FREQUENTLY ASKED QUESTIONS

Thai Limited Company Formation

by Magna Carta Law Office

Q: What types of business organizations can be registered in Thailand?

Businesses can be incorporated as Sole Proprietorships, Limited and Unlimited Partnerships, Private and Public Limited Companies, Branch Offices, Representative Offices and Regional Office Headquarters. In most cases, Thai Limited Company is the most popular structure and ideally the first step in setting up a new business in Thailand.

Q: What is a Limited Company?

A limited company is one formed with capital divided into equal shares, and the liability of the shareholders is limited to the amount, if any, of unpaid shares respectively held by them.

Q: How much capital is required to set-up a limited company in Thailand?

A limited company in Thailand can be set up with only a few thousand baht, however, the average declared capital is 1 million baht.

Q: Will a foreigner funding a business be automatically entitled to a visa or work permit upon setting-up a company?

Even if a company is funded by a foreigner or is under a foreigner's name, it is a prerequisite that the foreigner secure a work permit if he intends to personally engage in the business. A company can obtain the relevant visa and work permit for its foreign director or foreign employee, provided it has been accordingly set-up, employing a minimum number of Thai nationals for each foreigner employed and that the company must have a minimum paid up capital of 2 million baht for every foreign employee.

Q: How many directors and shareholders are required under Thai law?

The structure of a Thai limited company must consist of one or more directors and a minimum of three shareholders who may be either Thai or foreign.

Q: Can foreigners hold 100 percent ownership of a business in Thailand?

In Thai limited company shareholding, the company must be majority owned by Thais. This means that foreign ownership of the company cannot be more than 49 percent.

Foreigners can hold 100 percent partnership of businesses in non-restricted categories, such as exporting and certain types of manufacturing businesses. Other methods to obtain 100 percent non-Thai control are through application for an alien business license, Board of Investment (BOI) Promotion, or registration through the Treaty of Amity for Americans.

Q: What is Voting Rights?

Shareholders of limited companies, based on the type and number of shares they possess, have the privilege of voting in the annual general meeting of a company. They have a right to cast their votes when the company is taking major decisions.

An ordinary share gives the holder voting rights in the company and entitles the person to all dividend distributions as a part-owner of the company.

Preference shares allow holders to be paid dividends before ordinary shareholders and they also have priority over asset claims upon company dissolution. The downside is that preference shareholders have a fixed dividend and only limited voting rights with respect to company affairs.

These different types of rights can have a major impact upon the running of the business because these rights can have a security impact on various company issues.

Q: Why form a Thai majority company?

Aside from the capacity of the company to acquire land, the formation of a Thai majority company generally requires less registered capital and less paperwork than the formation of a foreign company.

Q: How long does it take to establish a limited company?

A Thai limited company can be incorporated in about one to two weeks.

Q: Why should I hire a lawyer to incorporate my company?

Starting a new business in Thailand can be very complicated due to language barriers, and it may take several weeks to complete the entire process. As all the legal documents are in Thai, completing these forms without the knowledge of its contents as well as Thai Law can lead to serious complications and other problems that will affect you and your business. That is why it is essential to look for trusted lawyers and advisors with legal qualifications and practical experience who can give you extensive guidance and advice on how best to structure your company.