Tips for starting a new business in Thailand
Are you planning to start your own business for the first time in Thailand? If so, I hope this useful information will help you put your business on the right track. The simplest and easiest sort of company for foreigners to form with a small business is a Thai Limited Company. In Thailand, a Limited Company is a company with up to 100 shareholders, who share the same business purpose and is formed with a Capital divided into legal equal shares.
To set up a company, you must first have memorandum that can be acquired at the registration office. To properly register, you are required to provide the authorities with details of your company and list a minimum of three shareholders (who can either be Thai or foreign nationals or both). At least 7 days after you first approach the department, you can call a shareholder's meeting to reach an agreement on the purpose of your business and set up the company's operational rules. Having agreed on the purpose of your business, you can then apply for business registration at the same department. If you cannot agree on company rules, you can refer to those stated in the Civil and Commercial Code's partnership and companies section.
Beside the issues of business registration, you must also make sure that your company's shares are worth no less than 5 baht each. Theses shares can be transferred or even sold if the company has no regulations on this matter. Every shareholder must be given a share certificate, a document that guarantees their status as a shareholder. Should anyone wish to transfer their shares to another party; they have to fill in the share transfer form that confirms the deal between the transferor and transferee. The Company also has to have in its possession a register of shareholders that contains a record of all the company's shareholders. The book is evidence that will identify the company's shareholders.
Shareholders and Chairperson
A Limited Company's shareholders can be either Thai or Foreign nationals or both, but the percentage of shares held by foreign national plays a significant role in determining the nationality of your company, which may impose serious limitations on the company's rights, such as landownership. If less than 49% of your company's shares are held by foreigners, your company is considered a Thai company. However, if foreign nationals hold more than 49% of the shares, your company is a foreign company. The significant differences between Thai and foreign companies operating in Thailand lie in their rights to buy and own properties or other business. It is therefore important, especially for those in real estate and development businesses, to know and remember that unless your company is Thai, you are restricted in the ability to possess and obtain land and property in this country without an exemption by the government.
Foreign companies are also restricted to certain activities and to proceed with certain operations the company will have to apply for permission from the government. In such instances, applications will be considered case by case. They will also face tough scrutiny and strict restrictions on their right to operate and ability run their business. These companies will be treated in the same way as foreign nationals seeking jobs in Thailand.
If you are registered as a Thai company, you are automatically granted the right to purchase and own properties and other business and will be treated the same way as a Thai citizen. However, according to new legislation that has recently come into effect, the Land Department's staff are now required to thoroughly investigate your Thai shareholders' sources of income. Thai shareholders in a company wishing to purchase properties in Thailand have to declare their income and provide the authorities with evidence that proves their ability to co-invest with other foreign shareholders in the same company. Only those successful in convincing the authorities are granted the right to purchase and possess land. Companies with approval from the Land Department can then proceed with their applications for lane title deeds or other certificates of use and possession.
Little things that matter
A company limited has to have its own board of directors to act on behalf of the company. This panel will, however, act under the regulations and agreements approved by the shareholders. Appointing directors or removing any of them requires shareholders approval. At the end of the company's financial year, within 5 months, it shall be the duty of the company to present the balance sheet to the Department of Business Development (DBD). If your company fails to present the balance sheet, the company will be fined up to 50,000 Baht and the company's board of directors may also be fined up to 50,000 Baht. If the committee refuses to pay the fine, the police can appeal to the court for a warrant and file a lawsuit against the resilient parties. Withdrawal of the company's business registration is also another penalty the company may face, should they not provide the authorities with the necessary statement.