Last updated [CCC. No. 23 effective on 07th February 2023]. If you are a business startup or want to expand your business, this article gives you essential information that is very useful for setting up a new Thai company in Phuket and throughout Thailand. The below information is good for you as you prepare to set up your new Thai company as both a holding company and a business operation company.
What is a Thai Company Limited?
In general, a Thai Company Limited is a business association consisting of a minimum of three shareholders. The management is carried out by an authorised director, who is under the control of the general meeting of shareholders and the company’s constitution. It has the character of a legal person distinct from its officers and shareholders. In other words, this allows the company to own property in its own name. As well as insulating the owners of the company against personal liability, etc.1
A Thai Company Limited is a kind of company whose capital is divided into equal shares by two minimum shareholders or more. The liability of the shareholders will be limited to the amount unpaid on the shares held. By contrast, in some countries like the USA, the court may ‘lift the corporate veil’ and subject the ‘shareholders’ to personal liability. But in Thailand, the liability of the shareholders is limited.2
Note that the personal liability of shareholders and director(s) are under different rules. Learn more about company management
What is the Advantage of Setting up a Thai Company Limited
A Thai Company Limited has Thai nationality. In other words, a Thai company limited has the same rights and duties as a Thai natural person. Having said that, when setting up a Thai company, it can conduct business and own property. Moreover, it is more advantageous for business tax. Some businesses may be eligible for tax exemption from the BOI. Let’s go step by step on how to set up a Thai Company Limited.
Step 1: Giving the Company Name
Three names, both in English and Thai. This is to make sure that one of them will be available and not forbidden by law. Keep this in mind: royal family names, government agency names, banking, finance, credit finance, insurance, etc. cannot be used as company names!
Step 2: Making the Company Memorandum
A memorandum is a declaration letter from three promoters. Having said that, the memorandum expresses their intention of establishing a Thai company. contain the following particulars: name, location, objective, and declaration of the limit of liability of the shareholders. Also, the amount of share capital and details of the three promoters The memorandum will be submitted to the Business Department.3
Step 3: Subscribing to Buy a Company Share
All three promoters must subscribe to buy at least one share of the share.4
Step 4: Make a General Meeting.
The general meeting for adopting the following.5
a) Article of association or regulation of the company.
b) The expense incurred by the promoters in promoting the company.
c) The number of preference shares, (if there is) and the nature and extent of the preferential rights of the preference shareholders.
d) Payment of company shares.
e) Appoint the company director and the company auditor(s).
Another key thing to remember is that articles of association have a major impact on a majority’s power. It creates full control over the board of shareholders and the company through preference. The key is the preference share, which is not only one type of share. But also having different voting rights with the common share.
Step 5 Make a Share Payment
After the General meeting. The share capital must be paid not less than 25% of company capital. The company capital in theory is a minimum of 15 baht by combination of Section 1100 and 1117 of CCC. But in practice, no company is set up with this minimum amount. With this in mind, in the case of a work permit, the minimum capital is 2,000,000 THB. In other situations, if the capital is more than 5,000,000THB. The Thai and/or Foreigners shareholders must provide Bank Statement certificates.
Step 6 Making the Application
The application for registration as a limited company consists of the following.
(a) company register, called Bor Jor 1.
(b) the Company limited registration certificate, the memorandum, called Bor Jor. 2).
(c) the list of establishment registration, called Bor Jor 3.
(d) the objective, called Wor.
(e) 5 the details of directors, called Kor.
(f) the list of shareholders, call Bor Jor 5).
Step 7 Register with the Company Department
The final step is to provide the competent officer with the application and required documents and information.
All things considered, the director(s) isn’t a real big boss. Therefore, structuring a Thai company to have full control of your company is the most important! Importantly, rights always come with duties. When forming a Thai company, you must hire an accountant/auditor. This is for tax and financial filing. The yearly balance sheet is under the responsibility of the director to be true and accurate.6
If you have a question about setting up a Thai company in Phuket, Or, if you are in need of a Thai Company lawyer to assist you with setting up a Thai company, Feel free to contact us; you will not be charged for the first session to determine your needs.
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- the Thailand Civil and Commercial Code (CCC), Section 1098, 1097, 1108, 1015, 1110, 1144
- the CCC, Section 1096
- the CCC, Sections 1097 and 1098
- the CCC, Section 1100 of CCC.
- the CCC, Section 1007 and 1008.
- the CCC, Section 1196 and 1206.
