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SETTING
UP COMPANY IN THAILAND
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| What
are forms of business organization allowed in Thailand? |
| Foreign
companies can establish the corporate either under the Thai
commercial laws or the Foreign Business Act (FBA), which has
been in force since March 3, 2000. Forms of corporate structures
allowed in Thailand are as follows: |
Partnership
Three types of partnerships are registered partnerships, unregistered
partnerships, and limited partnerships. While the liabilities
attached to each are different, the rules governing them are
the same which generally follow Western law. |
Limited companies
Two types of limited companies are private and public limited
companies. Private limited companies in Thailand are basically
similar to Western corporations; that is they are registered
with a Memorandum of Association and the Articles of Association
and shareholders’ liabilities are limited to the remaining
unpaid amount, if any, of the par values of their shares. The
companies must have at least 7 promoters and a minimum of 7
shareholders are required at all time.
The procedure for incorporating public limited companies is
similar to that for a private limited company. The companies
require a minimum of 15 promoters for the formation and registration
of the Memorandum of Association. There must be 100 or more
shareholders whose liability is limited to no more than the
unpaid amount (if any) of the par value of the shares. It
is unlawful to restrict share transfers for purposes other
than to protect the rights and benefits of the company allowed
by law, or to maintain a Thai/foreigner shareholder ratio.
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Joint Ventures
It is described as a group of natural and/or juristic persons
entering into an agreement to conduct a business together. Despite
being unrecognized as a legal entity under the Civil and Commercial
Code, it is recognized by Revenue Code and, therefore, subject
to corporate taxation. |
Branches of foreign companies
A company incorporated under Foreign Laws may establish a branch
office to do business in Thailand. Subject to the provision
of Foreign Business Act, a branch may be allowed to operate
for a certain period with a requirement of working capital being
brought into Thailand within certain intervals over a period
of time. The extension of the original duration of the license
to operate may be granted. |
A Representative office of foreign corporations
The activities of a representative office is limited to ‘non-trading’
activities such as sourcing of goods or services in Thailand,
inspecting and controlling quality of goods which its head office
purchases, disseminating information about new products and
services of its head office, and reporting to its head office
on local business development and activities. Working capital
contributions in respect to branches apply.
In
the present, a representative office is defined in accordance
with the Regulation of the Office of the Prime Minister in
Establishment of Work Permit and Visa Center (No.3) B.E. 2544
(A.D.2001). It is classified within the List 3 (21) Service
Business under Foreign Business Act.
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Regional Operating Headquarter (ROH)
An ROH means a juristic person or partnership organized under
Thai law that provides services to its domestic or overseas
affiliated companies/or branches. Such services are concerning
administrative, technical, management and other supporting roles,
including research and development and training. A package on
ROH, introduced on August 16, 2002, provides tax breaks and
incentives to attract foreign companies to establish regional
headquarters in Thailand. |
