BR001E How to set up a company in Thailand – DE

PREFACE

The following brochure is meant to be a short summary of the Thai corporate law.
We are aware of the fact that it can only be the first step to describe the very com-plex forms of doing business in Thailand. However, we hope that this information can be helpful for you in your further decisions.
Generally speaking, Thai corporate law and the exact procedures of setting up a company are often quite similar to the procedures you are familiar with, but, as you know, important details can be different. Thus, we advise you to proceed carefully and with far-sightedness.
We would be glad if this brochure meets your interest.
Please allow us to inform you that despite all our efforts we cannot accept liability for this brochure and its contents and we reserve all rights derived from it.
LORENZ & PARTNERS thank you very much for your interest in our work.

TABLE OF CONTENTS

Introduction

Setting up a company in Thailand is one of the legal possibilities for foreigners to do business in Thailand. However, there are a number of important restrictions for foreigners if they want to engage in certain economic activities. Therefore, it is nec-essary to identify first who is considered a foreigner in Thailand.

Definition of “Foreigner”
Under Section 4 of the Foreign Business Act B.E. 2542 (1999) (“FBA”), “For-eigner” means:

1. A natural person without Thai nationality under the Nationality Act B.E. 2508 (1965);

2. A juristic person who is not established under the laws of Thailand;

3. A juristic person established under the laws of Thailand with half or more of its capital belonging to foreigners (regardless of the number of partners, shareholders or members) or invested by those;
Moreover, bearer shares of a Limited Company shall be considered as shares of foreigners;

4. A Limited Partnership, a Registered Ordinary Partnership and Unregistered Ordinary Partnership with its managing partner or manager being a for-eigner.

Business in Thailand is basically free because of the GATT (General Agreement of Tariffs and Trade) and the GATS (General Agreement on Trade in Services) that Thailand ratified.

Thailand is a member of the WTO (World Trade Organisation) and implemented the TRIPS (Trade Related Aspects of Intellectual Property Rights).

However, a foreigner wishing to operate business in Thailand in any form of busi-ness organisation is subject to the terms and conditions of the FBA. This law has been enacted in order to maintain the balance of trading power and the economy of the country. It classifies the business operations into Lists 1, 2 and 3 (see An-nex 2).

The exceptions are made as follows:

– U.S. citizens are given preferential treatment by means of the “Treaty of Amity” between Thailand and the USA;

– Australian citizens are given preferential treatment for some types of business according to the Thailand-Australia Free Trade Agreement.

Businesses in List 1 are prohibited to foreigners. These are for example the running of radio- or TV-stations, the publishing of newspapers, and the trading of land property.

Businesses in List 2 are prohibited to foreigners unless ministerial consent is granted with cabinet approval. These are for example manufacturing of firearms and ammunitions, trading in Thai antiques or art objects, and mining.

Additionally, foreigners may operate businesses in List 2 only if shares of not less than 40% of the capital are held by Thais (may possibly be reduced to 25% upon the permission of the Minister with the approval of the Cabinet) and not less than two-fifths of the total number of directors are Thais.

Businesses in List 3 are prohibited to foreigners unless permitted by the Director-General with the approval of the Foreign Business Committee (“FBC”). These are for example businesses in the field of construction, tourism or advertising.

The FBC is a regulatory authority. It consists of 19 members nominated by various ministries and trade groups.

The FBC will grant this permission if it is convinced that the kind of applied busi-ness will not be of any competition to a Thai business. The permission is granted for an unlimited period of time and is subject to restrictions and limitations stated in the permission certificate.

The content of the Lists 1 to 3 of the FBA is expected to be reviewed once a year with special regards to GATT and GATS agreements.

Apart from the possibility to obtain permission to conduct businesses listed in Lists 2 and 3, an exceptional permission can (seldom) be granted by the Thai govern-ment to conduct any business listed in Lists 1 to 3 for a limited period of time.

Foreigners can engage in businesses not mentioned in the Lists, like production and sale (of the produced goods) or export trading, without any permission accord-ing to the FBA.

Although some activities which are not mentioned in the categories are not pro-hibited (for example teaching), a work permit is required anyway.

Besides, there is a minimum amount of capital required for a foreigner to start any business. This amount will be fixed in ministerial regulations, but will in no event be less than THB 2,000,000 (or minimum THB 1,000,000 if BOI promotion is granted). If a business requires a permit under List 2 or 3, the minimum capital must be no less than THB 3,000,000 (Section 14 of FBA).

A foreigner who wishes to engage in the businesses which are controlled under the FBA may do so by:

– Being granted permission from the Thai government;

– Investing at least THB 100 million, which will allow the foreigner to conduct retail, wholesale, or agent business (one of these activities per registered and fully paid-up capital of THB 100 million);

– Virtue of agreements between Thailand and the foreigner’s home country; or

– Being promoted under the investment promotion laws and Board of In-vestment (“BOI”) promotion.

See our L&P Brochure No. 6 – BOI

The most important exceptions to the rules and regulations stipulated by Thai law can be made if the company is to be founded under the sponsorship of the BOI. Accordingly, it is possible for foreigners to do business in various forms, as well as to be a major shareholder of a company. Furthermore, there are several interesting incentives offered to a company promoted by the BOI, for example:

– Up to 8 years tax-free profit;

– No import duty for machines and commodities if not available in Thailand; and

– The possibility for foreigners to hold essentially 100% of the shares.

1. Representative Office

An interesting way of doing business in Thailand is the set up of a Representative Office.

A foreign entity may establish a Representative Office in Thailand to engage in lim-ited non-revenue-generating activities.

The scope of activities is limited to the following:

– Procuring or sourcing of goods or services for the Head Office;

– Checking and controlling the quality and quantity of goods purchased or to be purchased by the Head Office or to be manufactured by a contractor in Thailand;

– Rendering advice in certain aspects with respect to the goods distributed by the Head Office to wholesalers or consumers;

– Disseminating information regarding new products or services of the Head Office; and

– Reporting to the Head Office on the business situation in Thailand.

The Representative Office must exclusively carry on the activities for the Head Of-fice, and there must be no income generated from activities within Thailand.

An application for the establishment of a Representative Office must be filed with the Department of Business Development of the Ministry of Commerce.

The following documents have to be presented to the Department of Business Development:

1. Copy of the Certificate of Incorporation of the Head Office, including Memorandum of Association and Articles of Association, notarised by a No-tary Public or authenticated by the Royal Thai Embassy or the Thai Consu-late;

2. Copy of the list of shareholders of the Head Office, notarised by a Notary Public or authenticated by the Royal Thai Embassy or the Thai Consulate;

3. Power of Attorney of the Head Office, authorising the appointed manager to act on behalf of the Head Office;

4. Power of Attorney of the appointed manager, authorising a lawyer to pre-pare the documentation and to file the application on behalf of the Head Office and the appointed manager;

5. Photocopy of the appointed manager’s I.D. card, or (if he is not a Thai citi-zen) his passport;

6. Undertaking of the Head Office certifying that the appointed manager and authorised lawyer do not have any of the characteristics under Section 16 of FBA;

7. Map showing the location of the Representative Office in Thailand;

8. Other documents relating to the project and activities to be carried out by the Representative Office;

9. Brochure of the Head Office;

10. List of Thai clients of the Head Office;

11. Copies of invoices to Thai clients issued by the Head Office;

12. Three-year estimated expenses; and

13. Transfer of technology plan.

Note: All certification of documents must not be older than 6 months on the date of submission.

Once the permission is granted, it is required that:

– The total debt financing used in the business shall not exceed seven times the portion of the registered capital of the Head Office;

– The money for the business has to be transferred by the foreign Head Office to Thailand and has to be at least THB 3,000,000; and

– At least one person who is responsible for operating the permitted business must have his/her domicile in Thailand.

The Representative Office manager has the responsibility to prepare balance sheets and income statements and to provide them to the Ministry of Commerce within 5 months after the end of the fiscal year.

Work permits can be requested for foreign employees of the Representative Office who are representative office manager or an assistant to representative office man-ager.

Since a Representative Office generates no income, no taxes must be paid in Thai-land. However, foreign employees are subject to personal income tax in Thailand.

Normally, the registration for the establishment of a Representative Office takes about 2 months from the date the complete application is accepted. (The prepara-tion of the application and all supporting documents generally takes another 2 – 3 months.)

2. Regional Office

Activities of a Regional Office are service businesses under List 3 (21) of the FBA. Regional Offices can be established by transnational corporations in countries where the Head Office is not registered. They do not have to be registered as a ju-ristic person under the law of the foreign country.

A Regional Office can only perform the following business activities:

– Communicating, coordinating and directing the operations of the branches and affiliates that are located in the region;

– Providing services in consulting and management;

– Training and personnel development;

– Financial management;

– Marketing control and sale promotion planning;

– Product development; and

– Providing services in research and development.

The general characteristics of a Regional Office are:

– At least one established branch office or affiliate in the Asian region must exist;

– No revenue-generating activities are to be performed;

– The Regional Office is not allowed to engage in any purchasing, selling or general trading activity;

– All expenditures incurred by the Regional Office must be borne by the Head Office; and

– It is not subject to corporate income tax in accordance with the revenue code, except for deposit interests of remitted funds from the Head Office, which are subject to taxation.

“Transnational Corporation” means a legal entity established under the laws of a foreign country and doing business in other countries.

An application for the establishment of a Regional Office must be filed with the Department of Business Development of the Ministry of Commerce.

The following documents have to be presented to the Department of Business Development:

1. Copy of the Certificate of Incorporation of the Head Office, including Memorandum of Association and Articles of Association, all notarised by a Notary Public or authenticated by the Royal Thai Embassy or the Thai Con-sulate;

2. Copy of the list of shareholders of the Head Office, notarised by a Notary Public or authenticated by the Royal Thai Embassy or the Thai Consulate;

3. Power of Attorney of the Head Office authorising the appointed manager to act on behalf of the Head Office;

4. Power of Attorney of the appointed manager, authorising a lawyer to pre-pare the documentation and to file the application on behalf of the Head Office and the appointed manager;

5. Photocopy of the appointed manager’s I.D. card, or (if he is not a Thai citi-zen) his passport;

6. Undertaking of the Head Office certifying that the appointed manager and authorised lawyer do not have any of the characteristic under Section 16 of FBA;

7. Map showing the location of the Regional Office in Thailand;

8. Other documents relating to the project and activities to be carried out by the Regional Office;

9. Brochure of the Head Office;

10. List of Thai clients of the Head Office;

11. Copy of bills to Thai clients by the Head of Office;

12. Three-year estimated expenses; and

13. Transfer of technology plan.

Once the permission is granted, it is required that:

– The total debt financing used in the business shall not exceed seven times the portion of the registered capital of the Head Office;

– The money for the business has to be transferred by the foreign Head Office to Thailand and has to be at least THB 3,000,000; and

– At least one person who is responsible for operating the permitted business must have his/her domicile in Thailand.

The Regional Office manager has the responsibility to prepare balance sheets and income statements and to provide them to the Ministry of Commerce within 5 months after the end of the fiscal year.

Work permits can be requested for the foreign employees of the Regional Office.

Since a Regional Office generates no income, no taxes must be paid in Thailand. However, foreign employees are subject to personal income tax in Thailand.

In general, the registration process for a Regional Office takes about 2 months from the date the complete application is accepted. (The preparation of the applica-tion and all supporting documents generally takes another 2 – 3 months.)

3. Joint Ventures

The term “Joint Venture” is vague and not defined in Thai law except for taxation purposes. In the broadest sense it simply means the co-operation of two or more parties or businesses in a common undertaking. Generally, Joint Ventures take the form of a Thai Limited Company, in many cases pursuant to a contractual share-holders’ agreement which controls the relationships and shareholdings of the par-ties. Often both parties contribute capital, with one providing technology or technical assistance and the other such benefits as basic production facilities and local marketing expertise.

Joint Ventures can be either incorporated or non-incorporated. A non-incorporated Joint Venture is formed specifically to conduct the business of the venture and to allow each party to maintain a separate identity within the venture. It is based on a contractual relationship between the parties and, under Thai law, is not regarded as a separate legal entity. It is used where the proposed venture, such as for a construction project, is limited in scope and duration. A “partnership” ar-rangement involving a limited liability company as one of the partners would fall under this category.

A Joint Venture agreement itself is considered to be a private contract and does not need to be registered with the government. However, the parties must obtain cer-tain registrations and licences as determined by the nature of the business activity and the particular structure or form the Joint Venture adopts. Licences and regis-trations may have to be considered in respect of the Foreign Business Registration, Value Added Tax Registration, Commercial Registration, etc.

4. Branch Office

A company incorporated outside of Thailand may establish a Branch Office to con-duct business in Thailand. This Branch Office is treated as the same legal entity as its Head Office. The actions of the Head Office are viewed as the actions of the Branch Office, and vice versa.

There are no specific laws by which a Branch Office is established. However, in order to be established as such, a foreign company must file a series of documents with the Ministry of Commerce and appoint a branch manager with authority to act for the Head Office.

As the Head Office is responsible for all liabilities of the branch, the authority of the branch manager can be restricted. But the Ministry of Commerce requires it to be broad enough to allow the manager to do all that may be required for the man-agement of the Branch Office. The intended business activities of the Branch Of-fice will determine which laws must be complied with, but basically the same commercial registrations and licences are required as for a Thai Limited Company or a Partnership.

For the approval of a Foreign Business Licence for a branch of a foreign corpo-ration, the corporation must undertake the following:

– The corporation shall remit at least THB 3,000,000 into the country for the business;

– At least one person responsible for operating the business must have his/her domicile in Thailand; and

– A loan used in the business shall not exceed seven times the shareholders’ equity or assets.

As a Branch Office is subject to the restrictions under the FBA, it is quite compli-cated and time-consuming to get the necessary licence. Only if government matters are concerned, such a venture is worth being considered.

The tax liabilities of Branch Offices in Thailand are as follows:

– Corporate income tax at the rate of 20% of net income derived from or in connection with the activities carried out in Thailand;

– Withholding tax at the rate specified in the Revenue Code for the transfer of profit out of Thailand (i.e. 10%); and

– VAT and/or Specific Business Tax may also become due, depending on the type of business activity engaged.

5. Partnerships

A Partnership is created when two or more persons agree to unite for a common purpose with the intent of sharing the profits thereof. Each party must contribute capital, labour or other property to the Partnership. A partner can be either a natu-ral person or a juristic entity (except a Public Limited Company).

The three types of Partnerships in Thailand differ generally with regards to liability attached to them:

5.1. Unregistered Ordinary Partnership

An Unregistered Ordinary Partnership has partners who are all jointly liable, with-out any limitation on the Partnership’s total obligations. A new partner in an Un-registered Ordinary Partnership becomes liable for all obligations incurred by the Partnership before and after his association with the Partnership.

This type of Partnership is not a legal entity and is subject to taxation as if it was an individual.

5.2. Registered Ordinary Partnership

In a Registered Ordinary Partnership all partners are jointly and solely liable for all the obligations of the Partnership without limitation.

A Registered Ordinary Partnership is a juristic person and has to pay corporate in-come tax.

The essential differences of a Registered Partnership from an Unregistered Partner-ship are that in a Registered Partnership:

– A partner’s name does not need to appear in a transaction before he can pursue claims of, or rights acquired by the Partnership against a third party;

– The liability of a partner ceases two years after he leaves the Partnership, as compared to the indefinite obligations of a partner in an Unregistered Part-nership;

– Creditors must exhaust partnership assets before they can enforce claims di-rectly against a partner;

– Creditors of a partner in his personal capacity may only satisfy their claims against him out of his profits or sums due to him as a partner and not out of Partnership property, unless the Partnership has been dissolved.

5.3. Limited Partnership

This entity has two types of partners:

(1) Partners with unlimited liability who shall be liable for all the obligations of the Partnership without limitation; and

(2) Partners with limited liability whose liability is limited to only the amount they agree to invest in the Partnership.

A Limited Partnership must be registered and is therefore classified as a juristic person. Limited Partnerships are subject to the following restrictions:

– The name of the Partnership may not include the names of the partners with limited liability. If it does, those partners become liable to third parties to the same extent as partners with unlimited liability;

– A partner with limited liability may contribute money or property, but not services;

– A partner with limited liability may not manage the Partnership. If he par-ticipates in management, he assumes unlimited liability; and

– A partner with limited liability may sell or transfer his interest in the Partner-ship without the consent of the other partners, and may carry on another business even if it is similar to that of the Partnership. As long as the Part-nership is not dissolved, a creditor of the Partnership may not proceed against a partner with limited liability.

5.4. Procedure for establishing a Partnership

When two or more persons agree to jointly engage in a business under any type of juristic partnership as mentioned above, the managing partner (in case of a Limited Partnership, the managing partner must be a partner with unlimited liability) ap-pointed by every partner has the duty to apply for registration of the Partnership with the competent authorities at the Office of Business Development in the province where the Head Office of the Partnership is intended to be located.

In addition, according to the Decree of Central Company & Partnership Registra-tion Office No. 102/2549, in case of registration of partnerships and limited com-panies with alien partners or shareholders who invest or own shares amounting to at least 40% but less than 50% of the registered capital or having alien investors or owning shares less than 40% of the registered capital but an alien is the authorized director, all Thai partners or shareholders shall submit documents identifying the source of money used for investment or holding shares of each partner or share-holder as follows:

– Copy of deposit bank book or bank statements for the past 6 months;

– Documents issued by the bank to certify the financial status of the partners or shareholders; or

– Copy of evidence showing the source of money for investment or holding shares.

5.5. Duties of the Partnership

Limited Partnerships and Registered Ordinary Partnerships have the following du-ties and obligations:

– Such Partnerships must submit balance sheets as well as profit and loss statements with the Central Accounting Department of Business Devel-opment within 5 months after the end of the fiscal year;

– In the case of dissolution of the Partnership, there must be an agreement among the partners, a liquidator and an auditor have to be appointed and the auditor’s remuneration shall be fixed. The agreement to dissolve the Partner-ship must be filed within 14 days;

– After registration of dissolution, the liquidator must liquidate the Partnership and submit quarterly reports of the liquidation to the Registrar. When the liquidation is completed, a report must be submitted to the partners for ap-proval and to register with the Registrar.

5.6. Taxation

Corporate income tax applies to all Registered Partnerships at a flat rate of 20% of net profits. They may also be required to pay VAT or Specific Business Tax de-pending on the type of business in which they are engaged.

6. Limited Company

Limited Companies are divided into Private and Public Limited Companies.

6.1. Private Limited Company

The Private Limited Company under Thai law basically is similar to what is referred to as a corporation. It is formed with a Memorandum of Association (“MOA”) and Articles of Association (“AOA”), and its formation is required to be registered with the Ministry of Commerce.

6.1.1. Company Setup Procedure

The following procedure has to be followed to set up a Private Limited Company:

– Company Name Reservation
The first step in forming a company is to reserve the name at the Ministry of Commerce. Upon approval, such name will be valid for 30 days whereby no other person can apply for the same. An extension is possible.

– Promoters
Three natural persons as promoters of the company are required for the reg-istration of the MOA.

The MOA must include the following information:
– Company name
– Province where the company shall be established
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– Scope of business
– Registered capital (at least 3 shares with at least THB 5 par value)
– Names, addresses, occupations and signatures of the promoters, and the number of shares to be subscribed by each of them
– Declaration regarding the limited liability of the shareholders and direc-tors

The government fee for the registration of the MOA is 0.05% of the in-tended registered capital. The minimum fee is THB 500 and the maximum fee is THB 25,000.

– Subscription of Shares
The prospective shareholders shall now subscribe their respective shares, whereas each promoter also has to subscribe at least one share (but may, af-ter the incorporation, transfer its share to the remaining shareholders or any other person, as long as at least three shareholders remain in the company at any time). Once all shares have been subscribed, the promoters shall, with-out delay, call for the statutory meeting.

– Statutory Meeting
The statutory meeting shall be called for with at least 7 days’ notice period.*
At the statutory meeting, the expenses/remuneration of the promoters shall be ratified, the type of shares (ordinary vs. preferential) shall be fixed, the AOA shall be adopted, and the director(s) and auditor(s) of the company shall be appointed.

– Share Capital Payment
After the statutory meeting, the promoters shall hand over the business to the directors, who shall call the prospective shareholders (including the pro-moters) to pay in their respective shares. At least 25% of each share has to be paid in cash.

– Incorporation of the company
Within three months after the statutory meeting, the director(s) shall register the company’s establishment with the Ministry of Commerce and confirm that the share capital (at least 25%) is “available”. In case the registered capi-tal is more than THB 5 million, the director(s) have to show proof that the funds are in their private (!) bank account(s).

The government fee for the registration of the establishment is 0.5% of the registered capital. The minimum fee is THB 5,000 and the maximum fee is THB 250,000.

The company can be setup within one day if all of the above steps (exclud-ing company name reservation) can be completed within the same day and all promoters and shareholders attend the statutory meeting.

6.1.2. Foreign Shareholding

If foreigners hold 50% or more of the company’s shares, the company will be con-sidered as “foreigner” under the FBA, and thus will be restricted in the type of business activities it may perform.

Exceptions and promotions:

– Plain Production Purpose
If the business purpose is only to produce things which are not prohibited by the FBA, foreigners are allowed to hold up to 100% of the shares. The company is then also allowed to sell its produced goods on the Thai market.

– BOI Promotion
The BOI grants various tax and non-tax incentives to projects deemed bene-ficial for the country’s development. The BOI-promoted project may con-duct its business without any restrictions on the shareholding of foreigners, thus allowing foreigners to hold 100% of the shares.

– Thai-U.S. Treaty of Amity
U.S. citizens are given preferential treatment, such as to maintain a majority shareholding and to wholly own a company in Thailand.

– Thailand-Australia Free Trade Agreement
Australian citizens are given preferential treatment for some types of busi-nesses.

In addition, according to the Decree of Central Company & Partnership Registra-tion Office No. 102/2549, in case of registration of partnerships and limited com-panies with alien partners or shareholders who invest or own shares amounting to at least 40% but less than 50% of the registered capital or having alien investors or owning shares less than 40% of the registered capital but an alien is the authorized director, all Thai partners or shareholders shall submit documents identifying the source of money used for investment or holding shares of each partner or share-holder as follows:

– Copy of deposit bank book or bank statements for the past 6 months;

– Documents issued by the bank to certify the financial status of the partners or shareholders; or

– Copy of evidence showing the source of money for investment or holding shares.

6.1.3. Directors and Board of Directors

Very often there is confusion about how to translate the various titles and func-tions of persons working in a foreign company. Only the Board of Directors and the Chairman are mentioned in the law, all other titles and functions can vary con-siderably according to the statutes. The following terminology is the most common in Thailand.

The company is administered and managed by the Board of Directors appointed through a resolution of the shareholders’ meeting and empowered by law and the Articles of Association. Directors may be foreigners. A Managing Director ap-pointed for carrying out the day-to-day operations may be a foreigner as well.

In case there is more than only one board member, the board can elect a Chairman for each meeting or for a determined period of office. This Chairman is often called President, especially if he has a large number or even the majority of shares. Like all other board members, the Chairman has only one voice when it comes to voting within the board. But if there is no majority of votes, his voice can be de-cisive (casting vote).

The company’s AOA can include provisions regarding the directors’ signing au-thority, e.g. one director can solely sign, or several directors have to jointly sign.

6.1.4. Registered Capital

There is no minimum requirement for the registered capital, except the minimum of 3 shares at THB 5 each. The amount of such capital depends on the operational requirements of the company. However, if the company wants to employ a for-eigner, the policy of the Employment Department, Ministry of Labour requires the company to have at least THB 2,000,000 registered capital, fully paid up, in or-der to apply for a work permit for one foreign employee. In order to get a 1-year business visa for foreigners, it is necessary to employ at least 4 Thais for one for-eign employee.

6.1.5. Company Seal

It is a generally accepted practice for the company to have a company seal to be af-fixed along with the authorised signatories’ signatures in order to bind the company in all legal affairs and main transactions.

6.1.6. Tax Implication

The tax liabilities of a Limited Company in Thailand are as follows:

– Corporate income tax at the rate of 20% of net income derived from or in connection with the activities carried out in Thailand (reduced tax rates apply to Small and Medium-sized Enterprises (SMEs)1)

– Withholding tax at the rate specified in the Revenue Code for the transfer of profit out of Thailand (i.e. 10%)

– If the annual income of the company is higher than THB 1,800,000, the company must enter to the VAT system.

6.2. Public Limited Company

The procedure for setting up a Public Limited Company is similar to that for a Pri-vate Limited Company. The provisions of the Public Limited Companies Act B.E.2535 (1992) allow a Private Limited Company to be converted into a Public Limited Company.

The major difference between a Private Limited Company and a Public Limited Company is that a Private Limited Company is prohibited from offering shares to the public. Certain other differences are shown in the following table:

PrivatePublic
Minimum number of natural persons as promoters315
Minimum number of shareholders required at all times315
Public subscription of shares by prospectusnot allowedallowed
Public subscription of debentures by prospectusallowednot allowed
Registration fee per THB 1,000,000 of capital
Memorandum of Association (max. THB 25,000)5001,000
Incorporation (max. THB 250,000)5,0001,000

7. Duties of Companies

Companies registered under the Civil and Commercial Code (“CCC”) have the following duties and obligations:

1 Since 01 January 2015, small and medium-sized enterprises (i.e. enterprises with paid-up share capital of not more than THB 5 million and income from sales and services of not more than THB 30 million per year) have to pay 0% CIT on net profits between THB 0 and 300,000, 15% for net profits between THB 300,001 and 3,000,000, and the regular 20% for net profits above THB 3,000,000.

a) The Ordinary General Meeting must proceed as follows:

– The Limited Company must hold the first Ordinary General Meeting within six months after registration and subsequently an Ordinary Gen-eral Meeting once every twelve months.

– The Ordinary General Meeting must approve the Financial Statements within 4 months after the end of the financial year.

b) After the annual Ordinary General Meeting, the following documents must be made and submitted to the Commercial Registration Office:

– A list of shareholders as of the date of the meeting must be produced within 14 days after the date of the meeting.

– The balance sheet and profit and loss statement must be submitted within 1 month after the date on which the statements are approved.

– New director(s) must be registered within 14 days after the date on which the meeting adopted the resolution on the appointment.

c) The following matters require special resolutions, namely:

– Change of the Articles of Association and the Memorandum of Associa-tion after the establishment of the Company (Sec. 1145 CCC);

– Increase of the capital (Sec. 1220 CCC);

– Exceptional admission of payment for the price of new shares other than in money (Sec. 1221 CCC);

– Decrease of the capital through reduction of the value of shares or reduc-tion of the number of shares (Sec. 1224 CCC);
But: at least 25% of the original registered capital has to be preserved (Sec. 1225 CCC). At the decrease of capital the public has to be informed by newspaper and the creditors have to be informed per letter. If there is an objection, the claim of the person objecting has to be satisfied or se-cured before the capital is decreased (Sec. 1266 CCC);

– Amalgamation (consolidation) of companies (Sec. 1238 CCC); and

– Dissolution of companies (Sec. 1236 (4) CCC).

Note: A special resolution requires a notification published in a lo-cal newspaper and sent via registered mail to all shareholders at least 14 days before the scheduled date of the meeting. A subsequent meeting can only be convened at least 14 days af-ter the former meeting.

d) The following matters require resolutions of the general meeting of share-holders: appointment of directors, change of directors’ power (unless the Board meeting is empowered by the Articles of Association to designate), change and appointment of auditor or liquidator, fixing the auditor’s remu-neration, approval of payment of dividend, approval of the liquidator’s re-port. These matters must be specified in the notice of summoning the meeting.

e) Shareholders holding not less than one-fifth of all shares are entitled to make a written request to the company to summon an extraordinary general meet-ing of shareholders. This request has to include the purpose of the extraor-dinary meeting. If the company’s directors do not summon the meeting within 30 days after the date of request, the shareholders who submitted the request or other shareholders holding one fifth of the shares may convene the meeting by themselves.

f) In the dissolution of the company, apart from the requirement of the special resolution, the dissolution and the steps of the liquidation are similar to those of the partnerships.

g) Balance Sheet preparation

– A balance sheet must be made at least once every twelve months. It must be examined by the auditors and submitted for adoption to a general meeting.

– On submitting the balance sheet, the directors must present to the gen-eral meeting a report showing how the business of the company has been conducted during the year under review;

– It shall be the duty of the directors to submit to the Registrar a copy of every balance sheet not later than one month after having been approved by the general meeting.

h) Auditing

The auditor shall be elected and terms of remuneration shall be fixed every year at an ordinary meeting. If any vacancy occurs among the auditors, the
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Tel.: +66 (0) 2–287 1882 | e-mail: thailand@lorenz-partners.com
directors shall forthwith summon an extraordinary meeting to overcome this vacancy.

i) Books and Accounts

The directors must cause true accounts to be kept. The directors must cause minutes of all proceeding and resolutions of meetings of shareholders and directors to be duly entered in the books, which shall be kept at the reg-istered office of the company.

j) Tax Return

Under the Revenue Code, for all registered taxpayers and businesses regis-tered for VAT, the VAT return and remittance of the tax due will be re-quired on a monthly basis by the fifteenth day of the following month.

We hope that this information brochure can be of any help to you. Please do not hesitate to con-tact us in case you have further questions.

LORENZ & PARTNERS Co., Ltd.
27th Floor Bangkok City Tower
179 South Sathorn Road, Bangkok 10120, Thailand
Tel.: +66 (0) 2-287 1882
E-Mail: info@lorenz-partners.com

Although Lorenz & Partners Co., Ltd. always pays greatest attention on updating the information provided in this newsletter we cannot take responsibility for the topicality, completeness or quality of the information provided. None of the information contained in this newsletter is meant to replace a personal consultation. Liability claims regarding damage caused by the use or disuse of any information provided, including any kind of information which is in-complete or incorrect, will therefore be rejected, if not generated deliberately or grossly negligent.

Annex

Business Lists under Foreign Business Act

List 1

Business that aliens are not permitted to do for special reasons:

1. Newspaper undertakings and radio and television station undertakings

2. Lowland farming/upland farming, or horticulture

3. Raising animals

4. Forestry and timber conversions from natural forests

5. Fishing for aquatic animals in Thai waters and Thailand’s Exclusive Eco-nomic Zone

6. Extraction of Thai medical herbs

7. Trade in and auctioning of Thai ancient objects or ancient objects of na-tional historical value

8. Making or casting Buddha images and making monk’s bowls

9. Dealing in land

List 2

Business concerning national security or safety with an adverse effect on art and culture, customs or native manufacture/handicrafts or with an impact on natural resources and the environment

Chapter 1.Business concerning national security or safety

1. Production, disposal (sale) and overhaul of:

a. Fire arms, ammunition, gunpowder and explosives
b. Components of fire arms, gunpowder and explosives
c. Armaments and munitions, military vessels, aircraft or conveyances
d. All kinds of war equipment or their components

2. Domestic transport by land, water or air inclusive of the undertaking of domestic aviation

Chapter 2.Business with an adverse effect on art and culture, custom and native manufacture/handicrafts
1. Dealing in antiques

1. Dealing in antiques or objects of art and works of art and Thai handicrafts

2. Production of wood carvings

3. Raising silkworms, producing Thai silk thread and weaving or printing pat-terns on Thai silk textiles

4. Production of Thai musical instruments

5. Production of articles of gold or silver, nielloware, nickel-bronze ware or lacquerware

6. Production of crockery and terra cotta ware that is Thai art or culture

Chapter 3.Business concerning natural resources and the environment

1. Production of sugar from sugarcane

2. Salt farming inclusive of making salt from salty earth

3. Making rock salt

4. Mining inclusive of stone blasting or crushing

5. Timber conversions to make furniture and articles of wood

List 3

Business in which Thais are not yet ready to compete in undertaking with aliens

1. Rice milling and production of flour from rice and farm crops

2. Fishery, limited to propagation of aquatic animals

3. Forestry from replanted forests

4. Production of plywood, wood veneer, chipboard of hardboard

5. Producing of lime

6. Accounting service undertakings

7. Legal service undertakings

8. Architectural service undertakings

9. Engineering service undertakings

10. Construction, except:

a. Construction of things that provide basic services to the public with re-spect to public utilities or communications and which require the use of special instruments, machinery, technology or expertise in construction and a minimum capital of the alien of at least THB 500,000,000
b. Other categories of construction as stipulated in Ministerial Regulations

11. Brokerage or agency undertakings except

a. Trading in securities or services concerning futures trading in agricultural commodities, financial instruments or securities
b. Trading in or the procurement of goods or services needed for pro-duction by or providing the services of, an enterprise in the same group
c. Trading, purchasing (or others) or distribution or finding domestic or overseas markets for selling goods made domestically or imports as an in-ternational trading business, with a minimum capital of the alien of at least THB 100,000,000
d. Other lines of business stipulated in Ministerial Regulations

12. Auctioning, except:

a. International bidding that is not bidding in antiques, ancient objects or objects of art that are Thai works of art, handicrafts or ancient objects or of national historical value
b. Other types of auction as stipulated in Ministerial Regulations

13. Domestic trade concerning indigenous agricultural produce or products not prohibited by any present law

14. Retail trade in all kinds of goods with an aggregated minimum capital of less than THB 100,000,000 or less than THB 20,000,000

15. Wholesale trade in all kinds of goods with a minimum capital for each shop store less than THB 100,000,000 each shop

16. Advertising undertakings

17. Hotel undertakings, except for hotel management services

18. Guide Tour

19. Sale of food or beverages

20. Plant breeding and propagating or plant improvement undertakings

21. Doing other service business except for service businesses prescribed in Ministerial Regulations