Establishing Company Limited in Thailand
- NAME; three possible names for your company are submitted to Department of Commerce to check availability, they will approved one and notify back within 3 business days.
- DIRECTOR(S); can be one or more in number and can be either foreigner or Thai. The director(s) is/are the only person(s) authorized to sign on behalf of the company. Two directors can be appointed as a control mechanism. It is recommended to have a Thai Director listed if applying for a Work Permit (WP) because they can sign for the WP application. Only a foreigner holding a WP can sign for another WP application hence a Thai Director is needed.
- SHAREHOLDERS; can be foreigners or Thai, as long as the Thais hold at least 51 percent of the company. Foreigner(s) can hold the maximum of 49 percent of the shares of the company. The way to maintain controlling interest in the company is to issue two classes of shares; ordinary and preferred. Possession of ordinary shares would give the shareholder more voting rights in the company than the preferred shareholder. The shareholder cannot sign on behalf of the company unless he/she is an authorized director.
- BUSINESS ADDRESS; you can use any address inThailand for a business, however for VAT registration; you must have a written permission from the owner of the property. Many start-up companies find property owners are reluctant to sign approval of their rented land for business use. We can assist you in finding a suitable location for your business.
- REGISTERED CAPITIAL; refers to the total financial responsibility of the company’s shareholders. You must register capital of at least 2 million baht if your company will be applying for a work permit. If the company is simply established to own property, 1 million baht is sufficient.
- MEMORANDUM OF ASSOCATION; the document specifies the name, size of capital, and business objectives of the company. It is recommended to list many objectives since your company may expand in the future for new business opportunities.
- ARTICLES OF ASSOCATION; the document specifies the basic rules the company must follow after incorporation. Standard articles are normally used at the beginning of registration to speed the process. Non-standard articles may be adopted by the company at a later time.
- CERTIFICATE OF INCORPORATION; your company will be issued a certificate by the Department of Commerce after completing the registration process.
- CORPORATE TAX ID; every business entity must apply for tax ID number within 60 days of being registered.
- VAT REGISTRATION; every business entity with annual sales over 1.2 million THB or when making application for a work permit must register for VAT. This number you will need to show on invoices you issue, for VAT you may charge, or for VAT you may pay out when your company purchases goods or services. At the end of each month, quarter, and year, you will claim on your tax return using this VAT number.
- PAID IN CAPITAL; Further, for each foreigner working within your company, your company is required to have a registered capital of 2,000,000 THB, i.e. if you have two non-Thai working in your company, it is required to have a registered capital of at least 4,000,000 THB. However, this does not mean that you need to have this amount of money to start, it is the merely the limited liability of your Thai limited company.
- COMPANY MEETINGS; the first ordinary general meeting of shareholders must be held within 6 months after the registration of the company, and thereafter, at least once every year.
- REQUIRED DOCUMENTS; minutes of all meetings and copies of resolutions must be kept at the registered office of the company.
- BALANCE SHEET; directors must have a balance sheet prepared once every year. The balance sheet must be certified by the auditor of the company, approved by shareholders and filed with the Commercial Registration Department and Revenue Department within 120 days and 150 days respectively of the end of the fiscal year.
- FINANCING; Thai law stipulates that the company’s debt to equity ratio may not exceed 7 to 1, meaning that the company is not allowed to borrow more than seven times the amount of its equity.
- BANK ACCOUNT; after registration, the company may open a corporate bank account. The bank will require tax ID and VAT certificate. The foreigner must hold a work permit in order to be a signer on the bank account.
- PUBLIC DISCLOSURE; many details of the registered company are available to the public, including list of shareholders, names of directors, registered capital, articles of incorporation, registered address, auditor’s report and balance sheet for preceding year.
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