The Civil and Commercial Code of Thailand defines a limited company as a company formed with capital which are divided into equal shares and the liability of the shareholders is limited to the amount of the shares respectively held by them. Foreigners are allowed to establish a Limited Company in Thailand. And except for reserved companies for Thai nationals, they are permitted to wholly own a limited company. Starting a business in Thailand is rather easy however most foreigners tend to buy into a franchise in Thailand as it has a lower risk profile. There are also a number of eCommerce businesses in Thailand with internet businesses owned by foreigners. As an example the largest web portal in Thailand is foreign owned and the skins for CPanel hosting is done in Thailand also by a foreign owned eCommerce company.
If the majority of shares of the limited company is owned by a foreigner, such foreigner is required to obtain a foreign business license before engaging in business activities. Foreign Business License however is not required if the company’s shares are owned in majority by Thai Nationals. It is an important reminder however to check for the requirements of Thai Laws as well as the process for registration before hurrying into establishing your company in Thailand.
Before you can set up your limited company, it is required that there are at least 3 qualified promoters who will be responsible for registering your company. It is required that before registration of the company, it shall file a signed name reservation which must be in accordance with the guidelines of Business Development Office of the Ministry of Commerce. It shall submit at least three proposed names. After the approval of the proposed name, the promoters will file the Memorandum of Association (MOA) which must include the following:
- The name of the company
- The province where the company will be located
- The objectives of the company
- The capital to be registered, which must include the number of shares and their par value
- The names of the promoters
For foreign companies, in addition to the above mentioned requirements if the company engages in activities specified in the Foreign Business Act, its minimum registered capital would be greater than 25% of the company’s average expenses per year for its first three years and requires 3 million baht to be fully paid up. If the company does not engage in business specified in the Foreign Business Act, its minimum paid up capital would be 2 million baht fully paid up.
It is incumbent upon the company that after submission of the MOA, it must convene a statutory meeting. After which, the company is required to be registered. It is also mandated to get a company income tax identity card.
All documents associated with the registration of the company are required to be submitted to the registrar of the Department of Business Development of Ministry of Commerce. However, if the limited company’s office will not be in Bangkok, the documents must be submitted to the office of the province where the company’s office will be located.
A limited company is managed by Board of Directors in accordance with the company’s charter and by laws. All shares must be subscribed and at least 25% of the subscription must be paid up. All shares are required to be with voting shares and it is prohibited to issue shares with par value of less than 5 baht.
Thailand limited company is also classified into two, public and private. Public Limited Corporation is governed by the Limited Public Company Act. It is established for the purpose of offering the sale of shares to the public. Private Limited Company however is governed by the Civil and Commercial Code of Thailand. It may, however, be converted into Public Limited Company through a special resolution of the shareholders.
It is the most common type of business organization in Thailand because the liability is limited to the amount of shares the respective shareholders have. Also, all the rights and obligations of the shareholders are reduced in writing; hence it is easier for the shareholders to determine their responsibility.