THAI LIMITED COMPANY
Setting up a Thai limited company is a popular business structure for company registration in Thailand, due to the simple set-up process and protection it offers to its shareholders. Registration of a Thai limited company takes place at the Department of Business Development (DBD) of the Ministry of Commerce and takes no longer than 7-10 days.
- A minimum of three shareholders are required
- Must have at least one director
- 51% of shares or more must be held by a Thai national or entity
- 2 million THB of capital required to support each foreigner’s work permit (whether in the position of a director or employee)
- Thai limited company registration takes one week or less
- Liability of shareholders is limited to the amount of their investment in the company
- Step one: Online reservation of the company name
- Step two: Acquiring a corporate address for the company’s registered address
- Step Three: Deciding on the registered capital of the company – this may depend on the work permit requirements in the case of foreign director(s) and/or employee(s)
- Step four: Preparation of the company registration documents including the Articles of Association and Memorandum of Association based on the shareholding structure
- Step five: Signing of the company registration documents by all promoters and directors on government forms with the corporate seal affixed
- Step six: Registration of the company with the Department of Business Development through which you will obtain a company registration number or Tax ID number, after which the company will be ready to begin its operations.
COMPANY REGISTRATION (CO., LTD) STRUCTURE AND DETAILS
- Shareholders & Shareholding
- Limited Liability
- Capital Requirements
- Obligations After Registration
Shareholders & Shareholding
In registering a private limited company, a minimum of three shareholders is required. The shareholders will sign the company registration forms for the incorporation of a company, and must all be physical persons. After the company’s initial registration with the Department of Business Development (DBD), shares can be transferred to the company, legal entity, or other individuals, Thai or foreign. The legal expert at METIS LEGAL ADVISORS will provide you appropriate guidance and legal advice on a step-by-step basis so that you are compliant with all legal requirements.
The majority of the shares or 51%, must be held by Thai nationals, a Thai company, or Thai legal entity. If not, the foreigner must apply for a Foreign Business License. However, this will very much depend on the activities of the company and would be at the consideration of the responsible officials of the Ministry of Commerce (see Foreign Business Licenses). However, it is still possible for a minority foreigner shareholder to acquire majority voting rights (and thus control) the company, but will require two separate classes of shares; ordinary and preferred (each type grants its holders different voting rights).
The shareholders are responsible for appointing one or more directors. A director, who is also eligible to be one of the shareholders during the company registration, is the legal representative who has the authority to sign documents and to act on behalf of the company. If the director of the Thai limited company is a foreigner, they must obtain a valid work permit and visa, which would allow them to legally work in the company in Thailand.
The main benefit of registering a limited company in Thailand is that the liability of shareholders towards the company’s debts or creditors is limited to their investment in the company. However, this limited liability of the shareholders in the company does not extend to directors during the directorship period and within two years from the date of resignation.
When registering a company in Thailand, METIS LEGAL ADVISORS will assist in setting out the rights and obligations of all parties in writing to ensure the understanding of each party’s legal standing within the registered company. This information is recorded with the registrar and obtainable from the DBD when required.
Capital requirements for setting up a Thai limited company will vary depending on the number of foreigners involved. Generally, for each foreigner employed by the company (including a director), the company must have 2 million THB of registered capital that makes it eligible for providing a work permit. Fortunately, this does not require the shareholders to accumulate all necessary finances at once, it merely represents the limited liability of the company. Thai limited companies without any foreign nationals do not have to meet any minimum amount, nevertheless, the starting capital should realistically reflect the company’s type and nature of business.
Obligations After Registration
Once the Thai limited company has been registered and is ready to operate, there are a number of legal obligations that need to be met, namely it has to follow accounting procedures specified in the Civil and Commercial Code, Revenue Code, and the Accounts Act. At the end of each accounting period (this is determined during the company registration process), it must submit a balance sheet altogether with the profit and loss statement and perform an audit. Failing to do so will lead to the monetary penalization of the company.