Company Registration in Thailand - Offshore Business Starting & Setup

The laws of Thailand are based on the civil law, but have been influenced by common law.

The principle law sources in Thailand are: Constitution of Thailand, acts and statutes, emergency decree or royal proclamation, treaties, subordinate legislation, Supreme Court opinions and other judicial decisions.

Basic corporate Law is found in the Civil and Commercial Code sections 1012 to 1273 (Book II, Title XXII). Foreign ownership of certain Thai industries and foreign companies in general are regulated by the Foreign Business Act BE 2542 (AD 1999).

Under Thai legislation, the following types of commercial entities may be established in Thailand to carry on business:

• Sole Proprietor;
• General Partnership;
• Limited Partnership;
• Private Limited Company;
• Public Limited Company;
• Foreign Branch;
• Representative Office;
• Regional Office;
• Joint Venture.

Foreigners can engage in business through any of the following business structures, however, the private limited company has been the most commonly used structure by foreigners.

Company name for a Thai company is registered in Thai. If you chose English name, it would be given a transliteration in Thai. Due to this fact, it is highly recommended to choose short names in order to avoid any complications in pronunciation and mistakes. Chosen name should not be identical or partly similar to the registered companies’ names. It should end with the word “Limited”. Company name should not have such words as investments, bank and related words, words associated with names of the royal family, ministries and other governmental units. Company names should not be against public moral and misleading.

In case of liquidation of the company, for the nearest two years company name cannot be used for another company.

There are 8 main steps to setting up a company in Thailand as follows:

1. Apply for permission of use the company name: promoters can search and reserve a company name on the Department of Business Development’s website www.thairegistration.com (no charge).

2. Register the Memorandum of Association: submit application for registration of the Memorandum of Association at the Department of Business Development under the Ministry of Commerce. Costs include THB 200 for stamp duty (stamp is affixed on the original copy of the Memorandum of Association), and between THB 500 -25 000 for government fees.

Application must include:

• company names in Thai and a foreign language;
• nature of business;
• capital to be registered;
• number and par value of shares;
• address of the headquarters;
• names, ages, and addresses of promoters;
• number of shares subscribed by each promoter;
• signatures of all promoters.

The promoter must sign the application for registration of the memorandum of association before the Companies Registrar, attorney at law, or auditor registered with the registrar.

3. Hold a statutory shareholder meeting and deposit the paid-in capital in a bank: after obtaining approval for registration of the memorandum of association, one of the promoters must issue a notice to all company shareholders to summon the first statutory meeting. The notice must be sent to all shareholders at least 7 days before the meeting. At this meeting the shareholders must pay in at least 25% of the registered capital. Shareholders also need to approve the articles of incorporation and bylaws, elect the company’s directors, appoint an auditor, and other business. Thereafter, the authorized director must prepare application forms and submit them to the Registrar

4. Obtain a corporate seal (optional, 4 days).

5. Register the company as a legal entity (final registration): directors who are authorized signatories must sign the application for registration of the company’s incorporation before the Private Limited Companies Registrar, an attorney at law, or an auditor registered with the Registrar. Directors who are authorized signatories must apply for company registration within 3 months from the date of the statutory meeting. Usually, final registration as a legal entity can be completed within a day. However, if the company is a joint venture and has adopted complicated articles of association, the Registrar may take a few days to review the company's articles of association. Thus, the final registration may be prolonged for 1-2 weeks or longer, depending on the content of the articles of association. Costs include THB 200 for stamp duty (stamp affixed on the original articles of incorporation), and between THB 5 000 - 250 000 for government fees.

6. Register with the Revenue Department (tax registration): within 60 days of incorporation, the company must register with the Revenue Department to obtain a taxpayer identification card, and register for value added tax (VAT). Businesses expected to earn over THB 1.8 million per year must register for VAT within 30 days from business commencement date.

7. Register with the Social Security Office under the Ministry of Labour (social security registration).

8. Submit company work regulations to the Department of Labour Protection and Welfare under the Ministry of Labour: company work regulations are reviewed by the Department of Labour Protection and Welfare, and the company is advised on required revisions. An employer with 10 or more regular employees must establish written rules and regulations (in Thai) on work performance. The regulations must be displayed at the work premises within 15 days of hiring 10 or more employees. This procedure takes 2-4 weeks.

The Foreign Business Act 1999 (FBA) reserves certain business activities for Thai nationals. Under the FBA, a company is considered “foreign” if half or more of its shares are held by non-Thai natural or juristic persons. Businesses that are reserved under Lists 1, 2, and 3 of the FBA are subject to foreign ownership limitations imposed by law. Business activities indicated in List 1 of the FBA are strictly closed to foreigners. Foreigners wishing to engage in one of the activities indicated in List 2 of the FBA must obtain permission from the Minister of Commerce with the approval of the Cabinet; or for activities indicated in List 3 of the FBA, permission of the Director-General of the Department of Business Development with the approval of the Foreign Business Committee. Alternatively, foreign enterprises granted promotional privileges by the Board of Investment or the Industrial Estate Authority of Thailand are permitted to engage in business activities specified in Lists 2 and 3 of the FBA in accordance with the conditions prescribed by such authorities, provided that the Ministry of Commerce is notified and a certificate is applied for.

List 1: newspaper business, radio broadcasting or television station business; rice farming, farming or gardening; animal farming; forestry and wood fabrication from natural forest; fishery for marine animals in Thai waters and within Thailand specific economic zones; extraction of Thai herbs; trading and auctioning Thai antiques or national historical objects; making or casting Buddha images and monk alms bowls; land trading.

List 2: production, selling, repairing and maintenance of: firearms, ammunition, gun powder, explosives; accessories of firearms, ammunition, and explosives; armaments, ships, air-craft or military vehicles; equipment or components, all categories of war materials; domestic land, waterway or air transportation, including domestic airline business; trading antiques or art objects being Thai arts and handicraft; production of carved wood; silkworm farming, production of Thai silk yarn, weaving Thai silk or Thai silk pattern printing; production of Thai musical instruments; production of goldware, silverware, nielloware, bronzeware or lacquerware; production of crockery of Thai arts and culture; manufacturing sugar from sugarcane; salt farming, including underground salt; rock salt mining; mining, including rock blasting or crushing; wood fabrication for furniture and utensil production.

List 3: rice milling and flour production from rice and farm produce; Fishery, specifically marine animal cultures; Forestry from forestation; Production of plywood, veneer board, chipboard or hardboard; Production of lime; Accounting service business; Legal service business; Architecture service business; Engineering service business; Construction with some exceptions; Broker or agent business with some exceptions; Auction with some exceptions; Internal trade connected with native products or produce not yet prohibited by law; Retailing all categories of goods having the total minimum capital less than THB 100 million or having the minimum capital of each shop less than THB 20 million; Wholesaling all categories of goods having minimum capital of each shop less than THB 100 million; Advertising business; Hotel business, except for hotel management service; Guided tour; Selling food or beverages; Plant cultivation and propagation business.

Thai companies must maintain a registered office in Thailand. It should be a real address, not a PO Box. The company must have an updated registration book of shareholders and accounting records kept at its registered (head) office of the company.

Under Thai law, a company is not required to have a corporate seal except for affixation on company share certificates. In practice, however, a Thai company usually affixes its corporate seal to other documents. Estimated cost is THB 300-500.

The redomiciliation of companies either to or from Thailand is permitted.

A director of Thai company should be a natural person. Every company must appoint at least one director to act as an agent of the company. The number of directors of a private company is not fixed under Thai laws, but set by the shareholders’ general meeting. A director is appointed or removed only by general meeting. Generally, there are no restrictions as to the nationality and residency of the directors, except for companies that engage in certain commercial activities under List 2 of the FBA, in which case a minimum of two-fifths of the total number of directors must be Thai nationals.

The directors are jointly responsible for ensuring that the payment for shares by the shareholders have actually been made, as well as the proper distribution of any dividend or interest as prescribed by Thai law. In addition, the directors have a statutory obligation to keep the books and documents prescribed by Thai law and to enforce the resolution of the general meetings.

Directors' information appears on public profile.

Appointment of company secretary for a Thai company is not compulsory, but recommended to get mails from Thai authorities which are sent a few times a year to the company.

A company in Thailand must have a minimum of 2 shareholders at all times, natural or juristic persons, residents or non-residents. Under the Foreign Business Act, foreign investors are prohibited from using nominee shareholders in a Thai company. To use nominal services 51% of shareholders should be Thai nationals. There is no general restriction for Thais that prohibited the use of nominee shareholders in a business. Notably, under FBA, a Thai national or juristic person that assists a foreigner in avoiding the Foreign Business Act by means of holding shares as a nominee or being a nominal owner of the company, shall (including the foreigner allowing Thai nationals or juristic persons to do so) be liable for a fine of THB 100 000 to THB 1 000 000 and / or imprisonment of up to three years'.

Shareholders' information appears on public profile.

Both ordinary meeting and extraordinary meeting are a shareholders meeting. The first Ordinary meeting is held within six months after the business is incorporated, the following ordinary meetings are held after the first ordinary meeting and will be held at least once in twelve months. Before the meeting can be held, the law requires that all the companies, through the board of directors must first issue a notice letter for their shareholders meeting. The notice letter must specify the place, date, and time of the meeting, as well as the nature of business to be transacted. It also must be published in a local newspaper and distributed via registered mail with an acknowledgement receipt to all shareholders whose names appear in the updated list of shareholders. Shareholders’ meeting can be held anywhere.

Information on beneficiary is not disclosed.

There is no established minimum level of capitalization for private limited companies, however, it is held that capital must be sufficient for the company’s objectives. Recommended minimum amount is 1 million baht, in order for a company to qualify for the application of a work permit for a foreign national, the minimum capital required by the department issuing work permits would be THB 2 million for each application.

The company’s capital must be divided equally into shares, where each share must have a designated par value of at least THB 5. All the company’s shares must be subscribed to, and at least 25% of subscribed shares must be paid up i.e. covered by the paid up capital.

All shareholders must have a share certificate issued in their name by a company in Thailand. Bearer shares and shares with no par value are not allowed under Thai company laws.