Thai Limited Company

In registering a private limited company, a minimum of three promoters are required. Promoters are shareholders who sign the company registration forms for the incorporation of a company, and must all be physical persons. After the company’s initial registration with the Department of Business Development (DBD), shares can be transferred to companies, legal entities or other individuals, Thai or foreign. The legal experts at Umpire Legal can provide appropriate guidance and legal advice on a step-by-step basis so that you can remain fully compliant with the process.

Majority of the shares, or at least 51%, must be held by Thai nationals, a Thai company or Thai legal entity. If not, the foreigner must apply for a Foreign Business License, but please note that the issuance of the Foreign Business License depends on the activities of the company and would be at the consideration of the responsible officials of the Ministry of Commerce (see Foreign Business Licenses). However, it is still possible for a minority foreigner shareholder to acquire majority voting rights (and thus control) in the company, and that is with the help of issuing two separate classes of shares – ordinary and preferred (each type grants its holders different voting rights).

Shareholders are responsible for appointing one or more directors. A director, who is also eligible to be one of the promoters during the company registration, is the legal representative who has the authority to sign documents and to act on behalf of the company. If the director of the Thai limited company is a foreigner, they must obtain a valid work permit and visa, which would allow them to legally work in the company in Thailand (see Immigration).

The main benefit of registering a limited company in Thailand is that the liability of shareholders towards the company’s debts or creditors is limited to their investment in the company. However, this limited liability of the shareholders in the company does not extend to directors during the directorship period and within two years as from the date of resignation.

When registering a company in Thailand, Umpire Legal can assist in clearly setting out the rights and obligations of all parties in writing to ensure the understanding of each party’s legal standing within the registered company. This information is recorded with the registrar and obtainable from the DBD when required.

Capital requirements for setting up a Thai limited company vary depending on the number of foreigners involved. Generally, for each foreigner employed by the company (including a director), the company must have 2 million THB of registered capital that makes it eligible for providing a work permit (see Work Permit for the full list of requirements and possible exceptions). Fortunately, this does not require the shareholders to accumulate all necessary finances at once, it merely represents the limited liability of the company. Thai limited companies without any foreign nationals do not have to meet any minimum amount, nevertheless, the starting capital should realistically reflect the company’s type and nature of business.

Once the Thai limited company has been registered and is ready to operate, it has a number of legal obligations to meet, namely it has to follow accounting procedures specified in the Civil and Commercial Code, Revenue Code and the Accounts Act. At the end of each accounting period (this is determined during the company registration process), it must submit a balance sheet altogether with the profit and loss statement and perform an audit. Failing to do so will lead to monetary penalisation of the company.