Introduction
Thailand has emerged as a highly attractive destination for foreign investors seeking to establish businesses. With its strategic location, supportive governmental policies, and flourishing industries, Thailand offers a favourable environment for entrepreneurs. Among the various business structures available, the limited company, also known as a limited liability company (LLC), stands out as a preferred choice.
This article delves into the myriad benefits of setting up a limited company in Thailand and provides a comprehensive guide tailored to foreign investors.
Key Points
- Limited companies offer shareholders a safeguard through limited liability, ensuring security and protection.
- A minimum capital requirement of 50,000 THB is required (2 Million for those who wish to employ a foreigner).
- Foreign investors can potentially exercise full control over operations and decision-making within the company.
- Limited companies offer flexible options for various types of businesses.
- Foreign companies face stricter regulations under the Foreign Business Act.
Understanding a Limited Company in Thailand
A limited company in Thailand closely resembles an LLC in other countries and is favored by many foreign investors looking to establish a presence in the nation. It comprises directors and shareholders, including both Thai and foreign individuals, and provides limited liability to its shareholders. Limited liability means that shareholders can only lose the capital they’ve invested in the company, ensuring high security and asset protection.
What are the Requirements for Establishing a Limited Company in Thailand?
To form a limited company in Thailand, the following prerequisites must be met:
Two Shareholders: At least two shareholders are required who can be Thai or foreigners
Directors: At least one director is required, and the director must be an individual. If a foreign director signs documents on behalf of the company in Thailand, they are considered to be working and must obtain a work permit.
Minimum Capital: In practice, registering a Limited Company in Thailand requires a minimum capital of 50,000 THB. However, to sponsor a work permit for a foreign employee, a paid-up capital of 2 Million THB is necessary for each permit.
Registered Address: A registered corporate address within Thailand is required. If it is in a building, a letter of consent from the juristic persons is required.
The shareholders must be individuals when the company is registered, though shares can be transferred to corporate shareholders after completing the process. Directors must also be individuals, as corporate directors are prohibited in Thailand.
What are the Benefits of a Thai Limited Company?
Establishing a limited company in Thailand offers numerous advantages that appeal to foreign investors:
Limited Liability: The cornerstone benefit is limited liability, shielding shareholders from extensive financial exposure in the event of company liabilities or debts.
Full Control: Limited companies provide flexibility, allowing shareholders to tailor voting rights and dividend allocations, granting them full control over the company’s operations and decision-making processes.
Versatility: These companies can engage in various types of businesses, adjusting shareholders, directors, objectives, names, and addresses to adapt to evolving business needs.
Foreign Ownership: Foreign investors can own up to 100% of the shares, subject to adherence to the criteria set by the Foreign Business Act. This facilitates full ownership and control.
Corporate Banking: Registered Thai limited companies can secure corporate savings accounts, checking accounts, and foreign currency accounts, simplifying financial management and enabling online banking.
Work Permits & Visas: These companies can apply for multiple work permits to accommodate foreign executives and staff members, with the number of permits contingent upon registered capital and labor department criteria.
What is the process for setting up a Limited Company in Thailand as a foreigner?
Foreigners can establish a limited company in Thailand through two primary avenues:
Thai Company: Predominantly Thai-owned (over 50% of the shares held by Thai nationals), no foreign business licence required, higher registered capital (2M+ THB) to support work permits for foreign employees, and fewer restrictions on activities.
Foreign Company: Majority foreign-owned (> 49% up to 100%), necessitating a Foreign Business License with associated restrictions based on the Foreign Business Act.
If a foreigner primarily owns the company, it is classified as a foreign company and is subject to more stringent governmental restrictions and limitations under the Foreign Business Act. Board of Investment promotions or registration under Treaty Amity (only for american citizens) can provide exemptions or reduced restrictions for foreign companies.
Establishing a limited company in Thailand as a foreign investor can be a rewarding venture, unlocking numerous opportunities in this thriving business landscape.
