Thailand, like other countries in the Southeast Asian region, encourages foreign investors to their country to boost their economic activities. And unlike other countries in the region, Thailand happens to have the right circumstances, conditions and enticements to lure foreign investment into the country. And in order to facilitate the influx of foreign companies to Thailand, several structures were established from which foreign investors can choose when they want to set up a company in the country.
One of the most frequently used legal entities in Thailand is the Private Limited Company, which has the same features and functions as the Limited Liability Company (LLC) in the United States. In Thailand, a Private Limited Company is used as a way to operate business in accordance with the business and investment laws of Thailand. It is required that 51% of a company’s shares must be held by Thai nationals. The remaining 49% may be held by anyone including foreign investors.
The biggest advantage of establishing a Private Limited Company is the fact that legally, it is a stand-alone company under Thai law. And for foreign investors who want to control the ownership of the company, the 49% limit may be exceeded or exempted, if the company is granted a Foreign Business License, which means the business should be unique and should not compete with local Thai businesses.
To set this type of business structure, a minimum of 3 individual promoters (shareholders) is required, and at least one director is elected to manage the business or the company. The business registration process includes:
Reservation of Name. This is done by submitting a signed Name Reservation Form to the Department of Business Development of the Ministry of Commerce (MOC). The form should contain the desired names including the alternative names which may be considered if the primary names have already been used by other entities.
Submit Memorandum of Association or MOA. This should include the name of the company, the province where the company will operate, scope of company’s business, capital (including the number of shares and their par value) to be registered, and the names of all the promoters.
Calling of Statutory Meeting. Once the share structure is determined, a statutory meeting is called to facilitate:
Adoption of Articles of Association (By-Laws). A Thai lawyer can help out in preparing the Articles of Association.
Ratification of any contract entered into including expenses incurred by the promoters in promoting the company
Fixing the amount of remuneration, to be paid to the promoters
Fixing the number of preferred shares to be issued and the nature and extent of the preferential rights accruing to them
Fixing the number of ordinary shares or preferred shares to be allotted as fully or partly paid-up
Appointment of the initial directors and auditors and determining the respective powers of the directors
Registration of Company. Within 3 months from the date of the statutory meeting, the directors must submit the application to register the company. Failure to register within the specified period, the company statutory meeting shall be nullified and void. When this happens, a meeting for persons who reserve will be arranged so they can buy the shares again.