What Type of Company to Open in Thailand?
A Private Limited Company (Co., Ltd.) is the preferred choice for foreign investors in Thailand due to its limited liability structure, similar to a Pte Ltd in Singapore, GmbH in Germany, or LLC in the United States. In Thailand, a Co., Ltd. requires at least two shareholders, as of the change on February 7, 2023, unlike other jurisdictions where a single shareholder is sufficient.
The main benefit of a Private Limited Company (Co., Ltd.) in Thailand is limited liability, which protects shareholders’ personal assets. It is easy to set up and manage, making it attractive to foreign businesses. The Co., Ltd. is governed by Thailand’s Civil and Commercial Code, beginning with Section 1096. This combination of asset protection, simple management, and clear legal guidelines makes it an ideal choice for foreign companies looking to enter the Thai market.
Minimum Registered Capital for a Thai Company
Thai law does not specify a minimum registered capital amount for a Private Limited Company (Co., Ltd.), except that the nominal value of each share must be at least 5 Thai baht. Given that a Co., Ltd. requires at least two shareholders, the theoretical minimum registered capital is 10 Thai baht. However, most companies opt for a higher capital amount to ensure sufficient funding for business operations.
For foreign-owned companies in Thailand, the minimum capital requirement typically ranges from 2 to 3 million baht, depending on the type of business and the permits needed. While Thai-owned companies do not have a specific capital requirement, they must adhere to general rules when hiring foreign employees. To employ a foreign national, a company must have a registered capital of 2 million baht per work permit, or 1 million baht if the foreign employee is married to a Thai citizen.
Capital contributions below 5 million baht are generally not subject to verification by authorities. However, for companies with registered capital exceeding 5 million baht, the Department of Business Development Order No. 1/2567, effective from July 1, 2024, requires additional documentation to confirm capital contributions during incorporation, capital increases, and mergers involving a capital increase. This ensures proper documentation and verification of capital contributions in compliance with regulatory standards.
Director of a Thai Company
A Private Limited Company must have at least one director to manage its operations and represent the company. The shareholders decide if more directors are needed to form a board. Directors must follow the company’s rules and Thai law. Foreigners can also be directors, but they may need a work permit to work fully in the company.
How to Register a Company in Thailand
Step 1: Reserve a Company Name with the Department of Business Development (DBD)
The first step in registering a company in Thailand is to reserve a unique company name with the Department of Business Development (DBD) under the Ministry of Commerce. The chosen name must comply with naming rules and not be identical or too similar to any existing company names, in either Thai or English. To increase the chances of approval, it is recommended to submit three different name options in order of preference.
Foreign investors should verify that the desired company name is available in both languages since the DBD may reject a name if its Thai transliteration closely resembles that of an existing company. Certain terms are restricted or prohibited in company names, and if the name includes the word “Thailand,” it must appear in brackets at the end (e.g., “ABC Co., Ltd. (Thailand)”).
After reserving a name, it remains valid for 30 days, and you must proceed with the next steps of the registration process within this period. You can check the availability and reserve your company name online through the DBD name reservation portal here.
Step 2: Prepare and Submit the Memorandum of Association
After reserving your company name, the next step is to prepare and submit the Memorandum of Association (MOA) to the Department of Business Development (DBD). The MOA must comply with Section 1098 of the Thai Civil and Commercial Code and include:
- The proposed company name, ending with the word “Limited.”
- The location of the registered office, specifying the province in Thailand.
- The company’s objectives.
- A declaration that the liability of shareholders is limited to their unpaid share amounts.
- The total registered share capital, divided into shares of a fixed amount.
- The names, addresses, occupations, and signatures of at least two promoters (individuals, not legal entities), along with the number of shares subscribed by each.
- Details of the registered director(s), including whether they have the authority to sign on behalf of the company separately or jointly.
Ensure all details are accurate to avoid delays. A standard MOA is usually processed within one working day, while custom MOAs may take longer. Once the MOA is approved, you can proceed to the next steps in the registration process.
Step 3: Allocate Shares
Promoters must be the initial shareholders of the company, each holding at least one share. Shares can include both preference and ordinary shares, which should be allocated among the promoters. Promoters also have the right to offer additional shares to other shareholders. Once the company is registered, promoters can transfer their shares to other shareholders or third parties. Consequently, the role of promoters is often temporary and typically concludes after the shares are allocated and the company is fully established. In Thailand, the role of promoters is often temporary and concludes after the company is registered and the shares are allocated, especially if it is planned that legal entities will become the shareholders later on.
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 – 8,000 baht.
Open a Company Bank Account
After registering your company, you can open a corporate bank account. The signatories, usually the director, must be present at the bank to open the account.
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
A Thai company must register with the Social Security Office (SSO) within 30 days of hiring its first employee. This requirement applies to both Thai and foreign employees, who receive the same benefits.
Although a company may be automatically registered with the SSO upon registering with the DBD, it still needs to go through the standard registration process after hiring employees.
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