Content Outline
In Thailand, there are two types of company classifications.
- Thai Partnership
- Thai Limited Company
Thai Partnership is the ordinary type or limited type of partnership and it is just like any other partnership. A limited company defined in Thai law is a form of business organization in which liability is limited to the amount of shares held by the shareholders respectively.
A Thai Limited Company especially a Private Thai Limited Company is the most common business entity in Thailand. Its key features are:
- They will be registered and owned by a minimum of three shareholders.
- Every shareholder bears limited liability for the company’s obligations depending on the par value of the shares.
- The shareholder’s involvement in the management of the company is restricted since the directors handle all the company’s affairs.
Steps to Register a Thai Company
Step 1: The Registration of the Company Name
The first action required when setting up a company in Thailand is to secure a company name. This name cannot be similar to any registered company in the Thailand and it has to end with the word “Limited. ”
In such a case, it is recommended to provide three names in order of preference to increase the chances of success. However, it is important to understand that even if you have chosen an English name for your company, it will be registered in Thai language. Do not choose long or difficult names because it may later present issues like errors in check writing.
Please remember that it is possible that the business name and the registered company name can be different.
The process of the reservation of the company name can also be done via the website of the department of business development DBD. As a rule, the decision on name reservation is made within 1-3 days after the application has been filed. In the case of approval, the name of the company remains effective for 30 days without the possibility of renewal.
Step 2: Filling Memorandum of Association
Pursuant to the registration with the Ministry of Commerce (MOC), the company then registers its memorandum of association. In this stage there is provision that all the issued share capital must be paid up in full. Before engaging in the transactions with a foreign country, it is mandatory to seek approval from the cabinet.
The memorandum of association encompasses:
- The intended name of the company
- The planned registered address of the company in Thailand
- The objectives of the company
- A statement affirming limited liability of shareholders
- The proposed share capital amount and its allocation into shares;
- Details including names, addresses, occupations, and signatures of the promoters, along with the subscribed shares by each.
Step 3: The Statutory Meeting
The company is also expected to produce its bylaws and articles of incorporation which are to be prepared during the statutory meeting. Furthermore, this is the meeting where the board of directors and auditors are elected during the shareholders’ meeting. Other matters to be addressed during the statutory meeting include:
- Adoption of the company regulations, if applicable;
- Approval of contracts made and expenses accrued by the promoters in advancing the company;
- Determination of compensation, if any, to be given to the promoters;
- Establishment of the quantity, if applicable, of preference shares;
- Determination of the quantity of fully or partially paid-up ordinary shares or preference shares to be issued;
- Selection of initial directors and auditors and defining their respective authorities.
Step 4: Registration of the Company in Thailand
The incorporation of the company must be lodged on the same day that Memorandum of Association is registered at the Ministry of Commerce in the event that the Statutory meeting has already been held. The application for registration must be made no later than 90 days after the date of the statutory meeting.
This is the stage where company registration fees are paid, and the business is issued with registration documents.
Step 5: Registration of Value Added Tax (VAT) & Income Tax
Following the company incorporation and within the period of sixty days from the date of incorporation or the date of commencement of operation, as the case may be, you are required to apply for and obtain a company corporate tax ID card from the Revenue Department.
One of the most significant taxes that have been implemented in Thailand since 1992 is Value Added Tax (VAT). It is a form of tax levied on the value added by each successive stage in the production and distribution processes. Any business entity engaged in the supply of goods or provision of services to a Thai entity with an annual turnover of more than 1. Businessmen whose sales revenue is 8 million baht or more must register for VAT in Thailand. Furthermore, in as much as you would like to acquire a work permit, you will have to register the company for VAT as soon as possible.
Though there are several steps a foreign investor has to take for the registration of a company in Thailand, it is still advisable to invest in Thailand. Depending on the specific type of business that you want to pursue, it is recommended to talk to professionals like FastLane Group to be sought on which kind of company to incorporate. Our team of experts can help you with all you need to register your company in Thailand. Contact us today to find out more.
Frequently Answered Questions
Thai law requires every foreign business operating in or investing in Thailand to meet the minimum capitalization of 2 million THB for a business categorized as non-restricted and 3 million THB for a restricted business under the Foreign Business Act. Thai-owned companies do not have to provide such documents (however, they will have to supply a foreigner’s necessary financial support to obtain a Thai work permit for the foreign staff).
The amount of time for registration will vary based on the kind of business activity you are going to conduct and how fast you are in providing the required information. It takes 1-2 weeks to incorporate a company but the application for the foreign business license can take at least 6 months depending on the type of the business.
After establishing a business entity in Thailand, certain activities must be conducted every month such as withholding tax and VAT returns with the Revenue Department and social security contributions for the employees with the Social Security Office. In addition, you also have to manage accurate bookkeeping records for an auditor to endorse the financial statements submitted to the Revenue Department and Department of Business Development each year. Other conditions include: preparing and filing half-year reports, paying for employee compensation, and filing reports to authorities for instance companies promoted by the Board of Investment, and so on. If a foreigner holds a work permit and a non-immigrant visa, they have to be renewed before the expiration date.
With regards to the registration of a business entity in Thailand, a bank account opening for the company is particularly useful and essential to facilitate the transactions of the business. With a registered business, operating an account with an authorized commercial bank of your choice is relatively easy. To open the account, the bank will need some certified minutes of the board meeting with the approval for the opening of the account together with its signing authority and formalities, and business registration and identification documents of shareholders, directors, and authorized signatories for the account opening. It will also be advisable if you provide several documents at the bank while registering the corporate account. Sometimes, foreigners must obtain a work permit and non-immigrant visa before using banking services such as online banking for the corporate account of some banks.