Setting up a company limited in Thailand can be a relatively straightforward matter depending on the details of the new company to be formed. This article shall discuss various issues relating to company registration, including the minimum requirements to register and incorporate a company in Thailand as well as several key considerations which the key stakeholders should consider before forming the new company such as director signing authority, registered share capital and the possible need for licenses or permits.

Minimum Requirements to Form a Company Limited

To form and register a new company limited at the Department of Business Development (DBD), the promoters of the company shall need to comply with the following minimum requirements:

  1. The new company will firstly need to reserve a name for the company at the DBD and such name shall need to be in Thai language. The name must be unique and in accordance with the Civil and Commercial Code (CCC) it must end with the word "limited".
  2. The new company will need registered share capital as this shall be specified in the new company's form BorOrJor.5 and the statutory meeting minutes. The amount of registered share capital the new company will need shall depend on various factors such as whether the new company needs a specified amount in order to have a license such as a Foreign Business License (FBL) under the Foreign Business Act E. 2542 (1999) or Board of Investment (BOI) privileges. At a minimum, Thai law provides that the shareholders must pay up at least 25% of the registered share capital. However, it is worth noting that the share capital shall need to be fully paid up in certain cases such as if the company later applies for protection under the US-Thai Treaty of Amity or a FBL etc. In accordance with the CCC the minimum par value for shares in a limited company is 5 baht per share.
  3. The objectives of the new company shall need to be specified in the Memorandum of Association, these shall appear in the affidavit of company registration which is an official document issued by the DBD when the company is officially registered.
  4. According to the CCC, the company must have at least two (2) individuals as its promoters. These individuals must each subscribe to at least 1 share in the new company.
  5. A limited company in Thailand must have a minimum of one (1) director but it is advisable to have at least two (2) directors as this makes the running of the company easier as having at least 2 directors means that you can hold board of director meetings. When registering the company it is also necessary to specify the signing power of the authorized directors of the company to legally bind the company.
  6. The new company will need a registered office address which shall be specified on the company registration documents such as the DBD issued affidavit of company registration.
  7. In relation to shareholders, a private company limited must have at least two (2) shareholders at all times. This minimum requirement is initially met by the promoters given that each of them is required to subscribe to at least 1 share in the newly formed company.

Key Issues to Consider When Registering a New Company Limited in Thailand

  1. Authorized Director signing power – The signing power of the authorized directors of a company limited is a vitally important factor for the promoters to consider because this shall determine what signing conditions shall apply to the authorized directors of the company in order to legally bind it to such things as contracts. Some companies use relatively straightforward signing conditions such as Director A has unlimited signing power and can sign individually on behalf of the company. However, some companies use more conditional signing conditions for their authorized directors such as requirements limiting their ability to sign only for certain documents or stipulations requiring 2 or more directors to sign jointly (with or without the company seal affixed). If the signing conditions are not practical then this can cause major problems later on as the person authorized to sign may not be available to sign, hence promoters and directors should be mindful of the signing conditions they set as otherwise they may not be effective in reality and result in documents signing being delayed or prevented.
  2. Bank reference letter for Thai shareholders – Thai shareholders shall need to declare the source of their funds to purchase shares in the company in certain cases. Basically this rule requires certain Thai shareholders to submit evidence of how they can afford to purchase their shares. In practice what is required is an official bank letter to show that they have the necessary funds in their bank account to purchase/ subscribe for their shares in the company. The purpose of this is to eliminate nominee Thai shareholders trying to circumvent the provisions of the Foreign Business Act.
  3. Liability of shareholders of the new company – if the new company's shares are not fully paid up then the shareholders are liable for the balance amount owing on their shares should such balance be called by the directors of the company.
  4. Foreign majority ownership considerations – If the new company shall be majority foreign owned (non-Thai) then depending in its business activities it may need special permission from the Thai Government in order to carry out its business activities in Thailand, such special permission may be in the form of a Foreign Business License (FBL) under the Foreign Business Act BE 2542 (1999) or Board of Investment (BOI) investment privileges etc.
  5. License or permits – Depending on the business activities of the new company, it may also need to obtain special licenses or permits in order to operate its business in Thailand. Examples of such licenses include a domestic recruitment license, import/export license, factory license, hotel license, E-commerce license, alcohol license and tourism license. Each license has its own requirements and in some cases certain licenses impose conditions on foreign share ownership, the directorship and minimum capital requirements. Hence, when registering a new company it is sensible to consider the licenses and permits it will require to operate its business and the conditions which shall apply to such licenses so that they can be complied with by the shareholders and directors.
  6. Share certificates – Share certificates should be delivered to each shareholder for the shares held by them. Every share certificate must be signed by at least one of the directors and have the company seal affixed. Every share certificate must at a minimum mention the name of the company, the numbers of the shares to which it applies, the amount of each share and the amount paid up on each share.

Originally published 11 Sep 2023

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.