Setting up a Limited Company in Thailand is subject to precise legal requirements as per the CCC and regulations of the Department of Business Development (DBD). These include reserving a name through DBD, preparing the MOA and AOA, conducting a statutory meeting, and submitting all the prepared documents for registration.
Capital Requirements
The capital required to set up a limited company varies, but it must be fully paid at the time of registration. The amount can be increased later for a small fee. This is a necessary requirement to show that the company is cash positive and can pay its bills. It also makes it easier to sponsor a work permit for a foreign employee.
The initial capital must be divided into shares and the par value of each share cannot be less than five baht. There can be either ordinary or preferred shares, and the privileges attributed to each type are specified in the Articles of Association. A minimum of three natural persons must be the shareholders and a registered business address is required. A company must obtain a tax ID number from the Revenue Department within 60 days of being incorporated or beginning operations. This step is important because it gives the company a corporate tax identity and opens up opportunities like BOI investment incentives.
An additional requirement is the submission of a Memorandum of Association and Articles of Association, which must be approved by the Department of Business Development of the Ministry of Commerce. This document must include a clear description of the company’s objectives, the province where its head office is located and the type and number of shares. It must also provide the name and address of the promoters and include documents evidencing the source of funds for each shareholder.
Shareholders
A Thai Limited Company Registration offers a structured and legally recognised way to establish a business presence in Thailand. The liability of shareholders is limited to the amount invested in the company, making it an attractive option for foreign investors. It also offers access to government incentives that aren’t available with other types of business structures.
The initial shareholders must sign a memorandum of association, which includes the company name and address as well as details about the promoters including their personal identification information. The shareholders must also conduct a statutory meeting to approve the articles of incorporation and bylaws, elect directors and determine the company’s objectives.
Shareholders can choose to hold ordinary or preference shares. Ordinary shares entitle the holders to voting rights in the company, while preference shares entitle them to dividend distributions. The shareholders are obligated to submit the company’s annual balance sheet and adhere to accounting and auditing regulations.
If a foreign investor funds a Thai company, they must secure the appropriate visa and work permit for themselves and their employees, regardless of their shareholding in the company. However, the number of non-Thai shareholders who can own a company is restricted to 49%. This can be increased to 100% if the activities fall under specific criteria, such as exporting and certain manufacturing businesses. This can be achieved by applying for a Foreign Business License, Board of Investment promotion or through registration through the Treaty of Amity for American citizens.
Tax Implications
Choosing the right business structure is one of the most significant decisions aspiring entrepreneurs must make before launching their venture. It is vital that this choice is aligned with the company’s long-term goals and that all parties involved fully understand the implications of each structure. Seeking professional advice and conducting extensive market research can help aspiring entrepreneurs make an informed decision.
A Thai Limited Company is a corporate structure that offers a level of legal protection to shareholders by limiting their liability up to the value of their contributed capital. Nevertheless, it is still imperative that a thorough risk assessment be conducted before investing any funds into a Thai Limited Company.
In addition, all registered companies must keep their books and accounts in accordance with the requirements of the Civil and Commercial Code and the Revenue Code. This includes a list of all shareholders and their shareholdings, annual financial statements, minutes of general meetings and board meetings, and more.
Furthermore, if a company expects to generate annual revenue in excess of 1.8 million baht, it is required to register for Value Added Tax (VAT) within 30 days of exceeding this threshold. In addition, a company must apply for and acquire its corporate tax ID card from the Revenue Department within 60 days of incorporation or when it begins operating in Thailand.
Company Registration
Once you have chosen your business structure and determined the amount of shares you will require, it is time to complete company registration. This step is a requirement for operating legally in Thailand and the specific requirements differ according to your chosen legal structure.
First, you need to reserve a name for your new venture. This process will typically involve submitting three names, ranked by preference. Certain terms, such as those associated with the royal family or those that are too close to that of another company, may be prohibited from being used; however, it is possible to include the word “Thailand” in brackets at the end of the proposed name.
After the successful reservation of a name, you need to draft a Memorandum of Association and file it with the Department of Business Development. The MOA must include the company name that was successfully reserved, the province where the registered office will be located, the company’s objectives, and the capital to be registered. The company must also appoint at least two promoters (who can be both foreign and Thai citizens or shareholders) and provide details of their names, occupations, addresses and signatures.
The company must also submit a bank statement and a letter from a lawyer stating the name of the company, the address of the company’s registered office, and the number of shareholders and the amounts of their respective shares. A stamp duty must be paid, and the company must maintain accounting records.