What Type of Company to Open in Thailand?
Opening a Private Limited Company (Co. Ltd.) is a popular choice for foreign investors looking to start a business in Thailand. This type of company shares similarities with legal structures in other countries, such as Pte Ltd in Singapore or GmbH in Germany. However, a key difference is that in Thailand, a Co. Ltd. cannot be founded by just one person and cannot operate with a single shareholder. As of February 7, 2023, a Co. Ltd. must have at least two shareholders, a change from the previous requirement of a minimum of three shareholders.
The choice of a Co. Ltd. is often due to its limited liability for founders (participants, shareholders), making it a less risky option for business owners. Additionally, the process of setting up and managing a Co. Ltd. is relatively straightforward.
The operations of a Co. Ltd. in Thailand are governed by Section 1096 and subsequent sections of the Civil and Commercial Code of Thailand, providing a legal framework for its functioning and regulation.
Minimum Registered Capital for a Thai Company
In Thai legislation, there are no specific guidelines for the minimum amount of registered capital for a Co.Ltd. The only requirement is the nominal value of the share, which cannot be less than 5 Thai baht.
Considering that a minimum of two shareholders is required to create a private limited company, the theoretically minimum necessary registered capital is just 10 Thai baht.
Of course, the registered capital of Thai companies usually far exceeds this minimum to ensure adequate business financing.
Foreign companies in Thailand must have a minimum capital of 2 to 3 million baht, depending on the type of business and the permits being processed. Thai companies do not have such capital requirements but must comply with general rules for hiring foreigners. If a company wants to hire a foreigner, it needs 2 million baht for each work permit. However, if the foreigner is married to a Thai citizen, the capital requirements are reduced to 1 million baht.
In practice, verification of capital payment is not conducted if its amount is less than 5 million baht. The capital must be registered, but it is not always necessary to actually contribute it.
Director of a Thai Company
A Co. Ltd. in Thailand must have at least one director who manages the company’s affairs and represents its interests. Additional directors can also be appointed to form a board of directors. The decision to appoint directors is made by the shareholders’ meeting. All directors are required to follow the company’s charter and Thai law. Foreigners can also serve as directors, and they may need to obtain a work permit for full-fledged activities.
How to Register a Company in Thailand
Step 1: Reserve a Name at the Department of Business Development (DBD) of the Ministry of Commerce
The company’s name should not be identical or similar to existing Thai companies and must comply with other existing restrictions. It is advisable to reserve three names. The reservation of a company name is valid for 30 days.
The company name will be registered in both Thai and English. Foreign investors are advised to check the availability of the desired name in both languages, as the DBD may reject a name if its Thai transliteration is similar to that of an existing Thai company.
Step 2: Prepare and Submit the Memorandum of Association to the DBD
After reserving the name, the company’s Memorandum of Association must be filed with the DBD. You can use a standard memorandum provided by the Ministry of Commerce or create a custom document. The memorandum should include the company’s name, location, business objectives, a statement that the liability of shareholders is limited to their unpaid share amounts, the size of the registered capital, and the names, nationalities, professions, addresses, and ages of the promoters (founders), who must be individuals, along with their signatures. There must be at least two promoters.
A standard Memorandum of Association is usually approved within one working day. A custom document may take longer to process.
Step 3: Allocate Shares
The promoters must be among the first shareholders of the company, with each owning at least one share. They also have the right to offer additional shares to other shareholders. After the company’s registration, the promoters can immediately transfer their shares to other shareholders or third parties. The role of promoters in Thailand is typically temporary.
Step 4: Hold a Statutory Meeting
After allocating shares and approving the Memorandum of Association, the promoters must convene a statutory meeting. This meeting will approve the Articles of Association, the types of shares and their rights, appoint directors and define their powers, and appoint an auditor.
Step 5: Pay the Registered Capital
After the directors are appointed, they are responsible for managing the company’s activities and must request that shareholders and promoters pay at least 25% of their share value.
Step 6: Register the Company
Once the shareholders have paid 25% of the share value and the statutory meeting has been held, the directors have three months to register the company with the DBD.
Government Fees
The registration fee for registering a company is 5,500 baht.
Including other official fees and duties, the total cost is approximately 6,500 – 7,000 baht.
Tax Registration of a Thai Company
When a new company registers with the DBD, it is automatically registered with the Revenue Department. The 13-digit company registration number issued by the DBD serves as the company’s tax ID number. This streamlined process eliminates the need for separate tax registration.
VAT Registration
A company with a turnover exceeding 1.8 million baht must register as a VAT payer within 30 days of reaching this threshold.
Companies planning to hire foreigners also need VAT registration.
Registration with the Social Security Office
Employer companies are required to register with the social security authorities.
If you have any questions about setting up a company in Thailand or about Thai corporate law, please email me or use the form below.