Thailand recognizes two forms of limited companies: public limited companies and private limited companies. The Public Limited Company Act governs a public limited company while the Civil and Commercial Code govern a private limited company.
Many foreign entrepreneurs looking to establish a legal presence in Thailand prefer to set up a private limited company. They can establish a private limited company either in partnership with a local or opt for 100% foreign ownership. This article guides you through what you need to know about setting up a private limited company in the country.
What is a Thailand private limited company?
A Thailand private limited company is a company that has the following key characteristics:
- Owned by at least three shareholders. All shareholders are needed at all times during the company operation.
- Each shareholder has limited liability, wherein his or her liability is limited to the par value of his or her shares.
- The participation of shareholders in the company is restricted since the directors are handling the company’s affairs.
In many cases, the shareholders of a limited company can be both Thai nationals and foreigners. Since the shareholders have limited liability, they will only lose the capital they have invested. All parties recognize their legal standings in the company and their rights and obligations, as these are written in the company’s Articles of Association.
What do you need to establish a limited company?
The following are the requirements needed to set up a limited company:
- Three or more shareholders
- One or more directors
- A registered office address in Thailand
- THB 2 million in the capital for every foreign employee
Since the Foreign Business Act governs private limited companies, foreign investors can only own up to forty-nine per cent of the company. If they wish to get one-hundred per cent ownership of the company, they need to acquire the following:
- A Foreign Business License;
- Get promotion from the BOI; or
- Register via the Treaty of Amity (applicable for US citizens only)
What are the benefits of starting a limited company in Thailand?
Establishing a limited company in the country offers many benefits, which include:
- Limited liability: Since the shareholders’ liability is limited to their registered company’s capitalization, they attain a high protection and security level.
- Complete control: With a tiered corporate share structure, the company’s control can be maintained by adjusting dividend allocations and shares voting rights.
- Flexible options: With a relevant business license, a limited company can engage in all kinds of business activities. Moreover, company directors, shareholders, goals, address, and name are all flexible.
- Complete foreign ownership: Foreigners can own one-hundred per cent of a limited company’s shares as long as they meet the required criteria.
- Eligibility for a corporate savings account: An incorporated Thai company is qualified to apply for corporate savings, checking, and foreign currency accounts.
- Multiple work permit and visa: A company can apply for several work permits to accommodate its foreign executives and personnel.
How to register a Thailand private limited company?
The following are the key steps for registering a Thai private limited company:
- Reserve a company name: Name reservation for Thai limited company must abide by the MOC’s Department of Business Development’s guidelines, amongst other guidelines. The Civil and Commercial Code’s Section 1098 stated that the proposed name must always end with the “limited.” The approval for company name reservation typically takes around one to three days.
- File for the Memorandum of Association: After registering the company name, business owners are required to submit their MOA or Memorandum of Association to the MOC’s DBD. The MOA should contain the proposed company’s name, registered office’s address, and objectives and the declarations that the shareholders’ liability will be limited, and the numbers of shares prescribed by every promoter.
- Convene a statutory meeting: The company must convene a statutory meeting right after the shared are subscribed. During this meeting, the matters to be transacted include the adoption of the company’s Articles of Association, appointment of directors and auditors, business operations’ ratification, and shares’ establishment.
- Register the company: The company’s directors must submit a company registration application to the Ministry of Commerce within three months of the statutory meeting. Companies that are not duly registered with the MOC will have no legal entity and are not permitted to conduct business activities. The company registration fee is around THB 5,500 for every THB 1 million registered capital, up to THB 250,000.
- Register for tax: A registered Thailand company must obtain a corporate tax ID card from the Revenue Department within sixty days of its incorporation. Companies with an annual turnover of THB 1.8 million must register for the Value Added Tax or VAT within thirty days after reaching this value.
Getting help from a professional company registration firm in Thailand
A professional company registration agency helps streamlines company registration in Thailand for foreign investors and ensures their companies stay compliant with the country’s latest law.