Thailand is one of the region's fastest growing economies, backed by an expanding middle class, rising demand for consumer goods and a thriving start-up community.
The second-largest economy in South-east Asia offers strong prospects for investors in a variety of sectors.
Here is a quick guide on getting started in Thailand.
1. Choose your business structure.
Before you register your business in Thailand, it’s important to consider which company structure will best suit your needs. There are several different options:
- Sole proprietorship
- Partnership (unregistered, registered or limited)
- Company (public or limited)
- Joint venture
The sole proprietorship is a registered business owned by one person, who is also the operator of the business. In Thailand there are some professions in which a sole proprietor is prohibited from working, specifically in banking and finance. By law only limited companies can do this type of work.
Whether or not you're able to set up this sole trader business structure in Thailand will also depend on your nationality. A US citizen, for example, is able to set up a sole proprietorship business because of the Treaty of Amity between Thailand and America. Other nationalities may find some business areas restricted to them.
There are three common types of partnerships in Thailand:
- Unregistered ordinary partnerships whereas all partners are jointly and wholly liable for all debts of the partnership
- Registered ordinary partnerships whereas the partnership becomes a legal entity and its legal personality is separated and distinct from the individual partners
- Limited partnerships whereas the liability of each individual partner is restricted to the amount of capital invested to the partnership
Unregistered Ordinary Partnership
With this partnership, all partners will be jointly liable for all obligations of the partnership. Also, the Unregistered Ordinary Partnership isn’t considered a legal entity. The partners are still held accountable for any mishaps.
Registered Ordinary Partnership
This kind of partnership requires registration with the authorities. With Registered Ordinary Partnerships, the business has legal rights, duties, and liabilities separate from all partners.
This kind of partnership has two types of partners: Unlimited Liability Partners and Limited Liability Partners. The Limited Liability Partners will be liable only to the amount of capital that the said partners contributed to the partnership. The Unlimited Liability Partners will be liable no matter how much capital the partners contributed to the partnership.
Even though registering partnerships is easier than registering other business structures, the partnerships, whether Unregistered, Registered, or Limited Ordinary Partnerships, can’t give work permits to foreigners. The also can’t open corporate bank accounts under the company’s name.
A joint venture refers to a group of persons entering into an agreement in order to carry on a business together. Although it has not yet been recognized as a legal entity under the Civil and Commercial Code, income from this business structure is subject to corporate taxation.
There are two types of limited companies - private or closely held companies, and public companies. The first is governed by the Civil and Commercial Code, the second by the Public Company Act.
A private limited company is formed by registering a Memorandum of Association (Articles of Incorporation) and Articles of Association (By-laws), as its constitutive documents.
Shareholders enjoy limited liability, i.e., limited to the remaining unpaid amount, if any, of the par values of their shares.
A minimum of seven shareholders is required at all times. A private limited company may be wholly owned by aliens. However, in those activities reserved for Thai nationals, aliens’ participation is generally allowed up to a maximum of 49 percent.
Thai law limits foreign ownership to 49 per cent of all shares. Therefore, the maximum share structure is 51 per cent Thai shareholders and 49 per cent foreign ownership.
The registration fee for a private limited company is 5,500 baht per million baht of capital.
Public Limited Companies registered in Thailand can offer shares, debentures and warrants to the public and may apply to have their securities listed on the Stock Exchange of Thailand (SET). The board of a public limited company must have a minimum of five members, at least half of Them are Thai nationals. Shares must have a face value of at least five baht each and be fully paid up.
The registration fee is 2,000 baht per million baht of capital for a public limited company.
2. Registering a company
Companies in Thailand have to be registered with the Department of Business Development, Ministry of Commerce.
Registering a company takes around seven days for a private company and up to 30 days for a public company. The first step is to select and reserve a company name, which is then valid for 30 days.
Some of the documents needed include:
- Articles of Association
- Memorandum of Association
- Application form and list of shareholders
- New director form signed by each director
- Declaration of Business Operation form
- Company name reservation
- Details of the offices and branches of your business
Before you can register your business you'll also have to pay at least 25 per cent of the initial investment capital into a corporate bank account.