There are many types of business structure to choose from if you would like to set up your own business. These include sole proprietorships, cooperatives, partnerships, limited liability companies, corporations and other forms of organization. However, these types often vary on each country based on its legal systems of setting up business. Thus, here in Thailand, the following are the common types of business structures:
- Joint Venture
- Company Limited
A partnership is a type of business owned by two or more people. Normally, each partner has unlimited liability for the debts incurred by the business. There are three common types of partnerships inThailand:
1.1 Unregistered ordinary partnerships whereas all partners are jointly and wholly liable for all debts of the partnership.
1.2 Registered ordinary partnerships whereas the partnership becomes a legal entity and its legal personality is separated and distinct from the individual partners.
1.3 Limited partnerships whereas the liability of each individual partner is restricted to the amount of capital invested to the partnership. Thus, limited partnership must be registered.
2. Joint Venture
A joint venture may be defined as a group of persons (natural and/or juristic) entering into an agreement in order to carry on a business together. Although it has not yet been recognized as a legal entity under the Civil and Commercial Code, income from this
business structure is subject to corporate taxation under the Revenue Code
which recognizes it as a single business entity.
3. Company Limited (Limited Liability)
A company limited is a type of business that has a separate legal personality from its shareholders. There are two types of limited company: private company and public company.
A private limited company is the most famous type of business structure in Thailand and is formed through a registration process which includes registration of a Memorandum of Association and Articles of Incorporation and other legal documents. It is managed by a
board of directors according to the company’s by-laws or articles of incorporation. At least three shareholders are required to form a private company limited whereas their
liability is limited to the remaining unpaid amount, if any, of the par values of their shares. Meanwhile, the liability of the directors may be unlimited if so provided in the company’s the Articles of Incorporation.
At MSNA, we make sure that we provide quality services especially in ensuring that you can register a private limited company in Thailand easily and legally. For more information, please read further on Thailand Company Registration.
A public limited company registered in Thailand may, subject to
compliance with the prospectus, approval, and other requirements, offer shares,
debentures and warrants to the public and may apply to have their securities
listed on the Stock Exchange of Thailand (SET).
Other types of business structure
To operate a branch of a foreign company, one has to study Thailand
Foreign Business Law. In some cases, a certificate to operate business
(issued by the Ministry of Commerce in Thailand) is enough, while others, a
license to operate business is required. If the branch of a foreign company is
to do only export or manufacturing, it does not need a certificate or license
to operate the business. It is also important to become familiarize on what
constitutes income subject to Thai tax because the Revenue Department may
consider income directly earned by the foreign head office from sources within
Thailand as subject to Thai taxes.
Regional Operating Headquarters (ROH)
ROH is a newly type of business recognized in Thailand that provides
benefits to investors who set up a regional headquarter in the country while
performing “qualifying services” to branches or associated companies located
within or outside Thailand. Read more on Regional Opearting Headquarters or ROH here.
It is a type of business that can be set up by a foreign company in Thailand with
the purpose of providing advice or service to its head office only. Thus, no
revenue must be incurred and recognized by this type of business. However, to
set up a representative office, one also has to consider the Foreign
Business Law of Thailand.