Company Types

There are 3 types of common for-profit business structures in Thailand. These are the Partnership, Limited Companies, and Joint Venture. However, note that only Limited Companies may currently offer cryptocurrencies (according to the Royal Decree on Digital Asset Businesses).

Note: it is possible for foreign businesses to obtain a foreign business license, but as it is very complicated and often impossible to obtain, most foreigners have a work permit issued under, and operate their business through, a Thai limited company. “Thai company” means under the current Foreign Business Act that half or more of the juristic person’s shares are held by Thais and therefore not subject to the Act’s restrictions. Foreigners are allowed to have majority voting rights and control in a Thai limited company through preference shares and weighted voting rights. The most popular form of business entity among foreign investors is therefore the private limited company. (See SamuiforSale’s guide to business law here.)

There are 2 types of common non-profit business structures: the Association and the Foundation.

For-Profit

Partnership

Thai and Western concepts of partnership are broadly similar. Thailand provides for three general types of business structures: Unregistered ordinary partnerships, in which all partners are jointly and wholly liable for all obligations of the partnership. Registered ordinary partnerships. If registered, the partnership becomes a legal entity, separate and distinct from the individual partners. Limited partnerships. Individual partner liability is restricted to the amount of capital contributed to the partnership. Limited partnerships must be registered. (Summary taken from the Thai Embassy here.) (For more information, see the Business Development Board here.) (For the relevant laws, see Thailand Law Online here.)

Limited Companies

There are two types of limited companies, i.e., private or closely held companies, and public companies. The first is governed by the Civil and Commercial Code, the second by the Public Company Act. Private Limited Companies in Thailand have basic characteristics similar to those of Western corporations. A private limited company is formed through a process which leads to the registration of a Memorandum of Association (Articles of Incorporation) and Articles of Association (By-laws), as its constitutive documents. Shareholders enjoy limited liability, i.e., limited to the remaining unpaid amount, if any, of the par values of their shares. The liability of the directors, however, may be unlimited if so provided in the company’s memorandum of association or the articles of incorporation. The limited company is managed by a board of directors according to the company’s charter and by-laws. All shares must be subscribed to, and at least 25 percent of the subscribed shares must be paid up. Both common and preferred shares of stock may be issued, but all shares must have voting rights. Thai law prohibits the issuance of shares with no par value. It also stipulates that only shares with par value of five baht or above may be issued. Treasury shares are prohibited. A minimum of seven shareholders is required at all times. A private limited company may be wholly owned by aliens. However, in those activities reserved for Thai nationals, aliens’ participation is generally allowed up to a maximum of 49 percent. The registration fee for a private limited company is 5,500 baht per million baht of capital. Public Limited Companies 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”). A minimum of 15 promoters is required for the formation and registration of the memorandum of association of a public limited company, and the promoters must hold their shares for a minimum of two years before they can be transferred. The Board of Directors of a public limited company must have a minimum of five members, at least half of Them are Thai nationals. Shares must have a face value of at least five baht each and be fully paid up. Restrictions on share transfers are unlawful except those protecting the rights and benefits of the company allowed by law, and those maintaining a Thai/foreigner shareholder ratio. Debentures may only be issued with the approval of three quarters of the voting shareholders. The registration fee is 2,000 baht per million baht of capital for a public limited company. (Summary taken from the Thai Embassy here.) (For more information, see this Legavox guide or this SamuiforSale guide.) (For information on private limited companies, see the Business Development Board here.) (For information on public limited companies, see the Business Development Board here.) (For the relevant laws, see Thailand Law Online here.)

Joint Venture

A joint venture may be described in accordance with general practice as a group of persons (natural and/or juristic) entering into an agreement in order to carry on a business together. It has not yet been recognized as a legal entity under the Civil and Commercial Code. However, income from the joint venture is subject to corporate taxation under the Revenue Code, which classifies it as a single entity. (Summary taken from the Thai Embassy here.) (See the relevant law at Thailand Law Online here.)

Foreign Business License/Certificate

Generally speaking, the Foreign Business License is an authorization whereby a foreigner is granted permission to operate a restricted business on the basis that the proposed business will grant benefits to the Thai society and economy. On the other hand, the Foreign Business Certificate is an “automatic” authorization whereby a foreigner is granted permission to operate a restricted business on the basis of either an international treaty or after having received promotion from the Board of Investment of Thailand (“BOI”). A few other salient points about the two forms of foreign business authorization as follows: Both forms of authorization are subject to the same minimum capitalization requirements under the Foreign Business Act. This requirement is a minimum of two million baht per each unrestricted business activity and three million baht per each restricted business activity. However, there are differences if the Foreign Business Certificate is issued on the basis of BOI promotion, whereby more specific minimum capitalization requirements may apply (such as a 500 million baht minimum investment for the hotel business). Furthermore, businesses registered under a treaty, such as the US-Thai Amity Treaty may be subject to specific rules regarding transfer of the minimum capital from overseas. According to Section 13 of the Foreign Business Act, neither a Foreign Business License or a Foreign Business Certificate may be granted where a more specific law regulates foreign investment in certain industries. For example, the Tourism Business and Tour Guide Act of 2008 prohibits foreign investment in the tourism business. The most preferable type of authorization that may be obtained is the Foreign Business Certificate issued on the basis of an international treaty according to Section 11 of the Foreign Business Act. This category allows a foreigner to be granted a Foreign Business Certificate simply based on the grounds that the foreigner is a national of a party to a treaty to which Thailand is bound. At this time, Thailand is a party to several treaties granting foreigners the right to operate in restricted businesses, but only the US-Thai Amity Treaty is being actively enforced by the Department of Business Development. (Taken from Siam-Legal here.) (Also see the Board of Investment here.) (See forms from the Board of Investment here.) (See a recent change according to PKFThailand here.)

Non-Profit

Association

An Association is defined as a membership group of persons sharing similar interests. A Thailand Association is more appropriate for organizations with due-paying members who participate in common non-profit activities such as sports and hobby clubs, or churches and religious organizations. (For the relevant laws, see Thailand Law Online here.)

Foundation

Foundations are a form of juristic person that engage in non-profit activities often promoting one of the following: religion and morality culture and education humanitarianism and charity environmental and animal protection human rights (See this Bangkok Legal guide.) (For the relevant laws, see Thailand Law Online here.)

Sources

Company Registration

• (Royal Decree on Digital Asset Businesses)
• (See SamuiforSale’s guide to business law here.)

Partnership

• (Summary taken from the Thai Embassy here.)
• (For more information, see the Business Development Board here.)
• (For the relevant laws, see Thailand Law Online here.)

Limited Company

• (Summary taken from the Thai Embassy here.)
• (For more information, see this Legavox guide or this SamuiforSale guide.)
• (For information on private limited companies, see the Business Development Board here.)
• (For information on public limited companies, see the Business Development Board here.)
• (For the relevant laws, see Thailand Law Online here.)

Joint Venture

• (For information on public limited companies, see the Business Development Board here.)
• (For the relevant laws, see Thailand Law Online here.)

Foreign Business License

• (Taken from Siam-Legal here.)
• (Also see the Board of Investment here.)
• (See forms from the Board of Investment here.)
• (See a recent change according to PKFThailand here.)

Non-Profits

• (For the relevant laws, see Thailand Law Online here.)
• (See this Bangkok Legal guide.)
• (For the relevant laws, see Thailand Law Online here.)