Company Registration in Thailand
Foreigners doing business in Thailand can set up a company in a number of ways. These are the options for starting a business in Thailand.
Solo Proprietorship In Thailand
Although foreigners are generally prohibited from conducting business in Thailand as a solo proprietor, U.S. citizens who register with the Thai Department of Business Development under the U.S. - Thailand Amity Treaty are allowed to run a sole proprietorship in most industries. The U.S. citizen solo proprietor will be subject to unlimited personal liability. A solo proprietor has the option of taxing their business income on their person income tax return.
Unregistered Ordinary Partnership (Sole Partnership)
Ordinary Partnerships in Thailand establish a business with a minimum of two owners. Ordinary partnerships are not required to register with the Commercial Registrar. If the partnership is unregistered, the partnership’s income will be taxed individually. Individual partners are personally liable to creditors only for their portion of the debt.
Registered Ordinary Partnerships
Ordinary Partnerships have the option of Registering with the Commercial Registrar. Registered Ordinary Partnerships are taxed as a juristic person, and are therefore required to issue an annual financial statement and pay corporate income taxes. All owners are jointly, severally, and personally liable to the partnership’s creditors, but creditors cannot seek compensation from individual partners before the partnership’s funds have been exhausted.
Thai LLP (Limited Liabilty Partnership)
A Thai LLP is a partnership with two types of partners. General Partners are allowed to manage the business, and are fully liable for the partnerships financial obligations. Limited Partners are not allowed to manage the business, but their liability is limited to the amount of capital they contributed. Thai LLPs must be registered and are taxed as corporate entities. LLPs must report a financial statement every 12 months.
Partnerships can be registered with the Commercial Registration Office in the province where the partnership's main office is located. The registration fee is assessed as 1% of registered capital and ranges from 1,000 - 5,000 THB.
Private Limited Companies
Limited Companies are the basic Thai corporate structure. They are governed by the Thai Civil and Commercial Code. Private Limited Companies are not eligible for public stock offerings. Every Private Limited Company must register their Memorandum of Association (similar to Articles of Incorporation) and Articles of Association (similar to by-laws).
Thai law requires at least 3 shareholders at all times. Shareholder liability is limited to the unpaid amount of their shares’ par value. All shares must be subscribed to at the time of incorporation, but only 25% of shares must be paid up. The minimum share price is 5 THB. Some shares may have preferential voting power, but every share must have at least one vote. If foreigners own more than 49% of the shares, the company is subject to the restrictions of the Alien Business Act.
Limited companies must follow strict financial requirements. Annual financial statements must be certified by an auditor, approved by the shareholders, and filed with the Commercial Registration Department and the Revenue Department. Small limited companies may be exempt from this requirement.
Establishing a Private Limited Company
A company must have three promoters before it can be registered. Each promoter must have at least one share in the company and be at least twenty years of age. Promoters do not have to be Thai citizens.STEP 1: Reserving the Company Name
The first step is to register the company name. One of the promoters must complete a Name Reservation Form and submit it to the Department of Business Development. If your name reservation is approved, you have thirty days to file a Memorandum of Association with the reserved name.STEP 2: Filing the Memorandum of Association
The second step is filing the Memorandum of Association, which is similar to "Articles of Incorporation." This document must state the intended place of business, the company’s purpose, and the capital to be registered. The promoters must also be named in this document. The Memorandum of Association is filed with the Department of Business Development.STEP 3: Convening the Required Meeting
Once the Memorandum of Association is filed, it is time to convene the first meeting. At this meeting, the bylaws are adopted and the directors and auditor are appointed. Decisions are made as to number of preferential shares and the extent to which shares are considered paid-up. Management is transferred from the promoters to the newly appointed directors.STEP 4: Applying for Business Registration
A company has three months from the time of the first meeting to submit an application for registration as a Private Limited Company to the Department of Business Development. There is a fee of 5,000 BHT per 100,000 BHT of registered capital. The maximum fee is 250,000 BHT.STEP 5: Registering for Tax Purposes
The final step in business registration is registration with the tax authorities. The business will need to apply for a tax ID card from the Revenue Department, and a Value Added Tax Certificate if the annual turnover exceeds 1.2 Million THB.