Company Formation
General Information on the formation of a company in Thailand.
We would like to give you a brief review of the different types of companies that can be founded in Thailand in accordance with the Thai Civil and Commercial Code (CCC). This information is no substitute for a lawyer. As a Farang (non-Thai foreigner) there is no way for your to create a company without legal help.
Company Types in Thailand
- Ordinary Partnership
- Limited Partnership (Ltd.Part)
- Public Company Limited (Co., Ltd Public)
- Company Limited (Co., Ltd)
Ordinary and Limited Partnership
The difference between an ordinary partnership and a limited partnership lies in varying levels of liability. The ordinary partnership is an unlimited partnership. In other word all the partners are personably liable for obligations with all of their personal assets. In the limited partnership, on the other hand, partners are only liable to the extent of their partner share. An ordinary partnership does not have to be registered (it can be however and is then a seperate legal entity), a limited partnership must be registered. Both company types are not very attractive for the typical non-Thai (Farang).
Public Company Limited
The public company limited als legal form is a company with some resemblance to the American corporation. The requirements and obligations of a public company limited (PCL) is described in the Public Company Limited Act of 1979. The PCL has many similarities to the Co., Ltd (s. below). The main difference is that many more stock holders are necessary.
The PCL requires at least 100 stockholders. Stockholders can be individuals or other legal entities. Individual stockholders must hold - in sum - over 50% of stock capital. Any legal entity (legal persons) holding shares may not hold more than 10% of capital. The value of a share should not be higher than 100 baht and not less that 20 baht. At least 15 individual persons and five million baht as the minimum in registered capital is necessary for company formation. The PCL is not a common company form for Farang on Samui.
Company Limited - aka Private Company Limited
The limited or private limited company must be formed by at least seven individuals (natural persons), called "promoters". Each promoter must have at least one share. There is no minimum amount prescribed for registered capital. The sum should, however, be high enough to be considered respectable, at least 30,000 baht.
A private limited company must have Thai partners among the promoters. The main advantage of having 51% of the capital in Thai hands is that the company is then not ruled by the regulations outlined in the Alien business Act. This makes company formation much easier. An attorney can design the memorandum of association so that the requirements of including Thai nationals are appeased without giving these Thai nationals decision making powers.
The private company limited must register for a name at the Business Development Office in the Ministry of commerce. Then a memorandum of association (founding contract of association) must be registered. The fee for the memorandum of registration is 50 baht per 100,000 baht of registered capital. A statutory promoter meeting and the application for a tax id is mandatory.
The company must have standard bookkeeping and follow those accounting procedures specified in the Thai Civil and Commercial Code, the Revenue Code and the Accounts Act. The documents themselves can be in any language, but a Thai translation is necessary.
A new company must close accounts anually, i.e. every 12 months (after registration). The company auditor must certify company performance and it must be approved by the shareholders. Audited financial statements must be certified by an authorized auditor and submitted to the Revenue Department. The closed accounts are to be filed with the Business Development Office, Ministry of Commerce, within five months of the end of the company's fiscal year, and with the Revenue Department, Ministry of Finance, within 150 days of the end of that same fiscal year.
Although there is no minimum on registered capital of the private limited per se, there are important regulations to be considered if the company wants to employ non-Thai nationals. At this point in time the Labour Office requires two million baht registered capital per foreign national employee.
