Opening a Business in Thailand

Do you want to open a company in Thailand but don’t really know how to proceed or the process might seem difficult? Do not worry, we at MSNA can give you the best solution.

The procedures depend on the type of company that you will set up. Let’s discuss it in details.

A. Registering a Thai company with 51% shares held by Thai shareholder

Pros:

• Your company can do business right after registration.
• The process is much easier because you don’t need to get special license.

Cons:

• If you want to hire foreigners to work, your company must have 2 million Baht capital and hire 4 Thai employees in order to apply for one work permit.

How to register:

• You need at least 3 shareholders (if you have 2 foreigners, then you need 1 Thai).
• The number of shares to be held by Thai must be at least 51%. This Thai shareholder must show proof of funds (at least 6 months update of bank statement showing enough money to buy the amount of shares they will hold).
• Please read the steps here

B. Other options:

If new Thai limited company will be doing only export activities from Thailand or manufacturing goods in Thailand, then it can be foreign majority owned without obtaining a Foreign Business License.

• If you are American, you can register a company under the Treaty of Amity

• Get BOI certificate (Board of Investment)

Pros:

• It would be fine if you don’t have a Thai partner as long as your business activity falls under any category of eligible activities for BOI promotion.
• Tax exemption such as corporate income tax, tariff exemption or reduction on import machinery and raw material (depending on the company’s activity).
• Non-Tax privileges such as permission to own land, permission to bring foreign expert to work on the promoted projects, exemption on foreign ownership of companies and exemption from work permit and visa rules.

Cons:

• Not all activities are eligible to obtain a BOI certificate. Please checkout Foreign Business law here 
• If your company’s activity is not in this list, you will need to get Foreign Business License.

How to register:

• The process to get BOI is summarized here

Registering a business in Thailand can be troublesome but we at MSNA can make it convenient for you. Contact us now for initial consultation.

In forming a company in Thailand, company promoters are responsible for registering the company with the Ministry of Commerce (MOC). The promoters must be individuals, not juristic persons and must be available to sign documentation during the registration process.

For a private limited company, there must be a minimum of 3 promoters and at least 15 promoters for a public limited company. The promoters of a private limited company must be 12 years of age or older while for a public limited company, the promoters must be 20 years of age or older.

Each promoter of a private limited company is required to be among the company’s initial shareholders immediately after the company’s registration and is required to hold a minimum of one share upon the company’s registration. They are generally free to transfer those shares to existing shareholders or third parties, thereafter, if they wish. It is not required for the individuals serving as promoters to reside in Thailand.

The promoters of a public limited company must also be among the company’s initial shareholders immediately after the company’s registration. All promoters must subscribe for shares, which must be paid up in an aggregate amount equal to or not less than five percent of the registered capital. Said shares may not be transferred before the expiration of 2 years from the date of the company’s registration, unless specifically approved at a meeting of shareholders. Nevertheless, it is required that one-half of the individuals serving as promoters have their domicile in the Kingdom of Thailand.

Promoter’s potential legal liability is generally limited to the par value of the shares they will hold after registration is completed. The promoters are also responsible for paying expenses associated with the company’s registration. After registration, however, the company may choose to reimburse the promoters for those expenses.

Interested in forming a company in Thailand, contact ThaiLawyers for more information.

Recently Thai Business Expert was asked how to close a Thai limited company.

In line with the growing trend of competition, profitability and economic stability, some business owners choose to wind down their Thai registered company either for the purpose of opening a new company or permanently cease doing business in Thailand. Whatever reasons you have for closing your Thailand business, legal, accounting and auditing assistance are required to ensure that the company will be closed in good faith. However, in closing down a registered company in Thailand, one must consider the following procedures:

1. Sending out invitation letters to all shareholders for an extra-ordinary Shareholders’ Meeting and publishing the letter in a local newspaper.

As prescribed by the Thai law, the company should hold a Shareholders’ Meeting to discuss the agenda of the company dissolution. An invitation letter for the meeting must be sent to all company shareholders by a registered post with an Advice of Delivery Service to ensure that the shareholders acknowledge the receipt of the letter. The same letter must be published in a local newspaper as well. This step must be done at least 14 days before the date of the shareholders’ meeting.

2. Registering the company dissolution at the Department of Business Development, Ministry of Commerce

Within 14 days from the closing date that the Shareholders’ Meeting has approved of, the
application form along with any required documents must be submitted to DBD to
register for company dissolution. The liquidator (either an outsider or one of
the company directors, whoever is appointed in the shareholders’ meeting) must
file the application at the Department of Business Development (DBD), Ministry
of Commerce, with a copy of his / her Thai I.D. card or passport. Once
everything is completed and accepted by the DBD, the officer will issue a
document which is a certification of the company’s dissolution showing the
closing date of the company.

3. Publishing the company dissolution and sending letters to inform creditors

Within 14 days from the date of dissolution, the liquidator must publish in a local newspaper the company dissolution at least once and send letters by registered mail to the
company’s creditors to inform them about the company dissolution.

4. Returning the VAT Registration Certificate (Por Por 20) to the Revenue Department (RD) in case the company is registered in the VAT system.

Within 15 days of the closing date, the company shall file Form Por Por 09 to return its VAT Registration Certificate to RD. In the event that the company fails to file it within the
specified time, there is a penalty of Baht 2,000.

Although the VAT certificate will be returned, the company is still responsible to submit its
monthly VAT return (Por Por 30) every month until the RD officer release their confirmation letter for deregistration of VAT.

5. Completing and auditing of the accounts and the Financial Statements until the closing date.

The company must prepare and complete its accounts and financial statements of the current accounting period until the date of dissolution registration and must have them
audited by a Thai auditor. The liquidator of the company must sign on the financial statements as well as the Corporate Income Tax Return Form (Por Ngor Dor. 50) for submission to the Thai Revenue Department within 150 days after the company closing date.

6. Returning the company’s Tax I.D. card to the Revenue Department

The tax I.D. card of the company must be returned to RD as well. The officer in this unit
will accept the application to return the Tax ID card only if a copy of the filed corporate income tax return and the receipt issued by the Revenue Department is attached to it.

7. Liquidating company’s assets, clearing company’s debts and returning the remaining cash to the shareholders

After step no.2 has been done, the liquidator of the company has to liquidate all assets of the company (converting them to cash), pay off the companies’ creditors and
divide the remaining cash and return it to the company’s shareholders according to the shareholding ratio.

8. Filing liquidation reports and registering the completion of liquidation process with the Department of Business Development

The liquidator has to file a liquidation report to the DBD every three months until the liquidation process is finished and the Revenue Department has issued a letter to the DBD certifying that the company owes no taxes, which will happen after step no.5. When this happens, the liquidator has to register the completion of the liquidation process with the DBD as well as submit the last liquidation report. The DBD will issue a document to certify that the company’s liquidation has been completed.

The above summary of Thai company closure procedures is intended for information purpose only. However, one must seek professional consultation before proceeding to dissolution because there are still a lot of details in the process such as closing of all bank accounts, submission of VAT on the book value of company’s fixed assets as of the closing
date within the 7^th of the following month and what to do if the company’s assets’ value is not enough to cover its debts. Careful planning of the whole process until the completion of liquidation of the company is strongly advised.

Basically, the dissolution process should take about a month to complete. However, if the company has VAT registration, it takes around 6 months to obtain the acceptance letter for
deregistration from the Revenue Department. Thus, for bigger companies, the whole process may be completed within a year or two, depending on how long the company had been in operation and whether its books of accounts were properly maintained and all tax returns were filed as required by the Thai law. The tax authorities may also invite the liquidator (or his representative) to discuss the tax matters of the company upon its liquidation.

Being highly knowledgeable and well-experienced in Thailand Business Set Up Process, we at MSNA can also assist you in the process of Thailand Company
Dissolution. We can also represent you in negotiation with the tax authority (Revenue Department).