Understanding Business Registration in Thailand
If you’re an investor, you should consider opening a business in Thailand. This Southeast Asian country has a flourishing economy and has an ideal location in the region for maximizing your investments.
Investing in the country also safeguards your investment thanks to the country’s strong consumer demand, solid economy, robust exports, and ample natural resources when push comes to shove. Foreign entrepreneurs can invest in Thailand legally by establishing a Thai limited company or registering their business in the country.
This is why it’s important to learn the ins and outs of business registration in Thailand. The country is simply one of the best, low-cost places for foreign investors to operate their business and maximize their return on investment.
The Benefits of Registering a Thai Limited Company
Registering a Thai Limited Company is one of the methods to establish yourself in the country. There are a number of benefits available to you by going through this specific investment route.
Full Transparency: As you register your Thai Limited Company, the company owners, or investors and third parties need to offer to the government the big picture and a clear idea of the nature of the business to ensure everything is on the up and up.
Reliability and Easy Examination: A registered limited company in Thailand is a reliable way for third parties (investors, partners, and private money lenders) to examine your business’s status on a variety of issues such as shareholders’ list, directors, financial state, corporate profile, and so forth.
It’s a Separate Legal Entity: This company type serves as a separate legal entity set up for a long period of time with its own rights, duties, and liabilities. The shareholders are personally secured from liabilities thanks to this registered company’s status.
Appointing Directors as Liaisons: Meanwhile, the daily management of this company type and its branches are done by shareholder-appointed directors so it’s able to perform its functions independently.
When you set up a Thai Limited Company, you’re required to do the following steps to the letter in accordance with the guidelines of this article.
First Step: Reserving a Company Name
The Department of Business Development (DBD) from Thailand’s Ministry of Commerce (MOC) offers rules when reserving a company name. This will help your business to register a name that isn’t redundant with other business names that have already been taken in Thailand.
We at Umpire Legal typically ask you to give us two to three name suggestions. This ensures that if one name is already unavailable or used, you can at least go for your other backup name.
Second Step: Identifying the Directors, Shareholders, and Promoters
When registering your own business, you’ll need one or more directors responsible for registration and setting the company up. You should also get two or more shareholders and promoters to become part of the company as well.
We’ll also ask for the personal details of the directors, promoters, and shareholders, which includes the following (if applicable):
Age
Address
Occupation
Contact Details
Passport number
Number of the Thai ID card
Third Step: Filing the MOA
We’ll also help you file the Memorandum of Association (MOA) with the Department of Business Development (DBD) that’s also part of the Ministry of Commerce. It includes the selected reserved company name along with other details.
The MOA also contains the names of the promoters, the capital for registration, the business objectives of the limited company, and the Thai province where the company will set up shop.
Even if there are no requirements for minimum capital amounts at this point, the value of the capital should be enough to cover the operation and intended objectives of your entrepreneurial ventures.
Additionally, if your company plans to hire a foreigner or more as part of its workforce, a minimum ฿2,000,000 is needed for every foreigner employed.
It’s used to apply for a Work Permit and a Non-Immigrant “B” Visa to allow them to work in the country. Otherwise, you can always hire locally.
Fourth Step: Scheduling Up a Statutory Meeting
The statutory meeting is a meeting required to be held by statute. You need to convene a statutory meeting to make the proper appointments after the company’s share structure has been fully defined.
You also need to first have the MOA and Articles of Association approved, elect members for your Board of Directors, and appoint an auditor prior to convening your statutory meeting to make the rest of your appointments.
The term could refer to any meeting held by statute or edict—such as the annual general meeting of shareholders—but in this case it’s to make appointments for your new Thai Limited Company as part of its requirements.
Fifth Step: The Actual Business Registration
Submission of the application of registration of the business by the company directors should be done within 3 months after the statutory meeting’s date.
Afterwards, they should pay all the necessary fees for company registration for good measure. We’ll help you know all the fees needed to complete registration and have them paid off as soon as possible. We will handle all the details and leave no fee unpaid or stone unturned.
Sixth Step: Registering Your Corporate Income Tax
Company registration also involves corporate tax registration because all Thailand companies are required to get registration for the purpose of easy taxation anyway.
Businesses with a Corporate Income Tax (IT) requirement should register for the ID card for Tax and a requisite company registration number.
This number should be taken from the Thai Revenue Department within 2 months of when you begin operations or the incorporation of the company.
Businesses required to pay for Value Added Tax (VAT) should also get an ID for VAT as well within a month of the date when the company reaches the sales milestone of ฿1,800,000.
Final Step: Opening a Bank Account for the Company
Your registered company is permitted to open a company bank account that can be managed through online banking as soon as its registration becomes official. In regards of the details needed to open such a bank account, take note of the following:
What type of accounts will the company need?
Which branch and bank will they open the account with?
Who will put their signature on the documents or paperwork?
Registering such an account usually takes nine days, mostly due to the statutory meeting needing to be held around a week before the registration proper can occur.
Both the business and the MOA should undergo registration with the DBD registrar at the MOC according to the documents and conditions prescribed for the registration process.
We here at Umpire Legal will also have you covered on that front.
How Many Shareholders and Promoters Do You Have?
To register your Thai Limited Company as required for its establishment process, you need the assistance of promoters. You need the help of at least two promoters.
Once you’ve established your proposed business, it will get at least two shareholders, which naturally necessitates the need for two promoters or one promoter for each shareholder—they can turn into prospective shareholders of your company.
The presence of promoters also serves as your legal safeguard against practically anyone filing a court motion demanding that your newly formed company is dissolved immediately.
Take note that you have no limits to how many shareholders and promoters you can get for your company, meaning you can invite any number of shareholders as you want to become part of your business.
More About the MOA and Its Importance
The Memorandum of Association is an important document required for business registration that specifies a multitude of information about the company, such as:
Name
Address
Business objectives
Company’s capital
Value of the shares
Share number or amount
Names of the promoters (at least two of them)
The registrar has a special official form that’s used to register the MOA. As we guide you towards registering your business, we’ll also input all that relevant data to the MOA for submission.
The Articles of Association
The AOA contains specifics regarding policies or agreements with reference to relations between the business’s shareholders, including policies for company operations and shareholder rights.
It should also contain agreements and details regarding the following corporate issues:
Directors
Liquidator
Balance sheets
Reserve and dividends
Shareholders’ meetings
List of shares and shareholders
The Annual Shareholders’ Meeting Requirements for Reporting
A Thai Limited Company should prepare a monthly financial statement. You should also have an auditor available to audit your financial statements annually.
Your average shareholders’ meeting should have your financial statement approved within four months after the end of your business’s financial year. This allows you to submit it to the DBD within a month after its approval.
Moreover, the director should list shareholder names to present at every annual meeting of shareholders.
The director should also list down the names of those who aren’t shareholders anymore since the date of the previous annual meeting before submitting both lists to the Department of Business Development within 2 weeks or 14 days after the latest annual meeting.
This yearly meeting must occur within 6 months of the date of registration of the business in question. Also, any meetings afterwards must be held at least every year.
They should also prepare the business’s shareholders’ share certificates along with a shareholders’ registration book for good measure.
A request for relocation should be filed with the DBD registrar in case there’s a need for head office relocation as well.
Business Registration Means It’s Now a Separate Legal Entity
Once you’ve completed business registration, your new company is now recognized by Thailand law as a “separate legal entity”. This means it’s independent of its shareholders. It’s also known as a “juristic person”.
This means the business has its own individual responsibilities, rights, duties, and liabilities separate from any of its shareholders.
Any agreements or commitments made by others and the company is the responsibility of the company itself as a separate legal entity. It’s now responsible or liable for such commitments. Third parties won’t hold the shareholders personally responsible for them.
For instance, if your business is granted the permit to carry on an activity like buy land in Thailand in its name, its investors such as shareholders don’t necessarily possess to execute this right as well (particularly if they’re foreigners forbidden to buy land in Thailand in their names).
Moreover, shareholders are shielded from getting litigated by business creditors for debt repayment, such that the company is held liable for it instead.
The third parties will also consider as already acknowledged all the info and data found in the company’s establishment paperwork or documents submitted to the registrar.
Ergo, third parties can’t claim they lack info on hand unfairly, causing them to fail in protecting their interests.
The Importance of Thailand Legal Counsel
Our legal services as a Thailand legal counsel will help guide you when dealing with the requirements and paperwork required when starting your own Thai Limited Business.
We’re also here to help businesses deal with other matters such as preparing documents, submissions, permits, and approvals for your company and handling paperwork with various entities, agencies, and legislative bodies involved in the Thai Limited Company registration process.
If you’re a foreigner or expat in need of legal services when making a business deal or investment in Thailand, get in touch with the Umpire Legal Team to consult experts on this matter. We make dealing with Thailand business law for foreigners as easy and safe as possible.
Reach out to our team today for your business registration needs and other legal concerns you may have in Thailand.