The number of foreigners wishing to conduct business in Thailand has dramatically increased over the years. A lot of reasons can account for the influx of foreign investors in the Kingdom. One is the strategic location of the country in the SEA region. The cheap cost of labor and the abundance of skilled workers is another of the country’s investment appeals. There is also the perennial smiles and friendliness of the locals which along with the world famous Thai cuisine make an ideal working environment for expats and locals alike. But, above all, doing business in Thailand is relatively simple despite the cultural and language barriers.

How to set up a business in Thailand?

It is suggested for a foreign investor in Thailand to register their legal entity to be recognized as a ‘Juristic Person’ under the laws of the Kingdom of Thailand in order to secure and facilitate all transactions with their business partners as well as for tax purposes, capitalizations and the acquisition of Non-immigrant Visa (Non-B Visa) for foreigners wishing to work legally in the Kingdom of Thailand.

Registering a “Company Limited” is likely to be the most popular business set up among foreigners in Thailand owing to the following reasons: it’s easy to put up and the liability of the shareholder is limited to his unpaid shares. This business format also allows the foreigner to engage in various business activities which are not commonly allowed in other Thai business organizations available. Moreover, a Thai company limited being a corporation can be seen as more credible and therefore more appealing to your business partners and clients. However, apart from thinking about the type of company to set up, there are other factors to consider such as the type and objectives of the business, the number of shareholders and among other things.

Thai Business Set-Ups

According to the laws of the Kingdom of Thailand, there are 5 categories of Juristic Person Registration, as follows:

1. Company Limited:

As regulated by the latest revision of the Civil and Commercial Code (CCC) B.E. 2551 which cuts off all the unnecessary procedures in registering a Thai company consequently making nowadays registration of a Thai Company Limited a very simple process. The actual company registration can be completed in one day with only 3 promoters required as opposed to the usual 7 minimum number of promoters or shareholders. Being a Company Limited, shareholders in this company set-up bear the least liability limited to the unpaid share values. This can be seen as one of the prime advantages of this company set-up apart from the fact that it is allowed to do various business activities which are restricted in another business formats. A Thai Company Limited as long as it’s properly incorporated and have the required capital and number of Thai employees can easily procure a Non B Visa and a Work Permit for its foreign employees.

2. Limited Partnership:

Registering a Limited Partnership is the suitable answer if you are looking for a form of Juristic Person registration that requires only two promoters (shareholders) at the beginning. However, of the two promoters, one must be appointed “Managing Partner”, also known as “General Partner”, to act on behalf of the business.

One important fact that needs to be taken into account for this business set up is that, according to CCC, the general partner must assume an unlimited liability for the business. This means that in case the business is indebted or goes bankrupt; the general partner must also resultantly be liable for all the debts occurred. This reason explains why not so many businesses choose Limited Partnership as their legal entity. Normally, registering as a limited partnership is preferred for a small or household business.

3. Foundation:

To register a Foundation, do keep in mind that this organization cannot make any profit; and the objective of the Foundation must relate to charity purposes. Although, there are no shareholders in a Foundation, you still need to have at least 3 founders at the beginning. Another fact that needs to be taken into account is that it takes around six months to one year for the application to be approved; so, be prepared to wait that long.

4. Representative Office:

The registration of a Representative Office is governed by Foreign Business Act B.E. 2542 which specifies that being a Rep. Office; it cannot generate any income in the Kingdom. The objectives and activities of a representative office are limited to the following:

The process of registering a Rep. Office is quite complicated and time consuming owing to the many documents required. It takes around 6 months before the result of the registration application is known.

5. Registering a Legal Entity under the Treaty of Amity:

The Treaty of Amity is a bilateral treaty between the United States and the Kingdom of Thailand. The treaty provides a commercial privileges or advantages to American Citizens or American companies who wish to put up their business in Thailand by allowing them to legitimately register a Juristic Person even though they do not have any promoters or shareholders who are of Thai nationality, given that they are qualified as:

Being a US Citizen; or,

Being a US Juristic Person that:

2.1) was registered under the laws of the Kingdom of Thailand or the US, and,

2.2) the majority capitals or shares belong to the shareholders who are of the US nationality, and,

2.3) the number of the directors who are of Thai and/or the US nationality must exceed the half of the total number of the directors, and,

2.4) the director who is authorized to act on behalf of the company must be the person who is of Thai or the US nationality. However, in the case that there are more than one authorized director, the majority thereof must be the persons who are of Thai and/or the US nationality.

For more detailed information on the various business set-ups or company registration formats in Thailand, feel free to contact us for a free consultation. We look forward to assisting you with setting up a business in Thailand.