Thailand – Company Incorporation
From our experience with incorporating companies in Thailand it is easier for you to visit Thailand in order to obtain the relevant work permits, activate the company bank account and source the necessary nominee officers, however if you are unable to do this then we can assist.
The incorporation process does not require the physical presence of the shareholders or directors in Thailand, as long at the relevant signatures are certified by a Thai Consulate or Embassy officials outside Thailand.
A popular way to complete a property acquisition in Thailand is to incorporate a Thai Limited Company, which owns the property. Incorporation usually takes between 3-4 weeks.
Thailand Foreign Ownership
While it is possible to register a company with majority foreign ownership in Thailand, this company will be governed by the rules of the Alien Business Law. Alternatively, in order to avoid the various restrictions imposed on the operations of an majority foreign owned company in Thailand, a company which is majority Thai owned could still be established under present legislation. In this structure, a non-Thai may own up to 49% of the company, while the remaining 51% will be owned by one, or more individuals.
At the same time it is understood that the control of the company will be exercised by the non-Thai shareholders through the issue of shares with increased voting rights to this group. This structure will be governed by the company’s Articles of Association, and we will work closely with you to draft a version that will address your specific requirements in this respect.
The first step to incorporating a new company is to reserve the company name with the Ministry of Commerice in Thailand. It takes one day to obtain the result of the name reservation and is valid for 30 days.
Filing the Memorandum of Association of the Company
Once the Company’s name has been approved by the registrar, during the validly period of 30 days, the promoters shall apply for the registration of the Memorandum of Association.
The Memorandum of Association must contain the following information:
- Name and the location of the Company.
- The objectives of the Company.
- Registered Capital, number of securities and par value.
- Name, address, occupation, nationality, age, and signature of each promoter and the number of shares subscribed to by each of the shareholders.
There is no minimum capital requirement.
Registration of Incorporation of the Company
Following the registration of the Memorandum of Association all shares must be subscribed to by shareholders and all promoters must hold at least 1 share. At least 25 % of the value of each share is required to by law to be paid up.
The promoters shall then hold a general meeting of all subscribers, which is called the Statutory Meeting.
The promoters are required to send to every subscriber a notice of the Statutory Meeting. The notice of the Statutory Meeting shall contain the agenda of all business to be transacted.
After the payment for the shares have been made, the authorised director must apply for the registration of the Articles of Association of the Company. In practice the Articles of Association can be submitted 10 days after the date of registration of the Memorandum of Association. It will normally take at least 3 – 5 days for the Registrar to consider the Articles of Association and the list of shareholders.
Objectives of the Company
As the Company will have Thai nationality, the Company is therefore free to set its own objectives, which should not be contrary to public order or good morals. The Ministry of Commerce provides a standard form of objectives of the Company containing 40 clauses including to owning a land and house.
The shares of the Company must be or par value and the amount of a share may not be less than 5 baht. The shares of the company can be issued only as ordinary or preferred shares. The preferred shares have special rights attached to them as prescribed in the Articles of Association. Normally, to protect the foreign shareholder, two types of share holdings are suggested. The Thai shareholders hold preferred shares with limited privileges whilst the foreign shareholders hold ordinary shares with better privileges.
No minimum capital is prescribed, however in order for a company to qualify for the application of a work permit for a foreign national, the minimum capital required by the department issuing work permits would be 2 Million THB for each application.
A company must have at least 7 shareholders or promoters whose names addresses and shareholdings are filed in public records at the Ministry of Commerce. Shareholders can be individuals or corporations of any nationality, and residence.
Under the Land Code and the Land Department Notifications, a Company in which more then 39 % of the shares are held by foreigners is required to be investigated by the Land officials regarding whether the Thai shareholders are nominees holding share on behalf of foreigners. This investigation can take 2 – 3 weeks if not longer.
In order to minimize any extra time or risk of investigation most law firms will suggest that in the first stage the buyer should structure the shareholding ration at 39% foreign and 61% Thai to avoid time being consumed by the government investing company shareholding structure. After the completion of the registration of the transfer of ownership of the land, the new company can be restructured so that the foreign holding is at the maximum percentage available.
The registered capital should not be less than the purchase price of the land. This is because the Land Department official has sole discretion regarding whether to investigate the Company if they consider that the Company has been established with Thai shareholders to hold the land on behalf of the foreigners.
There is no requirement for a local Thai director, and there are no restrictions on the number and nationality of the directors.
Under Thai law, it is required that authorised Directors shall be appointed from any of the directors of the Company, to sign any document for an on behalf of the Company.
The limited company will need a registered office address in Thailand. Establishing a registered business address must occur before the company can apply for a tax registration number, which is required in order to apply for a work permit, or open a bank account.
Books and Accounts
The Company books and accounts must be kept at the registered office and are to be a true and complete account of the sums received and expended by the Company. The balance sheet and the profit and loss account has to be examined by the Company’s auditor and submitted to the general meeting for consideration. Accounts must be audited once a year and filed with the Revenue Department and Commercial Registration.