Company formation
Thai Company Formation
Unless there is a specific legal requirement, it is not compulsory for foreigners to conduct business through a Thai registered company or other entity. Foreigners may engage in business, pursuant to an agreement with a Thai party. For example, it is permissible for a foreign company to enter into an agency or franchising or licensing or distribution agreement with a Thai company. In addition, a foreign company may simply sell its products to a Thai purchaser under a sale and purchase or import/export agreement. However, when it comes to the intent to operate business within Thailand, the most popular form of business entity among foreign investors is the private limited company.
Private limited companies
Three applicants (“promoters”) must apply to establish a private limited company and each promoter must hold at least one share. A minimum of 3 shareholders in the limited company is required at all times.
Each share must be at least 25% paid up and the company must register its Memorandum of Association with the Ministry of Commerce and must among others include the name of the company that has been successfully reserved, the province where the company will be located, its business objectives, the capital to be registered, and the names of the at least 3 promoters.
A private limited company may be wholly owned by foreigners. However, if the nature of the business of the company is restricted under the Foreign Business Act or other laws then foreign ownership, both in the number of shareholders and the percentage of shares owned must be less than 50%.
Statutory Meeting
After the share subscription has been completed, the promoters must hold a statutory meeting to adopt the Articles of Association, elect the first directors, appoint the auditor, etc. Generally, there are no restrictions as to the nationality of the directors, except for companies that are engaged in certain commercial activities. Subscription for shares in a private limited company may not be offered publicly and a private limited company cannot issue bonds, debentures, or other forms of security to the public.
There must be a board of Directors with at least one director. If the nature of the business is restricted under the Foreign Business Act or other laws then there may be restrictions on the number of foreign directors and a requirement that there should be a number of foreign directors resident in Thailand.
Other juristic entities
Branch Offices
There are no laws or regulations that specially address the establishing or registering of the presence in Thailand of a foreign-incorporated entity (“branch office”). There is no branch registry. The only filings, registrations, or licenses required for a branch office in Thailand are those prescribed under other relevant laws, such as the Foreign Business Act or the Revenue Code. A foreign-incorporated company wishing to conduct business listed in the Foreign Business Act in its own right in Thailand must be licensed under the Foreign Business Act. For this purpose, it must file its Certificate of Incorporation, Articles of Association, and an affidavit from one of its officers providing relevant corporate particulars with the Ministry of Commerce. The company must also grant the manager of its activities in Thailand a broad power of attorney to act on behalf of the foreign-incorporated entity. The Power of Attorney and other documents noted above must all be certified by a notary public and authenticated by a Thai embassy or consulate. The Revenue Code requires that branch offices obtain taxpayer ID cards and register as value added tax (VAT) traders on the same basis as locally incorporated companies.
Representative Offices
A representative office is an office of a foreign enterprise that does not engage in commercial activities in Thailand. The primary function of a representative office is to provide information and assistance to its foreign head office may only provide support services, such as identifying and verifying the quality of local goods, giving advice about goods sold to agents or customers, providing investment information, etc.
Certificates of Incorporation, Articles of Association and Memorandum of Association, Power of Attorney and affidavits stating corporate particulars must be notarized, authenticated by a Thai embassy or consulate and submitted to the Ministry. There are also requirements regarding the remittance of funds into Thailand.
Regional Offices
Regional offices are intended to provide liaison, training, and managerial support services between foreign incorporated companies and their branch offices or subsidiaries, throughout Southeast Asia. Regional offices may contact co-ordinate, direct, and research and product development services. They must not offer goods for sale, enter into business negotiations with customers in Thailand, or accept purchase orders. Income to support the regional office must come from the head office. Permission must be obtained from the Director General to establish such an office.
