Establishing a Company in Thailand: Complete Guide to Business Setup Insights

Thailand offers great business opportunities for foreigners who want to setting up a company in Thailand or invest in the country due to its strategic location. The country has a strong economy, abundant natural resources, a thriving export sector, and a dynamic consumer market, making it an attractive destination for foreign business ventures. The Foreign Business Act (FBA) regulates the establishment of foreign companies, company registration in Thailand, and the business activities of foreigners in the country.

Foreigners have access to different business structures, with the Thai Limited Company being a popular choice. The registration process varies depending on the chosen structure, ranging from 3-5 business days for a simple Thai Limited Liability Company to up to 90 days for a more complex BOI Company.

Although setting up a company in Thailand can be complicated due to the need for a foreign business licence, understanding the legal codes, and registering the business. Our experience in handling corporate matters for international clients ensures a smooth process.The Thai Limited Company is a common choice for foreign-owned businesses in Thailand. It is a straightforward entity that allows for various activities and limits the liability of shareholders to the unpaid amount on their shares.

Company in Thailand: Advantages of a Thai Limited Company

Reliability: Setting up a company in Thailand that is a Thai Limited corporation requires a clear and detailed presentation of the business to the government and external entities during the registration process. This registration allows third parties to examine different aspects of the company, such as its corporate profile, financial status, shareholders, directors, and more. As a result, partners, investors, banks, and private lenders consider a registered limited company in Thailand to be a trustworthy entity. The comprehensive registration process builds trust among stakeholders, establishing the company as a reliable and dependable business partner.

Security: A Thai Limited Company is created as its own legal entity with a long operational existence. Companies usually operate until their owners choose to close them down. The dissolution procedure is complex, highlighting the stability and longevity of these businesses. The company’s daily management, including its branch offices, is managed by directors, offering a stable and secure structure for continuous business activities. Choosing a Limited company in Thailand guarantees a strong and lasting investment in a business with a solid legal basis.

How to Set Up a Thai Limited Company?

Establishing a company in Thailand requires following a well-organised process to ensure a seamless and legally compliant setup. Here is a comprehensive guide outlining the crucial steps involved:

• Step 1: Company Name Reservation: Choose a business name that follows the regulations of the Department of Business Development (DBD) under the Ministry of Commerce. Have a few backup names ready in case your first choice is not available.
  
• Step 2: Identifying the Promoters, Shareholders, and Directors: A Thai Limited Company requires a minimum of two promoters and shareholders, as well as one director. If the shareholders consist of both Thai and foreign nationals, or if the directors are foreign, the Thai shareholders must present a Bank Statement Certificate showing funds equal to or greater than the value of their shares.
  
• Step 3: Filing Memorandum of Association (MOA): Submit the Memorandum of Association (MOA) to the Department of Business Development (DBD) with the chosen company in Thailand name, address, goals, capital, and information about the founders. There is no specific amount required for capital, but it should be suitable for the business activities planned. If hiring foreign employees, a minimum of THB 2,000,000 per foreigner is necessary for visa and work permit applications.
  
• Step 4: Convene a Statutory Meeting: Organise a mandatory gathering to conclude the selection of positions, establish the distribution of shares, endorse the Memorandum of Association and Articles of Association, choose the Board of Directors, and designate an auditor.
  
• Step 5: Registration: Make sure to submit the application for company establishment within three months after the statutory meeting, and remember to pay the necessary registration fees.
  
• Step 6: Corporate Income Tax Registration: To ensure compliance with tax regulations, it is necessary to register the company for tax purposes. This involves obtaining a Tax ID card and a registration number for Corporate Income Tax. It is important to complete this process within 60 days of incorporating the company in Thailand. Additionally, if the company reaches THB 600,000 in sales, it must register for VAT within 30 days.
  
• Step 7: Opening a Company Bank Account: Once the company in Thailand has completed the official registration, it becomes eligible to establish a corporate bank account in Thailand. To proceed with this, specific information is required, including the preferred bank, branch, account types, and authorised signatories. 

The entire registration process usually takes a minimum of 9 days, taking into account the mandatory 7-day notice period for the statutory meeting before the actual registration. The company in Thailand and the Memorandum of Association are registered with the registrar at the Department of Business Development, Ministry of Commerce, adhering to the prescribed forms and conditions.

Additional Details Required for Setting Up a Thai Limited Company

Number of Promoters and Shareholders: To start the registration process, there must be at least 2 promoters involved. After the company is set up, it needs to have a minimum of 2 shareholders to avoid outside parties from requesting the company to be dissolved. There is no limit on the maximum number of promoters or shareholders, giving the flexibility to invite as many shareholders as needed.

Effects of Registration: Once the registration process is finished, the newly formed company is considered as a separate legal entity, completely separate from its shareholders. It is known as a “juristic person” and has its own set of rights, responsibilities, and liabilities. 

Any agreements or commitments made with third parties are solely the responsibility of the company, relieving shareholders from any personal obligations. This means that permits given to the company cannot be carried out by the shareholders themselves, and creditors cannot take legal action against shareholders for repayment of debts.

Memorandum of Association: The Memorandum of Association is a vital document required for company registration. It contains important information like the company’s name, address, business goals, capital, number and value of shares, and the names of at least two promoters. To register the Memorandum of Association, the registrar provides a dedicated form.

Articles of Association: The purpose of this document is to provide a clear understanding of the agreements and policies that regulate the relationship between the shareholders of the company. It encompasses a range of important corporate matters, including shares, directors, shareholders’ meetings, balance sheets, dividends, reserves, and the role of the liquidator.

Reporting Requirements:

• Monthly preparation of financial statements is required.
• An annual audit by an auditor is necessary.
• The financial statement must be approved by an ordinary shareholders’ meeting within 4 months after the financial year-end.
• Submission of the approved financial statement to the Department of Business Development (DBD) is required within 1 month.
• The director must submit a list of shareholders to the DBD within 14 days after the annual shareholders’ meeting.
• An annual shareholders’ meeting must be held within 6 months from the company’s registration date.
• Subsequent meetings should be conducted every 12 months.
• Share certificates need to be prepared.
• A shareholders’ registration book must be prepared.

Corporate Governance:

• Corporate governance principles must be followed by a Thai Limited Company to ensure transparency, fairness, and accountability in its operations.
• Shareholders’ meetings serve as a platform for important decisions, such as appointing directors, approving financial statements, and discussing strategic matters.
• Directors, who are chosen by shareholders, have the responsibility of managing the company on a daily basis and making operational and strategic choices.

Shareholder Meetings and Decision-Making Shareholder meetings, whether they are held annually or on special occasions, are crucial for making important decisions. Resolutions are approved by a majority vote, unless the Articles of Association state otherwise for certain decisions. Special resolutions are necessary for making changes to the company’s capital, engaging in mergers or acquisitions, or modifying the Articles of Association.

Regulatory Compliance:

• Thai Limited Companies must comply with legal and regulatory requirements, including filing annual financial statements and updating shareholder information with the Department of Business Development.
• Any changes to the company in Thailand structure or shareholding must be reported promptly to the relevant authorities.

Taxation:

• Companies in Thailand are subject to corporate income tax, with tax rates determined by the net profit.
• Value Added Tax (VAT) registration is mandatory for businesses with annual sales exceeding THB 1.8 million.
• Employing a knowledgeable tax advisor is advisable to navigate the intricacies of Thailand’s tax laws.

Ongoing Obligations:

• Regular maintenance of statutory records and shareholder registers.
• Renewal of business licences and permits as required.
• Compliance with changes in corporate laws and regulations.
• Engaging legal and financial professionals for periodic reviews and audits.

Key Considerations for Establishing a Company in Thailand

Establishing a Thai Limited Company requires careful preparation, following legal protocols, and continuous dedication to following regulations. By receiving appropriate guidance, businesses can take advantage of limited liability, operational autonomy, and opportunities within Thailand’s dynamic business environment. It is crucial to stay updated on legal obligations and consult with experts to effectively manage a thriving business in the nation.

Frequently Asked Questions