If you want to create a limited company in Thailand and start a business – you are in luck. It is possible for foreigners to do so. There is a strict process, and criteria must be met – but it is possible. Many foreigners seek a new life and fortunes in Thailand. Creating their own business is an attractive idea; the potential returns can be great but as with anything, there are pitfalls.
What are the criteria for creating a Limited Company in Thailand as a foreigner?
Firsts things first – the criteria. You can’t simply fly into Thailand and create a limited company from scratch. There are procedures to follow and regulations to comply with. The below is the current required criteria for a foreigner to start a limited company:
1. A PLC may be completely owned by foreigners, except businesses that are solely reserved for Thai nationals in accordance with the Foreign Business Act (“FBA”).
– Businesses reserved for Thai nationals can have a total of 49% ownership by foreigners
2. The private limited company must be managed by a board of directors in accordance with the Thailand civil and commercial code. The directors may be foreign and shareholder liability is no different from a standard PLC operation.
3. If your business is a service business, you can only create it if the majority of shareholders are Thai nationals. Service businesses are regulated under the FBA. Control of the company can still be obtained by foreigners however through shares. It is possible to have two types of shares – one type for Thai nationals, and one for foreign owners. The second type of shares will have enhanced rights and an increased dividend entitlement.
Statutory Criteria / Requirements
The above are general requirements concerning the actual formation of a private limited company by foreigners. There are other statutory requirements that must be adhered to, listed below.
– A minimum of one director
– A minimum of three shareholders
– A registered address within Thailand
– Registered business capital
– A working bank account
– Corporate income tax filing for half the year
– Corporate income tax filing for the full year
– VAT and tax filing/records on a monthly basis
– Social security filing/records on a monthly basis
That is practically it. As you can see, the criteria isn’t overly stringent. Moreover, the statutory requirements are things that you should have as a business regardless of where you are in the world.
What is the process for setting up a limited company if you meet the criteria?
If your private limited company complies with the above criteria, how do you then create the business? The procedure can vary depending on the type of business. The following is a general outline however including important steps for the creation process:
1. Reserve your company name
First and foremost you must reserve your business name. This has to be done via the Department of Business Development of the Ministry of Commerce. You can search for existing business names via their database here. You must submit three potential company names for consideration – these names will hopefully be accepted within 3 days.
2. File a Memorandum of Association
Once the business name has been accepted, you must then file an MOA. This document includes your company name, registered address, business objectives, details of shareholders and details of at least two witnesses. This again has to be filed with the Department of Business Development.
3. Hold a shareholder meeting
A statutory shareholder meeting must be held. This is to lay down the foundations of the business and sort numerous critical issues. Things to debate include promoter expenses, number of shares to be issued, and the number of shares to be paid. Moreover, this meeting will include the appointment of company directors and auditors.
4. Complete and submit company registration
This process must be completed within three months of the shareholder meeting. An application must be submitted to the Department of Business Development to establish the company. If not submitted within the 3 month period, the initial shareholder meeting will be deemed void. The application process involves submitting your company name, license number and auditor compensation.
5. Completed VAT and Tax registration if applicable
If your company qualifies for income tax, you must secure your Tax ID from the Thailand Revenue Department. This process has to be completed within 60 days from the start of your company’s operations.
This is a general outline. You can find a detailed guide from the Department of Business Development. Furthermore, you should consider other operations such as opening bank accounts, applying for working visas if required, and registration of a worker social fund.
Starting a limited company in Thailand is an involved process, so it may be wise to instruct a professional in the business of company set up. Hopefully you’ve found this guide useful – best of luck with your future business endeavours in Thailand!
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