Company registration in Thailand is a complex process. It requires the preparation of several constitutive documents and follows accounting procedures governed by the Civil and Commercial Code, the Revenue Code, and the Accounting Act.
Firstly, the company name must be reserved with the Department of Business Development, which can usually be done within 1-3 days. Then the share structure must be defined.
Registration with the Department of Business Development
The Department of Business Development under the Ministry of Commerce regulates the process of registering a Thai limited company. The first step involves submitting a Memorandum of Association, which includes the company name and two alternative names that have been reserved, its business objectives, the province where it will be registered, its capital to be registered and the initial promoters/ shareholders.
It is necessary that at least three promoters/ shareholders are natural persons. Those promoters/ shareholders cannot be nominees, and must own at least one share of the company.
The MoA also needs to include a declaration that the liability of the shareholders is limited, and the amount of shares held by each shareholder. It must be signed by all promoters/ shareholders. This process takes a few days.
Drafting Articles of Incorporation and Bylaws
While there are several structures for setting up a business in Thailand, the most popular choice for foreign investors is the private limited company. This structure provides for maximum 49 percent foreign ownership, and it also supports work permits. For higher levels of foreign ownership, the investor would need to establish a BOI (Board of Investment) or register through the Treaty of Amity.
The next step in the process is drafting the company’s articles of incorporation and bylaws. This includes establishing the company’s share structure and identifying directors. It is important to note that bearer shares are not allowed in Thailand. Share certificates must be issued to shareholders and a record book kept at headquarters.
The company’s articles must contain certain required provisions, and there are also many optional provisions that can be included. These documents are filed with the Department of Business Development.
Convening a Statutory Meeting
When all shares subscribed for have been paid in, the promoters shall without delay hold a general meeting of share subscribers (the statutory meeting). This is where the regulations of the company are adopted and the board members elected.
There are no restrictions on foreign ownership of a Limited Company in Thailand, however certain business activities may require a work permit. In order to maintain a work permit, the company must show consistent business activity and must follow accounting procedures.
The directors must prepare lists of shareholders at the time of each annual shareholder’s meeting and a list of persons who no longer are shareholders from the date of the last meeting. The company must forward both of these to the Department of Business Development within 14 days of the meeting.
Obtaining a Business Name Board
A company that is registered allows third parties to examine the financial state of a company as well as its list of shareholders, directors, and other key details. This will give investors and other parties peace of mind knowing that a company is trustworthy.
A Thai limited company is a legal entity that is considered separate from its shareholders. This means that a creditor of a company cannot sue individual shareholders for debt repayment.
Before a company can be incorporated it must be proposed by its promoters and then approved by the Department of Business Development. A company must also file a Memorandum of Association and convene a statutory meeting. It should also register into the VAT system if required. If not, it may be eligible to apply for a tax ID number through the Treaty of Amity.
Obtaining a Tax ID Number
A registered Thai Limited Company is a legal entity that has its own rights, liabilities and duties independent from the shareholders. Any commitments or agreements made by the company bind only the company and not the shareholders, and third parties can hold the company liable for its debts.
To register a limited company in Thailand, you need to file a memorandum of association, convene a statutory meeting and register the company. The next step is to apply for a tax ID number and VAT registration (if applicable) with the Revenue Department.
A limited company in Thailand must have at least two shareholders and one director. It also needs to have a minimum of two million baht in registered capital, and must be fully paid up.