COMPANY FORMATION IN THILAND

Forming a company in Thailand is a popular option for foreign investors, particularly due to the country's strategic location, stable economy, and business-friendly policies. The most common structure for foreigners is the Thai Limited Company, but foreign ownership is regulated by the Foreign Business Act (FBA). Business entities for foreigners Entity Foreign Ownership Benefits Considerations Thai Limited Company (Co., Ltd.) Limited to 49% without a Foreign Business License (FBL). A Thai majority is required for unrestricted business. Offers liability protection and corporate identity. It is the most flexible option for most business types. Requires a minimum of three shareholders and one director. A minimum registered capital of 2 million THB is typically required for each foreign work permit. BOI-Promoted Company Up to 100% allowed for eligible activities. Provides significant incentives, including corporate income tax exemptions, permission to own land, and streamlined visa processes. Application is limited to specific industries promoted by the Board of Investment (BOI), such as technology, manufacturing, and R&D. The application process can take several months. Branch Office 100% allowed. An extension of the foreign parent company and can generate income. Useful for establishing a presence controlled by the parent company. The parent company is fully liable for the branch's debts. Requires a Foreign Business License. Representative Office 100% allowed. Can conduct market research, quality control, and report back to the parent company. Not taxed in Thailand as it cannot generate income. Cannot engage in commercial activities or generate revenue. Amity Treaty Company U.S. investors can own 100%. Provides American citizens with the same privileges as Thai nationals, with a few restricted exceptions. This option is only available to U.S. citizens and companies majority-owned by U.S. citizens. Company formation process Reserve a company name: Submit three name options to the Department of Business Development (DBD) online. The approved name is valid for 30 days. Draft documents: A Memorandum of Association (MOA), Articles of Association (AOA), and other required documents must be prepared. Hold a statutory meeting: This meeting formally approves the articles and appoints directors and auditors. Register the company: Submit all documents to the DBD for registration. A registered address in Thailand is required. Obtain licenses: Apply for a Foreign Business License (if applicable) and any industry-specific permits. Open a corporate bank account: The company must open a bank account in Thailand to handle finances. Register for taxes: Register with the Revenue Department for a Tax ID and VAT (if annual sales exceed 1.8 million THB). Apply for visas and work permits: Foreign employees and directors must obtain a Non-Immigrant "B" visa followed by a work permit. Key legal considerations Foreign Business Act (FBA): This act lists specific business categories where foreign ownership is restricted. For companies that are more than 50% foreign-owned, an FBL is required for these restricted activities. Nominee shareholding: Using Thai nationals as "nominee shareholders" to circumvent the FBA is illegal and can lead to severe penalties, including fines and imprisonment. Share classes: In a Thai-majority company, a foreigner can still maintain control through legal strategies like issuing preference shares with higher voting rights, as long as it does not violate FBA anti-avoidance rules. Shareholders' agreement: A private agreement between shareholders can provide additional protections for foreign minority investors.