their shares for a minimum of two years before they can be transferred, except with the approval of the shareholders at a meeting of shareholders. The board of directors must have a minimum of five members, at least half of whom must have a domicile in Thailand. Share of the company must be equal to value and be fully paid up.
Forms of business for foreign investors:
A Thai Branch office of a Foreign Company. It is not considered a separated entity and the capital is provided by the parent company.
The investors can also open a Representative office incorporated mostly in order to perform research activities on the Thai market.
A US-Thai company can be registered as an American company under the US - Thai treaty of Amity which allows Americans to be the majority of shareholders in a Thai company, however, the majority of company directors must be American or Thai.
Other forms of Thai legal entities.
• A sole proprietorship in Thailand is one person in charge of the business with unlimited liability. Legal action can be taken against the person's business and his assets. Other than those who are permitted under the US-Thai Treaty of Amity and Economic Co-operation, foreigners may not run sole proprietorships. A sole proprietor pays income tax as tax rates that apply to individuals.
• With respect to partnerships, there are three types of partnerships in Thailand. The differences between each type relate to limitation of liability and the tax rate applied to the partners.
Partnerships generally are not eligible to apply for work permits for foreign partners/ employees, so it is unusual for foreign investors to form this type of company.
The three types of partnerships are:
• Unregistered partnerships: all the partners are fully liable for all responsibilities of the partnership. Partners pay tax at personal income tax rates.
• Registered partnerships: the partnership is a legal entity and, therefore, is separate and distinct from the partners. Corporate Tax rate is applied to this type of entity.
• Limited partnerships: the amount of capital determines the liability of the partners. This type of business must be registered. Corporate Tax rate is applied to this type of entity.
INCORPORATION PROCEDURE IN THAILAND
The registration of a new business in Thailand is simplified by checking with the Department of Business Development’s information list to determine whether the planned business name is already taken. After the preferred business name is approved, the entity must file the application form to the Department of Business Development, Ministry of Commerce.
The application must be accompanied by the Articles of Association, Memorandum of Association (Articles of Incorporation) and Articles of Association (By-laws); a declaration confirming that the company has been incorporated following the provisions of the Thai Civil and Commercial Code; and other relevant documents requested by the registrar. All forms are in Thai, and they must be filled only in Thai. This process may require some local assistance.
Other important aspects in the registration process are tax and employment matters. The Ministry of Commerce and the Revenue Department have a joint information system. The company registration number is also its Tax ID number.
Registering for VAT or Registration of Employers can be done after company registration is completed. Enrolling in the VAT register can be done voluntarily, but is mandatory if the accounting period sales exceed 1.8 million THB, while registering of the employer has to be done within 30 days after the company employs its first employee.
Investing in Thailand
Thailand Board of Investment (BOI), the government agency for encouraging investment, promotes foreign investments into Thailand.
The BOI provides enhancing competitiveness and investment facilitation such as:
• Offering an attractive and competitive package of tax incentives.
• Imposing no foreign equity restrictions on manufacturing activities or on some services.
• Providing assistance in the provision of visas and work permits to facilitate entry and subsequent operation for a foreign-owned business.
• Waiving restrictions on land ownership by foreign entities.
ECONOMY OVERVIEW IN THAILAND
Company formation in Thailand is preferred because it offers an industrialized economic environment and is extremely competitive in manufacturing, engineering, telecommunications, electronics industries, high skilled labour, and offers a good environment for living.
Valens provides a wide range of corporate services to start and operate business in Thailand, including registration, licenses and permits, company secretarial services, tax matters, employment, immigration, regulatory affairs, and property. We have an experienced team to provide advice to your business operations.
We work to create value for our clients. Our client base includes multi-national corporations, mid-market companies, state-owned enterprises, and private equity firms.
To request further information or arrange an obligation-free meeting with one of our legal counsel, please contact us.