WHAT ARE THE COMPANY SET-UP REQUIREMENTS?

Company name

Once you have chosen your legal business structure, you need to register your company with Thailand's Department of Business Development (DBD). This process may involve submitting required documents, obtaining approvals, and paying registration fees. The specific requirements may vary depending on the business structure you have selected.

Utilize Narai Partners' expertise to streamline your company's registration process. Our professionals will guide you through each step, ensuring all documentation is accurate and compliant. With Narai Partners' assistance, you can save valuable time and effort while ensuring a smooth registration experience.

The company's name must be secured by filing it with the Department of Business Development (DBD) within the Ministry of Commerce.

The company's name must conclude with the term "Limited" and be officially registered in the Thai language, even if the name is originally in English.

After the name receives approval, it will remain valid for a duration of 30 days, and no extensions will be granted.

Shareholders & Directors

For a Thai firm to meet the requirements, it must have a minimum of one director who is:

  • At least 20 years of age.
  • Either a Thai resident or a non-resident.
  • Not deemed incompetent or bankrupt.

In Thailand, businesses are obligated to have a minimum of three shareholders. However, under specific conditions, foreign investors can attain full ownership, holding 100% of the company.

For activities restricted to Thai nationals, foreign individuals or entities are allowed ownership of up to a maximum of 49%.

Ongoing business compliance requirements

General meeting of shareholders

The initial general meeting of the shareholders is convened within six months following the company's incorporation, with subsequent general meetings taking place annually thereafter.

Yearly reports

Private and public limited companies are required to furnish the following documents at the conclusion of each accounting period:

  • Audited financial statements
  • Balance sheet
  • Profit and loss account
  • Company name
  • Director's particulars
  • Roster of shareholders
  • Minutes of the annual meeting
  • Nature of business

Accounting and tax compliance

Date of the financial year-end

In Thailand, the standard financial year-end for companies is December 31st. The typical accounting period spans 12 months. However, for newly incorporated companies, it's important to note that their initial accounting period can be shorter than 12 months.

Bookkeeping requirements

Companies in Thailand are obliged to maintain their company accounts and related documents at the registered address for a minimum of five years following the closing of their accounts. However, depending on the nature of the company's business activities, this duration may be extended to seven years by the Revenue Department.

The essential documents, records, and statements that must be retained include:

  • Accounting journal
  • Statement of accounts
  • Records of payments and receipts
  • Profit and loss statements
  • Balance sheets
  • Records of electronic funds transfers
  • Credit card transactions
  • Bank statements, including records of checks
  • Internal or external audit reports

It is crucial to note that financial statements, accounts, and documents must be documented in either the Thai language or a foreign language accompanied by a Thai translation. These records should be written in ink, typewritten, or printed to meet the stipulated requirements.

Audit of financial statements

Companies are mandated to produce audited and certified financial statements at the conclusion of the fiscal year. Additionally, it is essential for the auditor to provide their professional opinion on the financial statements. This audit opinion is a necessary component when submitting both financial statements and tax returns.

Corporate income tax return

Companies are required to submit their corporate income tax returns using Form CIT 50 and make tax payments within 150 days from the end of their accounting periods.

For companies that solely engage in disposing of funds or profits from Thailand, there is an additional requirement. They must pay corporate income tax within seven days of the disposal date and submit Form CIT 54.

Employment law

Sick leave

Employees are granted a sick leave allowance of 30 days per year. If an employee takes sick leave exceeding a duration of three days, it is obligatory for them to provide their employer with a medical certificate as verification.

Maternity leave

Female employees who are pregnant are entitled to a total of 98 days of maternity leave, and this leave includes allowances for taking days off for prenatal appointments.

The initial 45 days of maternity leave are fully compensated by the employer, with the remaining portion of the maternity leave being covered by social security.

Paternity leave

The provision of paid paternity leave, totaling 15 days, is limited to employees within the public sector.

Yearly leave

Employees who have been continuously employed for one year are entitled to a minimum of six working days of annual leave.

Furthermore, the employer and employee have the option to mutually agree to carry forward any unused annual leave from one year to the next, allowing it to be added to the following year's entitlement.

Social Security Fund

Social security in Thailand encompasses the following groups of individuals:

  • Section 33: Employees aged not less than 15 years old and not exceeding 60 years old.
  • Section 39: Individuals previously insured under section 33, who have made contributions for at least 12 months but are no longer employed.
  • Section 40: Any person who does not fall under section 33 or section 39.

The social security contribution rate is fixed at 5% of the eligible income.

The minimum monthly salary used for calculating social security contributions is THB 1,650, while the maximum is capped at THB 15,000 (resulting in contributions ranging from THB 83 to THB 750).

Social security contributions must be remitted to the Social Security Office by the 15th of the subsequent month.

During the period from June to August 2021, the Thai cabinet implemented relief measures by reducing the contribution rate to 2.5% to assist employees.

HOW TO REGISTER A THAI LIMITED COMPANY?

Company registration process step by step

Reserve a company name

The process of registering your company begins with reserving a company name through the Department of Business Development (DBD).

However, there are certain restrictions to consider when choosing your company name. It cannot be identical to or closely resemble the name of an existing registered partnership or company, in either English or Thai. The approved company name will be registered in both languages. Sometimes, foreign investors may check the availability of the name only in English, and later, when the DBD checks the Thai transliteration, it could be rejected if it's deemed too like an existing Thai company name.

Certain terms are also prohibited from being used in company names. If you wish to include 'Thailand' in the name, it must be enclosed in brackets at the end of the name. It is advisable to suggest three names ranked by priority to increase the likelihood of success.

Keep in mind that the trading name of your business can differ from the company name. You can use the same name for multiple companies as long as you accompany it with a distinct descriptive word (e.g., ABC Trading Ltd, ABC Holdings Ltd, or ABC Capital Ltd). Once the name is approved, it will be valid for 30 days, and no extensions are allowed. Within this period, you must complete the second step of the registration process.

Prepare Memorandum of Association

The Memorandum of Association (MOA) is a legal document prepared by the founders of a company during the company registration process. Under Thai law, all limited liability companies must have an MOA. The MOA sets out the conditions under which the company was formed and is distinct from the Articles of Association (AOA), which describe the company's operating rules.

The MOA of a limited liability company must include these items:

  • The name of the company
  • The location of the company's registered office
  • The company's objectives
  • The share capital must be divided into shares of equal value.
  • The name, address, age, profession and number of shares that the persons setting up the company reserve for the purchase of shares.
  • The names, addresses and ages of two witnesses.

The MOA of a public limited company must contain the following information:

  • The name of the company
  • The purpose of the company, which is to offer shares for sale to the public
  • The purpose of the company
  • The share capital, including the type, number and value of shares
  • The province in which the company will be located
  • The name, date of birth, nationality and address of the promoters and the shares they own.

To file the memorandum, an application must be submitted together with a stamp duty of THB 200 to the Department of Business Development.

What are the capital requirements?

Under Thai law, there is no minimum capital requirement for a limited liability company that is mainly owned by Thai citizens and does not employ foreign staff or directors.

However, if a limited liability company employs foreign staff or directors, it must have a registered capital of THB 2 million per foreign employee. Companies that are restricted under the Foreign Companies Act must maintain a registered capital of THB 3 million.

The MOA registration fee for a limited liability company is THB 50 per THB 100,000 of registered capital. The minimum amount is THB 500, while the maximum amount is THB 25,000.

For a public limited company, the registration fee is THB 1,000 for every THB 1 million of registered capital. The maximum amount is THB 25,000.

After filing the memorandum of association, it is necessary to provide the names, addresses and professions of the directors of the foreign company.

In the case of a Thai limited liability company, there is no specific requirement regarding the nationality of the directors.

Prepare and sign documents

To facilitate the preparation of the Statutory Meeting for the adoption of the Memorandum of Association (MOA) and the drafting of the registration application documents for your new company, you will have to provide the following essential details:

  • The proposed name of the company.
  • The province where the company's registered office will be located.
  • The company's goals or intended activities.
  • The amount of share capital that the company intends to register.
  • Details of the promoters, including their names, addresses, occupations, and signatures. There should be at least two individuals serving as promoters, and they should not be corporate entities.
  • Information regarding the value and quantity of shares subscribed to by each promoter, specifying whether these shares are paid up or not and whether they are ordinary or preference shares.
  • If there are multiple registered directors, please clarify whether they sign on behalf of the company separately or jointly.
  • The address of the registered office, as well as any branch office locations.
  • Personal information about the ultimate shareholders or, in the case of a corporate shareholder, their company registration details.

This information will be essential for us to undertake the necessary administrative procedures and submit the necessary documents to the Department of Business Development (DBD) to register your new company. Please check that all the information you provide is accurate and up to date to facilitate the registration process.

Submission with the Ministry of Commerce

The director of a company is required to submit the updated list of shareholders to the Registrar of the Ministry of Commerce (MOC) at least once a year, and no later than 14 days after the date of the annual general meeting of shareholders.

However, in the past, the MOC had allowed the list of shareholders to be submitted simultaneously with the audited financial statements, which had to be filed with the MOC within one month of the date of the annual general meeting.

Companies that fail to comply with the deadline for filing the list of shareholders are liable to a penalty of 2,000 baht per authorized director.

Articles of Association

The articles of association are an essential document for all Thai companies and their content is established at the statutory meeting.

General provision

  • The regulations of the Thai Civil and Commercial Code relating to limited liability companies are applicable in their entirety.
  • In accordance with the law, any amendment to the Articles of Association must be submitted to the shareholders' meeting for consideration.

Shares and shareholders

  • Share varieties must be recorded on the registered certificate, and all shares must be fully paid up. Each share certificate must be authenticated by at least one director and bear the company stamp.
  • The transfer of shares must be formalised in writing, signed by the transferor and the transferee and authenticated by at least one witness.
  • The transfer of shares becomes valid as soon as the company registers the transaction.
  • The company may not hold its own shares or use them as collateral.

Directors

  • The number of directors and their remuneration are determined by a resolution of the General Meeting of Shareholders.
  • Any vacancy on the Board of Directors must be filled by the directors appointed by the Board of Directors. The term of office of any person so appointed is limited to the remainder of the term of office of the previous director.
  • The Board of Directors has the option of establishing the attendance threshold required for deliberations at its meetings, and in the absence of such provisions, the attendance threshold is three when the number of directors exceeds three.
  • The Board of Directors is responsible for the management of the Company.

Shareholders' meeting

  • A general meeting of shareholders must be held within six months of the company's registration, and at least once every 12 months. This is known as an ordinary meeting. All other general meetings are referred to as extraordinary meetings.
  • The Directors have the right to convene an Extraordinary General Meeting when deemed appropriate, or in response to a written request from shareholders holding at least one fifth of the shares.
  • Any shareholder who is unable to attend the meeting may vote by proxy, provided that the proxy is in writing.
  • The Chairman of the Board of Directors chairs all General Meetings of Shareholders. In the absence of a Chairman or if the Chairman is not present within 15 minutes of the time set for the start of the meeting, the shareholders have the right to elect one of their peers as Chairman.
  • The General Meeting is authorised to deliberate only in the presence of shareholders representing at least one quarter of the company's capital. If, within one hour of the scheduled start of the meeting, the minimum shareholder threshold is not reached, the meeting is cancelled.

Auditor

  • A balance sheet, comprising a summary of the company's assets and liabilities and a profit and loss account, must be prepared at least once every financial year, from 1 January to 31 December.
  • This balance sheet must be examined by at least one auditor and presented for approval at the general meeting within four months of the date on which the balance sheet was finalised.

Dividend and reserve fund

  • Dividends must be distributed in proportion to the amount invested in each share, unless they are preference shares.
  • When dividends are distributed, the company must allocate at least one-twentieth of the profits from its activities to a reserve fund, until the reserve fund reaches an amount equivalent to one-tenth of the company's share capital or a higher proportion thereof.

Open a company bank account

Once you have set up your company in Thailand, it is essential to open a bank account. It is important to do this as soon as possible, as this will be necessary to release the company's capital.

Below you will find the conditions and steps to follow to open a bank account for a company in Thailand.

There are several things to consider before opening a bank account in Thailand:

When opening a bank account for your business, it's important to choose the bank that best suits your needs. There are many banking options in Thailand, but each offers slightly different services, different fees, and specific procedures for certain transactions. Before deciding, ask yourself questions such as:

  • Do I need a Thai baht or foreign currency account?
  • Will the business require online banking?
  • Will the business frequently transfer funds internationally (to which countries)?
  • Are there any specific banking features or services that the business requires?
  • What are the conditions for obtaining a business loan?
  • Are there any monthly fees to consider?

Answering these questions will help you choose the bank that best meets your company's banking requirements.

Can foreigners and non-residents open a business bank account in Thailand?

Yes. However, the procedure and conditions for opening an account may vary from one bank to another and even from one branch to another within the same bank.

It is important to note that some banks may impose restrictions on the services available to foreign or non-resident customers, particularly regarding online banking and international fund transfers. It is therefore advisable to check with your chosen bank what its specific policies and requirements are for foreigners and non-residents before opening an account.

It is usually not possible to open a company bank account from abroad, as the designated director normally must go to the bank branch in person to do this.

The most popular banks in Thailand for foreigners:

  • Bangkok Bank
  • Bank of Ayudhya (Krungsi)
  • Citibank
  • HSBC Bank
  • Kasikorn Bank
  • Krung Thai Bank
  • Siam Commercial Bank (SCB)
  • Standard Chartered Thailand
  • UOB Bank

What documents do I need to open a business bank account?

  • A copy of the company's registration certificate.
  • Stamped minutes of the meeting of the Board of Directors authorizing the opening of the account and appointing signatories for payments and the closing of the account.
  • The company's tax identity card.
  • The identity card or passport of each member of the Board of Directors and of each shareholder holding more than 25% of the capital.
  • A copy of the company's articles of association and memorandum of association.
  • A list of shareholders.
  • A minimum deposit of THB 500 (the amount depends on the bank).

Please note that additional documents may be required by the bank, such as a work permit, company records, tax data and personal financial information, depending on its internal policies and the nature of your business. It is advisable to check the specific requirements of the bank with which you are considering opening an account.

The procedure for opening a business bank account in Thailand is divided into three steps:

  1. Prepare the required documents listed above, as well as any additional documents that may be requested by the bank.
  2. Complete the application form provided by the bank.
  3. Go to the local bank with the completed documents and application form to present them. You may also have a meeting with the bank's local branch manager.

In general, the account opening process takes about a week, but the exact time may vary depending on the bank, the complexity of the company's structure and the completeness of the documents provided.

We recommend that you contact the bank in advance to find out about its specific procedures and make an appointment if necessary.

Register for VAT

Any person or company subject to VAT is required to register by submitting form VAT 01 before starting business or within 30 days of reaching the required income threshold. If the business is based in Bangkok, it should apply to the Area Revenue Office, while if it is located elsewhere, it should apply to the appropriate branch of the Area Revenue Office.

If there is more than one office, the application should be submitted to the Revenue Office closest to the main office.

Find out more about the conditions for paying VAT for your business here: (redirection vers la page taxes / VAT)

Register with Social Security Fund

How does social security works in Thailand?

Social security is a fund designed to guarantee the security and protection of insured persons. Under the Social Security Act, employers and employees are legally obliged to pay monthly contributions to the social security fund.

What is the social security contribution rate in Thailand?

The current contribution rate is 5% of the employee's salary.

The minimum salary taken into account for the calculation is THB 1,650, while the maximum salary taken into account is THB 15,000. As a result, the minimum contribution is THB 83, and the maximum contribution is THB 750. Even if the employee's salary exceeds THB 15,000, the maximum contribution remains capped at THB 750.

It is important to note that contributions must be paid to the social security office by the 15th of the following month.

How do I register for social security in Thailand?

Any company registered in Thailand that employs one or more employees aged between 15 and 60 must register and submit an application for affiliation to the social security fund for its employees to the Social Security Office. This must be done within 30 days of the date on which the employee starts work for the company.

Foreigners working legally in Thailand are also required to register with the Social Security Office. They are entitled to the same benefits as Thai employees, in accordance with current legislation.

What is an insured person within the meaning of the Social Security Act?

Under the Social Security Act, a person is deemed to be insured if he or she pays contributions that entitle him or her to the benefits provided for under the Act.

Insured persons include the following categories:

  • Employees, as defined in Article 33, aged between 15 and 60.
  • Former employees, in accordance with Article 39, who were insured persons within the meaning of Article 33 and who paid contributions for a period of at least 12 months, but who cease to be considered as insured persons by ceasing to be employees.
    If a former employee wishes to continue to be insured, he must inform the social security office within six months and pay a contribution to the fund before the 15th of the following month.
  • Any other person who does not meet the definition of an employee under Article 33 or Article 39 may request to be insured under Article 40 by notifying the Social Security Office.

What benefits are insured persons entitled to?

  • Benefits in the event of accident or illness, including health promotion and disease prevention
  • Disability benefits
  • Death benefits
  • Family allowances
  • Maternity benefits
  • Old-age benefits
  • Unemployment benefits, except for an insured under Article 39

What are the benefits related to a non-occupational accident or illness?

  • The cost of medical examination and diagnosis.
  • Costs of health promotion and disease prevention.
  • Costs of medical treatment and rehabilitation.
  • Costs of admission to and treatment in medical establishments.
  • The cost of medicines and medical supplies.
  • Ambulance or patient transport costs.
  • Costs paid as preliminary assistance to an insured person in the event of damage resulting from medical services.
  • Other necessary expenses.
  • The insured person receives benefits equivalent to 50% of his/her salary when the employee is absent from work for a period not exceeding 90 days per incident and not exceeding 180 days per year.

Under the Social Security Act, an insured person is entitled to benefits in the event of a non-occupational accident or illness if the employee has paid contributions for at least three months in the fifteen months prior to the date on which he or she receives medical treatment.

In the case of a chronic illness, in accordance with ministerial regulations, the employee is entitled to benefits for a period exceeding 180 days but not exceeding 365 days.

Disability benefits under Article 70 include:

  • The cost of medical examination and diagnosis.
  • The cost of medical treatment.
  • The cost of medicines and medical supplies.
  • The cost of admission to and treatment in a medical establishment.
  • Ambulance or transport costs for a disabled person.
  • Physical, mental and professional rehabilitation costs.
  • Other necessary expenses.

To be entitled to non-work-related disability benefits, insured persons must have paid contributions for at least three months in the last 15 months.

When an insured person becomes disabled and this disability is considered severe according to the medical commission's criteria, he or she will receive benefits equivalent to 50% of his or her salary.

What are the benefits in the event of death?

In the event of the death of an insured person for non-professional reasons, and if he or she has paid contributions for at least one month during the six months prior to his or her death, the following death benefits will be granted:

  • Funeral expenses, amounting to at least 100 times the maximum daily minimum wage rate, are paid to the following persons in the following order of priority:
    • The person whom the insured has designated in writing as the funeral administrator and who has undertaken to fulfil this role.
    • The insured's spouse, parents or children.
    • Other persons who can provide proof of funeral management.
  • If the insured person has not designated a funeral administrator in writing, the death benefits will be divided equally between the insured person's spouse, parents or children as follows:
    • If the insured has contributed for 36 months or more, but less than 120 months, an allowance equivalent to 50% of the monthly salary multiplied by four is paid before death.
    • If the insured has contributed for 120 months or more, a benefit equivalent to 50% of the monthly salary multiplied by twelve is paid before death.

What does family allowance include?

  • Children's living expenses
  • Children's school fees
  • Children's medical expenses
  • Other necessary expenses

Employees are entitled to family allowances if they have paid contributions for at least 12 months in any 36-month period.

Insured persons are entitled to family allowances for their children up to the age of 15 and for a maximum of three children at any one time.

What are maternity benefits?

  • The cost of medical examinations and antenatal care.
  • The cost of medical treatment.
  • The cost of medicines and medical supplies.
  • Childbirth expenses.
  • Costs of admission to and treatment in medical establishments.
  • Nursery care and treatment.
  • Ambulance or patient transport costs.
  • Other necessary expenses.

If an employee has to be absent from work because of childbirth, she will receive benefits equivalent to 50% of her salary, paid in a single payment over a period of 90 days each time.

An employee is entitled to maternity benefit if she has paid contributions for at least five months in the last 15 months.

Each employee is entitled to maternity benefits for a maximum of two births.

What are old-age benefits?

An insured person aged 55 or over is entitled to old-age benefits if he or she has paid contributions to the fund for at least 180 months.

The benefit may be paid in one of two forms:

  • Monthly subsistence allowances (retirement pension)
  • Payment of a lump sum (retirement pension bonus)

What is unemployment benefit?

Employees are entitled to unemployment benefit if they have paid contributions for at least six months in the 15 months prior to becoming unemployed.

WHY YOU SHOULD SET UP YOUR BUSINESS IN THAILAND

Thailand is attracting increasing interest from foreign investors wishing to set up a business or expand their activities, due to the rapid growth of its economy and its favourable business climate.

A gateway to the Asian market

Investors would be well advised to consider setting up a business in Thailand, given its strategic position as a gateway to several Asian countries.

Thailand occupies a central geographical position between China and India, maintaining close trade links with both nations. It is also a member of the Association of Southeast Asian Nations (ASEAN), an organisation comprising Brunei, Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore and Vietnam.

Thailand has also ratified the Association of Southeast Asian Nations Free Trade Area (AFTA) agreement with the other nine nations. This initiative aims to boost domestic trade and production among ASEAN members, while promoting economic integration with international and regional partners.

Thailand also benefits from access to the Greater Mekong Subregion, encompassing Cambodia, China, Laos, Myanmar and Vietnam, and is actively involved in strengthening economic ties within these six nations. The Greater Mekong Subregion is committed to promoting development in sectors such as agriculture, energy, transport, trade facilitation, urban development and tourism.

Investors establishing a presence in Thailand benefit from considerable potential access to Asian markets, thanks to the free trade agreements concluded between Thailand and other nations, thus facilitating trade between these countries.

Many incentives for foreign investment

Thailand's Board of Investment (BOI) is the country's government agency dedicated to promoting the establishment of companies and projects in sectors deemed beneficial to Thailand's economic prospects.

Companies can apply for promotion by BOI, enabling them to achieve 100% foreign ownership and benefit from tax incentives for qualifying activities.

The BOI offers tax incentives for the following business sectors:

  • Agriculture and agricultural products
  • Chemicals, paper and plastics
  • Electronics and electrical appliances
  • Light industry
  • Mining, ceramics and base metals
  • Metal products, machinery and transport equipment
  • Services
  • Technological development and innovation

Please note that the BOI incentives are classified into two groups, named Group A and Group B.

  • Group A covers activities eligible for tax incentives, including corporation tax, import duty exemptions for machinery and raw materials, and other non-tax benefits.
  • Group B includes activities that benefit exclusively from tax incentives relating to the import of machinery and raw materials, as well as other non-tax advantages.

Special economic zones (SEZs)

Special Economic Zones (SEZs) are regions that promote infrastructure development, offer investment incentives and provide services to foreign workers with the aim of stimulating economic development by attracting small and medium-sized enterprises (SMEs).

Companies established in Special Economic Zones (SEZs) benefit from advantages such as one-stop services, tax breaks and access to foreign labour.

Thailand has 10 SEZs comprising 23 districts and 91 sub-districts:

  • Tak SEZ – three districts and 14 sub-districts
  • Sa Kaeo SEZ – two districts and four sub-districts
  • Trat SEZ – one district and three sub-districts
  • Mukdahan SEZ – three districts and 11 sub-districts
  • Songkla SEZ – one district and four sub-districts
  • Nong Khai SEZ – two districts and 13 sub-districts
  • Nakhon Phanom SEZ – two districts and 13 sub-districts
  • Chiang Rai SEZ – three districts and 21 sub-districts
  • Kanchanaburi SEZ – one district and two sub-districts
  • Narathiwat SEZ – five districts and five sub-districts

Low corporate tax rates

Thailand has one of the lowest corporate income tax rates in Asia.

The standard rate is 20%, but this can vary depending on the type of taxpayer.

To find out more, visit our page dedicated specifically to taxes.

FIVE COMMON CHALLENGES WHEN STARTING A BUSINESS IN THAILAND

Establishing a business in Thailand is a highly sought-after option in Asia. Nevertheless, the process of setting up a business in Thailand as a foreigner may involve certain complexities or restrictions.

Ownership restrictions

Foreign investors establishing a Thai limited company are restricted to owning no more than 49% of the shares, with the remaining 51% being held by Thai nationals.

Non-Thai nationals may opt to establish Thai companies due to the advantages they provide, including the absence of restrictions on the type of business, the ability to purchase and own land, and relatively low setup costs, which may not be available to foreign companies.

Foreign investors need to be mindful of the prohibition outlined in the Foreign Business Act, which restricts the use of nominee Thai shareholders to control most shares in a Thai limited company. Should a Thai national act as a nominee shareholder, they may be subject to a fine ranging from THB 100,000 to THB 1 million.

Nevertheless, there are three avenues through which foreign entrepreneurs can secure complete ownership, holding 100% of a company.

BOI application

When seeking BOI promotion, it is crucial to meticulously adhere to the stipulated requirements and ensure the accurate preparation of all necessary documents. Failure to do so may result in the rejection of your application.

Investors have the option to apply for BOI promotion either before or after registering their company. However, it is advisable to pursue BOI promotion after completing the company registration process.

The application process for promotion takes some time, providing an opportunity to acquire any necessary licenses or machinery by first incorporating the company.

For BOI promotion to be approved, certain criteria must be met:

  • To foster comprehensive development in the agricultural, industrial, and service sectors, projects submitted for BOI promotion must meet the following qualifications:
    • The project's added value must amount to no less than 20% of revenues, except for projects in agriculture and agricultural products, electronic products and parts, and winding centers, which must have an added value of at least 10% of revenues.
    • The utilization of modern production processes is mandatory.
    • New machinery is a prerequisite.
    • Projects with an investment capital of THB 10 million or more must secure ISO 9000 or ISO 14000 certification or a comparable international certification within two years.
  • Consideration for environmental protection is essential.
  • A minimum capital investment of THB 1 million is required for each project.
  • Projects with an investment exceeding THB 750 million must provide a feasibility study.

Work permits

Foreigners intending to work or engage in business activities in Thailand must secure a valid work permit before commencing their endeavors. Working in Thailand without the required work permit is considered illegal, and a foreigner apprehended for doing so may face fines or imprisonment.

Upon issuance of a work permit, the foreigner is restricted to working solely within the company and at the designated location specified in the permit. If the company's location changes, a new work permit must be obtained to reflect the updated information.

If you decide to cancel your work permit, it is imperative to return it to the Ministry of Labour within 10 days. It's important to note that if you cancel your work permit, your visa will also be canceled. Therefore, it is necessary to apply for an extension of stay promptly after canceling both your work permit and visa.

Appointing shareholders

A company in Thailand is mandated to have a minimum of three shareholders. Given that foreign investors are not allowed to possess the entire company, it necessitates having at least two Thai shareholders.

Nevertheless, foreign investors may encounter challenges in finding Thai business partners, and it can be both difficult and risky to identify local investors to serve as shareholders in the company. As Thai shareholders will hold the majority of shares, selecting a trustworthy individual to act as a shareholder is crucial.

Foreign shareholders can exert control over the company with minority shares by holding preference shares. Preference shares grant the holder the right to participate in any Annual General Meeting with voting rights that may be the same, lower, or higher than those of an ordinary shareholder. Additionally, preference shareholders have the privilege of receiving dividends before ordinary shareholders in case the company turns a profit.

Language barrier

Thailand designates Thai as its official language, with Thai being the primary business language. Nevertheless, English is commonly spoken in Thailand.

Since many government authorities and legal documents are in the Thai language, it is advisable to engage a professional translator to assist in the preparation, translation, and scrutiny of documents.

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.