Business In Phuket

Phuket, Thailand’s largest island, is not only a top tourist destination but also a vibrant hub for business. The island’s thriving business community and attractive investment opportunities are bolstered by the Thai government’s initiatives to encourage foreign investment. Conducting business in Phuket requires valid company registration, which can be complex due to local regulations. However, partnering with a knowledgeable lawyer can make the initial stages of your business venture in Phuket both smooth and successful.

What You Should Know About Operating A Business Under A Thai Company?

Foreigners should familiarise themselves with the regulations surrounding foreign ownership and permissible commercial activity before starting the business registration procedure. While the Thai government actively promotes foreign investment, many types of businesses cannot be owned or operated by foreigners in the country. Therefore, businesses that do not fall within the restricted categories can be owned entirely by foreigners; however, doing so often requires obtaining a Foreign Business Licence. Nevertheless, these will definitely need a lot of work and are sometimes unavailable to small businesses. Because of this, many foreign investors decide to establish a Thai company in order to retain a stake in the business.

Even in situations when the company fits within limited or prohibited categories for foreign ownership, many foreigners opt to continue business without such a licence or exemption due to the difficulty and sometimes impractical nature of acquiring one. These people usually use Thai limited companies to do business and have work permits that are obtained through Thai companies. A Thai business is defined by the Foreign Business Act as one in which Thai nationals possess half or more of the shares held by the juristic person. 

Foreigners Operating Business In Phuket, Thailand

If foreigners want to do business in Phuket, they have to follow the Foreign Business Act B.E. 2542’s permission criteria. Foreigners must abide by these rules in order to be eligible to apply for a foreign business licence for particular business categories or, in some situations, to receive an exemption based on a treaty or particular legislation, such as an investment promotion.

The Foreign Business Act in Thailand categorises businesses into three lists:

1. Businesses in this category are generally prohibited to foreigners unless there is an exemption specified in a special law or treaty. 
2. This relates to foreign-owned companies that were operating prior to the Foreign Business Law’s adoption. To go on, these companies can submit an application for a special licence for alien firms. Nonetheless, the Minister must provide special authority to launch a new enterprise in this category with Cabinet approval.
3. Similarly to List 2, the businesses in this category should be in existence and operating before the enactment of the Foreign Business law. The power to grant an Alien Business License for foreigners wanting to start a new business lies with the Director General and a committee.

Incorporation of a Company

When establishing a company, it’s important to consider several options and select the most suitable framework based on the potential future business objectives and present circumstances of the foreign investor. To venture a business in Phuket, you’ll need to remember that there are two main categories of how to form your company’s framework:

• Partnerships: Ordinary and Limited
• Limited Businesses (Public and Private)

Among these options, the limited company structure is the most preferred one by foreign investors. As this benefit stems from the fact that in limited businesses, the obligations of shareholders are restricted to the amount owing on the shares they possess. A limited corporation can only be established with promoters or investors numbering no more than three. Foreigners may possess up to 49% of the shares; Thai nationals will own the remaining 51% of the shares.

These are the following documents that are required to register for a business in Phuket:

• Company Name
• Location of Head Office
• Company Objectives
• Number and Value of Shares to be Registered
• Names, Addresses, and Occupations of Promoters and Shareholders, along with the Number of Shares Owned by Each
• Names, Addresses, Ages, and Nationalities of Two Witnesses
• Names, Addresses, Ages, and Authorities of Directors
• Company Regulations (if any)

Registration of Limited Company in Phuket

Registering a limited business in Phuket typically takes a few days, but it might take up to three weeks if the necessary paperwork is not ready. Engaging the services of a Phuket-based lawyer with experience in company formation expedites the registration procedure.

Here is an outline of the essential steps involved in registering a business in Phuket is provided below:

• Step 1: Reserve the Company Name: Foreign investors need to choose three alternative names adhering to Ministry of Commerce guidelines and submit them to the Department of Business Development (DBD) representative office in Phuket. Once verified, the approved name will be valid for 30 days without an extension.
• Step 2: File the Memorandum of Association: After the business name selection, shareholders sign and submit the Memorandum of Association (MOA) to the Phuket DBD office. This document contains very important details like the company name, address, objectives, lists of shareholders and promoters, and registered capital information.
• Step 3: Organise a Statutory Meeting: The purpose of the statutory meeting called by the shareholders is to approve the company’s regulations, choose directors and an auditor, and decide whether or not the shares have been paid up in full. The investors then hand over control of the company to the designated directors, who demand payment of at least 25% of the share value.
• Step 4: Register the Company: Directors submit the application form and all requisite documents, along with payment for registration fees, to the DBD representative office in Phuket.

Steps to Establishing a Business in Phuket

From initial market research to understanding legal requirements, each stage of starting a business in Phuket presents unique challenges and opportunities. Through careful planning and adaptability, along with a deep commitment to understanding the local business landscape, entrepreneurs can build a strong foundation for success in this vibrant coastal region. As we conclude this guide on business in Phuket, remember that although the path may be daunting, perseverance and diligence will ultimately pave the way for a thriving enterprise.

Frequently Asked Questions