What is a company limited.
In general, meaning of a Thai Company Limited is a business association. It has the character of a legal person distinct from its officers and shareholders. In order words, this allows the company to own property in its own name. As well as insulating the owners of the company against personal liability.
Under Section 1096 of Civil and Commercial Code of Thailand (CCC). A Thai Company Limited means a kind of company which forms with a capital divides into equal shares. The liability of the shareholders will limit to the amount unpaid on the shares respectively held.
By contract of law, in some countries like 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 under the Section law mentioned.
What is the advantage of setting up a Thai Company Limited.
A Thai Company Limited has a Thai nationality. In order word, a Thai company limited has the same Rights and Duties with a Thai natural person. Having said that, a Thai Company can perform a business and own a property. Moreover, it more advantage for business tax. Some businesses may applicable for tax exemption form the BOI. Let’s go step by step how to set up a Thai Company Limited.
Step 1: Giving he company name.
3 names both in English and Thai. This to make sure that one of them will be available and not forbidden by the law. With this in mind royal family name, government agency name, banking, finance, credit foncier and insurance etc can not use as a Company name.
Step 2: Making the company memorandum.
According to Sections 1097 and 1098 of CCC. A Memorandum is a declaration letter of 3 promoters. Having said that the memorandum to express their intention of establishing a company. Contain with the following particulars; Name, Location, Objective, declaration of the limit of liability of the shareholders. Also the amount of share capital, details of the 3 promoters. The memorandum will submit to Business Department.
Step 3: Subscribing to buy a company share.
All 3 promoters must subscribe to buy company shares at least one share under section 1100 of CCC.
Step 4: Make a General Meeting.
Under section 1007 and 1008 of CCC. The general meeting for adopting the following.
a) Article of association or regulation of the company (if there is).
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, article of association has a major impact on a majority power. It creates a full control of the board of shareholder and the company by the preference. The key is the preference shares which is not only a 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 Minimum 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 mine, in case of Work permit the minimum capital is 2,000,000THB. 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 a limited company consist of the following from.
(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 to the competent officer the application and required documents and information and done.
All things considered, how to structuring a Thai company to have a full control of your company is the most important. Importantly, rights always comes with duties. Setting up a Thai Company you compulsory need an accountant/auditor. This for tax and financial filing. The yearly balance sheet is under the responsibility of the director to be true and accurate. Under section 1196 and 1206 of CCC.
If you have a question about setting up a Thai Company in Phuket. Or, if you are looking for a Law firm in Phuket 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.
Frederic Retif, Master in Business law, French Lawyer and Thai Legal Advisor.
And Nuansnit Chantawong, Master in Laws, Attorney at Law and Notary Services Attorney.