When setting up a Thai Business, be careful when leasing
A problem that is often encountered when establishing a Thai company – but which is easily avoided – involves the leasing of commercial premises and the subsequent registration of an office address.
Typically foreign investors rent an office prior to registering their company, usually signing the lease agreement as an individual. What they often fail to do, however, is to confirm that the owner will agree to subsequently assign the lease to their company at a later date and to allow the business to use the property as its registered business address.
It is essential for business registrants to hold the formal written authority of the owner of a leased property to register their company for the purposes of Value-Added Tax (VAT). If a business owner cannot obtain the property owner’s permission to register their company at the address, then they may also find themselves unable to apply for a work permit (Labour Dept.) or an extension of stay (Immigration Bureau).
Business owners must also be careful that their lessor is in fact the legal owner of the premises. Alternatively, if a business owner is to sign a sub-lease (rather than a head lease) then it is essential to verify that the lessee is authorized to enter into a sub-lease (or assign their lease) without first obtaining the written consent of the owner. Note that, in general, Thai leases rarely grant lessees the power to enter into sub-leases in the absence of scrutiny and approval by the property owner.
A competent legal advisor will provide details of these and other formalities that need to be addressed in order to start your business, and will advise you regarding the likely time frame for each, and the nature of documentation required.
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