Thai Limited Company Formation is ideally the first step in setting up a new business in Thailand.
A limited company is one that is formed with capital divided into equal shares. The shareholders’ liability is limited to the amount of, if any, unpaid shares held by them.
A Thai Limited Company is majority-owned by Thai nationals, owning at least 51% of company shares.
Aside from the company’s capacity to acquire land, forming a Thai majority company generally requires less registered capital and less paperwork than setting up a foreign company.
A Thai limited company has to consist of 1 or more directors. They can either be Thai or foreigner. Under the new Thai Company Shareholding Structure, the minimum number of shareholders needed to establish a Thai Limited Company and Partnership has been reduced from three to just TWO as of February 7th, 2023.
You can set up a Thai Limited Company with only a few thousand Baht. However, the average declared capital is 1M Baht.Â
You can set up a Thai Limited company in about 1-2 weeks.
Even if a foreigner funds the company, the foreigner needs to secure a work permit if he intends to personally engage in the business. A company can obtain the relevant visa and work permit for its foreign director or foreign employee, provided it has been accordingly set up. The company must employ a minimum number of Thai nationals for each foreigner employed. Moreover, they must have a minimum paid-up capital of 2 million Baht for every foreign employee.
In Thai Limited Company shareholding, Thais must own the majority of the company shares. This means that foreign ownership of the company cannot be more than 49%.
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Foreigners can hold 100% ownership of businesses in non-restricted categories, such as exporting businesses and certain types of manufacturing businesses. Other methods to obtain 100% non-Thai control are through application for an alien business license, Board of Investment (BOI) promotion, or registration through the Treaty of Amity for Americans.
Shareholders of limited companies have the privilege of voting in the annual general meeting of the company. This is based on the type and number of shares they own. They have a right to cast their votes when the company is making major decisions.
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An ordinary share gives the holder voting rights in the company and entitles the person to all dividend distributions as a part-owner of the company.
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Preference shares allow holders to be paid dividends before ordinary shareholders, and they also have priority over asset claims upon company dissolution. The downside is that preference shareholders have a fixed dividend and only limited voting rights with respect to company affairs.
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These different types of rights can have a major impact on the running of the business because they can have a security impact on various company issues.
Starting a new business in Thailand may become complicated due to language barriers. It may also take several days or weeks to complete the entire process. Furthermore, all the legal documents are in Thai script. Completing these forms without knowledge of their contents or the Thai law can lead to serious complications. This may then have a vast effect on you and your business. Therefore, it is essential to look for trusted lawyers and advisors with legal qualifications and practical experience. They can give you an extensive guide and advice on how to structure your company.
If you are planning to start a new business in Thailand, our specialists in company formation in Thailand offer tailored services to foreign investors. Book an appointment now!
