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Corporate and Commercial

Establishing a company limited in Thailand requires registration with the Department of Business Development

Business Structures

Business Structures

Establishing a business requires registration with the Department of Business Development.

Partnership

Can be divided into 2 types as follows;

  1. Ordinary partnership;
  2. Limited partnership

The Ordinary partnership is a business which all the partners, by a minimum if two persons, are jointly and unlimitedly liable for all the partnership’s obligations.

The ordinary partnership shall register as the juristic person or not. Therefore, the ordinary partnership can be divided into 2 types as follows,

  1. Non-registered Ordinary Partnership with no legal status as the juristic person;
  2. Registered Ordinary Partnership with legal status as the juristic person

The Limited partnership is similar to an Ordinary partnership but requires registration and the partner can be provided to 2 types as follows

  1. One or more partners whose liability is limited to such amount as they may respectively undertake to contribute to the partnership;
  2. One or more partners whose are jointly and unlimitedly liable for all the obligations of the partnership.

Company limited

Establishing a company limited in Thailand requires registration with the Department of Business Development (DBD).

To establish the Company limited, you must have at least 3 promoters joint together, in order to gather capital with divided into equal shares. The liability of the shareholders being limited to the amount unpaid on the shares respectively held by them.

There two potential ways to structure a Thai company limited as follows;

  1. Thai Owned
  2. Foreign owned

Thai owned
Thai owned company limited is considered anything a company whose shareholders hold 51 % or more of the shares of the company. A common practice in Thailand has been for a Thai person to hold 51 % of the shares and foreigner to hold 49 %. However, the shares owned by the Thai person would be categorized as preferential shares so that the shares have minimal to no voting or dividend rights. This 51% /49% structure effectively gives 100% control to the foreign shareholder(s) and avoids the applications of the Thailand Foreign Business Act, which basically restricts foreign owned companies from performing service type businesses without a first obtaining a license from the Department of Business Development.

Foreign Owned

Foreign owned Thai company limited is generally required to first obtain a license to operate with the Department of Business Development before commencing operations.

Applying for a foreign business license from the Department of Business Development can be costly, time consuming and risky due to legal fees involved and government bureaucracy.

Representation office (RO)

Representative office is an office established by a company or a legal entity to conduct marketing and other non-transactional operations, generally in a foreign country where a branch office or subsidiary is not warranted.

The Representative of a foreign company is not subject to income tax provided that the services rendered by the representative are only provided to and for use by its head office.

A representative office in Thailand must be registered with the Department of Business Development as such and is restricted to the following types of activities;

  1. Searching for local sources of goods or services for its head office;
  2. Inspecting and controlling the quality and quantity of goods procured by its head office;
  3. Providing advice in various fields relating to products directly sold by its head office to local distributors or consumers;
  4. Disseminating information about new products and services of its head office;
  5. Reporting to its head office on local business developments and activities.