Thailand’s tourism attracts foreigners from different walks of life, which includes businessmen around the world who are seeing the country’s potential in terms of booming economy and the fast-developing country. A lot of investors are getting interested on doing business in Thailand. To be able to open a business in Thailand involves legally registering the business in Thailand.
In doing business in Thailand you have the choice over what type of business organization to establish. There are different types of business structures in Thailand. Choosing what type of organization to establish involves knowing the option that would suit the business needs and activity of your company:
THAI COMPANY LIMITED
Thai Company Limited is the kind of company which is formed with a capital divided into equal shares, the liability of the shareholders being limited to the amount unpaid on the shares respectively held by them. This business structure allows separation between investors and management.
In setting up a Limited Company you must have 3 persons signing together in order to prepare Memorandum and then register. There must be at least 2 Thai partners who would own the majority shares which is 51% and you would own 49%. Upon receiving the amount of shares, the director must register as the company within 3 months from the date of company’s meeting to establish the company.
According to the Civil and Commercial Code, the partnership can be divided into 2 types as follows:
1. Ordinary Partnership – the kind of partnership in which all the partners are jointly and unlimitedly liable for all the obligations of the partnership. The ordinary partnership shall register as: a.) Non-registered Ordinary Partnership with no legal status as the juristic person; b.) Registered Ordinary Partnership with legal status as the juristic person.
2. Limited Partnership – the kind of partnership of which there are:
a.) One or more partners whose liability is limited to such amount as they may respectively undertake to contribute to the partnership, and; b.) One or more partners who are jointly and unlimitedly liable for all the obligations of the partnership.
When two persons or above agree to invest in the ordinary partnership, the managing partner who is appointed from every partner must be responsible for requesting for the registration of such partnership to the officer at the commercial registration office that the head office of the partnership is located on.
A limited partnership must be managed only by the partners with unlimited liability
THAI REPRESENTATIVE OFFICE
Operation of a Representative Office in Thailand involves:
- To be the juristic person established in accordance with the foreign law and established an office in Thailand to operate the service business to the head office of the affiliated company or the group company in foreign country only;
- The Representative Office renders the service to the head office or the affiliated company or the group company without income from service, except for the supporting fund for expense of the Representative Office received from the head office;
- The Representative Office has no authority to receive the purchase order or to offer for sale or to negotiate on business with any person or juristic person.
In operation of business as the Representative Office, the scope of service is permitted to be rendered in either or all of 5 categories:
- To report the business movements in Thailand to the head office or affiliated company or the group company;
- To give advice on various aspects pertaining to the goods distributed by the head office or affiliated company or the group company to the distributors or the users;
- To seek for the supply source of goods or services in Thailand for the head office or affiliated company or the group company;
- To inspect and control the quality and quantity of the goods that the head office or affiliated company or the group company purchased or hired to manufacture in Thailand;
- To disseminate the information in relation to the new goods or services of the head office or affiliated company or the group company.
Regional office is established by a transnational corporation in a country other than the country where it is registered as the head office, without having to be registered as a juristic person under the law of the country of establishment. Likewise, they are limited to perform 7 specific activities only. These activities fall under List three of FOREIGN BUSINESS ACT 1999 (FBA). These are:
- Communicating, coordinating and directing, on behalf of the head office, the operation of branches and affiliates which are located in the region
- Providing services in consulting and management
- Training and personnel development
- Financial management
- Marketing control and sales promotion planning
- Product development
- Services in research and development
US TREATY OF AMITY
The US-Thai Amity Treaty, also known as the Treaty of Amity and Economic Relations between the Kingdom of Thailand and the United States of America was signed on May 29, 1966 to give special rights and benefits to American citizens who wish to establish their businesses in Thailand.
Registration under the Treaty of Amity is required for the business organization to be recognized. Requirements for US Treaty of Amity includes a minimum of 51% shares must be held by American citizens; and a minimum of 50% of directors must be American citizen.
The minimum capital requirement for a treaty-protected company is THB 2 million. If the the business is required to obtain a Foreign Business License under FBA, the minimum capital requirement must be THB 3 million for each business activity.