Incorporation of Private Limited Companies in Thailand
A Brief Introduction
The above is among the most common aspects of Thai Law that captures the interest of foreign entities ranging from giant multinational corporations to single individuals desirous of living in Thailand- having a keen eye on booming Thailand. Inasmuch, Private Limited Companies are the most common & arguably the most plausible vehicle for interested foreign entities to sustain their presence in Thailand.
We are very pleased to provide the reader with a brief introduction to the incorporation of limited liability companies in Thailand:
Types of Limited Liability Companies
Private Limited Company & Public Limited Company
As mentioned above, we shall deal with the more commonly enquired Private Limited Company (บริษัท จำกัด – Private Limited Companies in Thailand have the foregoing Thai words encompassing the company name, to wit: บริษัท’Barisat’ meaning Company and จำกัด ‘Jamkat’ meaning Limited e.g. บริษัท McWalden & Bailey จำกัด ) :
How to incorporate / start / create a private limited company in Thailand?
- A minimum of 3 Individual Promoters
- A minimum of 3 Shareholders (Natural / Juristic Persons) must be maintained throughout
1. Reserve Company Name
2. File Memorandum of Association
3. Hold Statutory Meeting, during which:
- Incorporation of Articles of Association;
- Election of Directors;
- Appointment of Auditors;
- Ratification of Pre-incorporation contracts;
- Expensed incurred by promoters paid;
- Preference shares established;
- Number of ordinary shares / preference shares to be allotted determined; and
- Prices of ordinary shares / preference shares fixed.
In the event that due preparation is made and all the necessary documents are completed & duly signed – The 4 steps above may be accomplished within a day.
Preparation of such necessary documents may take 1 – 3 weeks.
Registration Fee: 0.55% of registered capital (THB 5,500 minimum per THB 1 million (THB 6,500 for the first million) registered capital, with a maximum fee of THB 275,000)
How are the company’s liabilities limited?
Shareholders – limited to par value of authorized capital
Directors – subject to company’s Memorandum of Association / Articles of Association
Minimum Paid Up Capital
No required minimum – subject to that required to accomplish company’s objective.
Nonetheless, all shares must be subscribed to and it is required that a minimum of 25 percent of subscribed shares be paid up.
Where employment of a foreign employee is sought: 2 million THB registered capital per work permit and 100% paid up
- by Board of Directors in accordance to the company’s charter and by-laws
- all shares are mandated to be attached with voting rights
- issuance of shares with no par value is prohibited
- issued shares must have a par value of >THB 5
- treasury shares are prohibited
The Foreign Business Act:
- the Act stipulates that a corporate entity that has less than 50% Thai ownership will be considered as a ‘Foreign Business’ and be subject to special considerations. Accordingly, to avoid this, many proprietors comply with the 49% – 51% rule, some in a manner which is in direct circumvention of the law – manner of which, in many cases is strictly unnecessary and is rapt with legal risks.
- while the Foreign Business Act’s many restrictions may appear to many foreign investors as insurmountable limitations – there exists a plethora of exemptions & plausible alternatives, in tandem with Thailand’s welcoming stance in encouraging foreign investment. These are dealt with in other chapters in our knowledgebase.
Alternatives to the Private Limited Company
Alternatively, existing foreign companies may prefer vehicles such as:
- Branch Office
- Representative Office
- Regional Office
- Joint Venture
For more information on the foregoing, or on Thailand-bound investments in general, please contact the author JOEL LOO SEAN EE, the Bangkok-based Senior Regional Counsel at Kelvin Chia Thailand and a member of Kelvin Chia Partnership’s Regional Practice Group at Joel.Loo@KCPartnership.com.
This article is published to provide general information only and is not offered as specific advice on any particular matter – This information is to be taken subject to proper consultation with a lawyer.