What is the Thai Company Limited?
General Practice and Visas for Thais
If you have a legal matter, please consider us. Our firm does not do everything, but we handle most things foreigners are involved with, such as : Visas, Work Permits, Leases of Business Property, Business Contracts, Rental Agreements for Landlord or Tenant, Criminal Defense, Family Law, and General Civil Litigation.
What is a Thai Limited Company?
A Thai Limited Company – is the most common type of company structure used to set up business in Thailand. The process is simple and the business can engage in a wide range of activities.
This type of company is formed with its capital divided into equal shares and the liability of each shareholder is limited to the amount unpaid on the shares held.
Why Set Up a Thai Limited Company?
Reliability: When registering a Thai Limited Company its investors (or company owners) and third parties have to present a clear picture and understanding of the business to the government. Registering a company limited allows third parties to examine the company's status regarding various matter for example, it's corporate profile, financial state, shareholders list, directors and more. As a result, parties such as partners of a company, it's investors, banks or private money lenders find the company reliable.
Security: A company is a legal entity which is established for a lengthy period. Normally, the company operates until the owners are unable to operate it and dissolve it. A Thai Limited Company cannot be easily dissolved thus it is always preferred that you invest in a solid, long lasting business. All the company's day to day management is normally performed by its Directors, which are assigned by the shareholders.
How To Set Up A Thai Limited Company
STEP 1: COMPANY NAME RESERVATION
he name reservation guidelines provided by the Department of Business Development (DBD) in the Ministry of Commerce, should be observed in reserving any company name.
STEP 2: FILING OF MEMORANDUM OF ASSOCIATION
A Memorandum of Association (MOA) must be filed with the Department of Business Development (DBD) in the Ministry of Commerce and must include the name of the company that has been successfully reserved, the province where the company will be located, its business objectives, the capital to be registered, and the names of the promoters. Although no minimum capital requirements have been set up, the amount of the capital should be adequate and reasonable enough for the intended business operations.
STEP 3: CONVENE A STATUTORY MEETING
A statutory meeting is convened to make all the appointments once the share structure for the company has been defined, the Memorandum of Association and the Articles of Association are approved, the Board of Directors is elected and an Auditor is appointed.
STEP 4: REGISTRATION
The Company Directors must submit the application to establish the company within 3-months of the date of the Statutory Meeting, together with Company registration fees.
STEP 5: TAX REGISTRATION
All companies in Thailand must be registered for tax purposes. Businesses liable for Corporate Income Tax (CIT) must obtain a Tax I.D. card and registration number for the company from Thailand Revenue Department within 60 days of incorporation or the start of business operations. Business operators liable for Value Added Tax (VAT) must also register for a VAT I.D. within 30 days of the date they reach 600,000 THB in sales.
STEP 6: OPENING A COMPANY BANK ACCOUNT
Companies can open a corporate bank account in Thailand after they have been officially registered. Which bank and branch, what type of accounts the company requires, and who will sign are some of the information needed to open a company bank account.
The registration process usually takes at least 9 days (mostly because the statutory meeting which shall be held at least 7 days before the registration itself takes place). Both the company and the Memorandum shall be registered with the registrar at the Department of Business Development, Ministry of Commerce in accordance with the documentary forms and conditions prescribed for the process.
Number of Promoters and Shareholders
Promoters are required to perform the registration process to set up a company. There can be no less than 3 promoters.
As soon as the company is established, it shall have at least 3 shareholders. That is the reason why you absolutely must have 3 promoters. They become at least prospective shareholders. This then prevents other parties from filing a motion in Court demanding the dissolution of your company.
It should be noted, there are no restrictions with respect to the maximum number of promoters and shareholders. This means that you can literally invite as many shareholders as you wish to join your company.
Effects of Registration
As soon as the company registration process is completed, the newly established company is recognized by the law as a separate body, which is independent from its shareholders. It is called a "juristic person" or a "legal entity". A newly established company has its rights, duties and liabilities which are different from those of its shareholders. Any agreements or commitments made between the company and third parties bind merely the company itself. Therefore, the shareholders are not held personally responsible to third parties. For example, if a company is granted a permission to carry on a certain business activity, its investors (i.e. shareholders) are not able to possess this right personally. Another example is; a company's creditor is not able to sue its shareholders for debt repayment.
Additionally, all data enlisted in the company establishment or documents that are submitted to the registrar, are considered as already acknowledged by third parties. Therefore, the aforementioned third parties are not able to declare that they did not have any information and, thus, were not able to protect their interests.
Memorandum of Association
This is an important document used for the registration of a company which specifies the name, address, business objectives, company's capital, number of shares, value of shares, names of promoters (there shall be at least 3 promoters) of the company. There is a special form available at the registrar that is used to register Memorandums of Associations.
Articles of Association
This document specifies agreements or policies with respect to relations between the company's shareholders, such as shareholders' rights and company's operational policies while carrying on business activities, as well as agreements concerning the following corporate matters:
- Shares and shareholders
- Shareholders' meetings
- Balance sheets
- Dividends and reserve
The Company Limited must prepare its financial statement once a month and at least one auditor shall audit the statements every year. An ordinary shareholder's meeting must approve the financial statement within 4 months from the Company's financial year end, and submit the financial statement to the Department of Business Development within 1 month from the date of the financial statements approval.
The director shall prepare a list of the names of all shareholders holding shares at the time of the annual shareholders' meeting and a list of persons who are no longer shareholders from the date of the last shareholders' meeting, and submit the lists to the Department of Business Development, within 14 days of the date of that meeting.
An annual shareholders' meeting must be held within 6 months from the Company's registration date, and subsequent meetings must be held at least every 12 months.
Share certificates for the Company's shareholders must be prepared
A shareholders' registration book must be prepared
A request for the relocation of the Company's head office must be filed with the registrar (if applicable).
This type of company registration is very popular with both foreigners and local Thais for the reasons mentioned above. The Corporate lawyers at Juslaws & Consult can guide you through your Thai Limited Company setup, including all the complexities and ensuring that you comply with the various reporting requirements.