Our firm specializes in setting up safe and secure company registration for foreigners. Our legal and consulting staff have set-up thousands of companies in Thailand and have decades of combined experience in all facets of Thailand law for foreigners. Contact us for a free consultation, we’re ready to help.
Anyone planning to open a business in Thailand will have heard that it is rarely as straightforward as they would like it to be. This is particularly true for those unfamiliar with Thailand’s laws and legal practices. The good news is that with our expertise and extensive knowledge behind you, setting up a company in Thailand has never been easier. Thanks to a range of new government incentives, from tax allowances to easier access to work permits for non-Thai nationals, a great deal is now possible that would have been unthinkable not long ago.
In most cases, the preferred first step to setting up a new business in Thailand is the establishment of a Thai Limited Company. In Thailand, there is no Limited Liability Company (LLC) that can be quickly created. Instead, a more formalized incorporation process takes place, for which there are two essential documents; the Articles of Association and the Memorandum of Association, both of which must be registered with the Thai Ministry of Commerce. Articles of Association can be tailored to suit the specific needs of a company, as long as the original shareholders and promoters (if different) agree to the terms in writing.
Thai Limited companies are the preferred route for setting up a business in Thailand, largely because they are so similar to co-operations in other developed nations. The process will therefore feel familiar to businesspeople, even if they have little or no experience of business in Thailand. All limited companies have directors, shareholders (both Thai and foreign in many cases), promoters, and limited liability. In this case, limited liability means that the shareholder in a Thai company can only ever lose what capital they invested.
Aside from familiarity, Thai limited companies are a popular way of doing business because they offer any number ways of generating profit. Although there are double taxation issues (on both the earnings of the company and dividends), many of these issues can be easily resolved by rolling profits into the salaries of directors and other shareholders.
Another benefit of the Thai Limited Company is that the rights and obligations of all parties are set down in writing, ensuring everyone has a clear understanding of their legal standing within a company, unlike some joint ventures where a number of duties and privileges can drift into a complex grey area. With a Thai limited Company, all legal entitlements and responsibilities are clearly stated and available for reference when required.
Setting up a Thai limited company has never been easier. Before July 1, 2008, it would take approximately 6 weeks. Now the process can take as little as one day. What’s more, only 3 mandatory shareholders are required to incorporate and register a new Thai limited company (as opposed to 7 prior to 2008). These improvements come with an unprecedented government drive to encourage foreign business in Thailand. The door is now wide open for foreign investors, even more so following government policy changes which have streamlined the process of registering a new Thai company.
If a Thai Company is majority owned by a foreigner, the foreigner must obtain a foreign business license before engaging in business activities. However, it is worth noting that a Thai limited company that is majority owned by a Thai will not encounter such restrictions. Consequently for many, it is beneficial to form a business partnership with a Thai national, in order to meet the legal definition of a “Thai company”. The disadvantage of this is that it introduces the issue of “nominee shareholders”, which were made illegal under the last amendment to the Foreign Business Act. Fortunately, a legal distinction between a nominee shareholder and a merely passive shareholder remains in place. In practice, no court is likely to penalize a shareholder with only one share, even if they have an active role in the company. When setting up a new business, the most effective safeguard is to ensure the list of shareholders does not include those already holding shares in numerous co-operations or those who do not have a genuine role in the company.