Private Limited Companies
Private Limited Companies in Thailand have the same basic characteristics as those in Western countries. The most common form of establishing a corporate is to set up a Limited Liability Company.
Management
- A Limited Liability Company will be managed by a Board of Directors.
- The number of Directors is determined by the Shareholders’ meeting and there is no statutory minimum requirement.
- Foreigners can be appointed as Directors
- However, for companies which have received permission to conduct business under list 2 of the Foreign Business Act, at least two fifths of the Directors should be Thai nationals.
- For a company established under the Thai-US Treaty majority of the Directors should be American or Thai nationals.
Investment capital requirements
There are no minimum or maximum share capital requirements
A minimum of three shareholders should be present at all times. Under certain circumstances a Private Limited Company may be fully owned by foreign nationals. However, for business activities restricted to Thai nationals under the Foreign Business Act, foreign participation is restricted to 49% of share capital. The 49% foreign ownership may exceed or maybe exempted if a Foreign Business License is granted. Minimum capital, transfer of technology and reporting requirements may vary based on the Foreign Business License.
Accounting/auditing requirements
- Directors must arrange for an annual general meeting to obtain shareholder approval of the company’s audited financial statements within 4 months from the end of the fiscal year
- Directors must file the audited financial statements, including the shareholder list to the Company Registrar within 1 month after holding the shareholders meeting.
- Financial statements must be audited by and subject to the opinion of a certified auditor.
Steps that should be taken to register a Private Limited Company:
1. To establish a Private Limited Company there must be at least 3 promoters signing together in order to prepare and register the Memorandum of Association.
Initially a company name should be reserved. It takes up to 2-3 business days to reserve a company name. To reserve a company name, the company can either submit a signed Name Reservation form to the Department of Business Development of the Ministry of Commerce or fill in a Name Reservation form and submit it through the Department of Business Development’s website. Two alternative names should also be provided in case there is a conflict in the name selected by the company.
*Upon receiving the shares, the director must register the company within 3 months from the date of the company’s first meeting.
Promoters should possess the following qualifications:
- Be an ordinary person (should not be a juristic person)
- Be at least 12 years of age
- Must purchase at least 1 share
The following information is used to register the Memorandum of Association:
- Company’s name (the name that was reserved)
- Location of the head office (Province)
- Objective of the company
- Registered capital must be divided equally among all the shares (Share price per share must be at least 5 Baht)
- Name, age, occupation, address and number of shares that the reserved
- Name, age and address of two witnesses
2. Once the Memorandum is registered, the following actions must be taken.
- Every promoter must purchase the reserved shares
- Once all the shares are reserved, the promoters must hold a statutory meeting for all the subscribers.
3. Promoters shall handover the business to the Directors
4. Directors shall collect the share capital from the promoters and subscribers.
Such payment should be atleast 25% of the share capital.
5. Once the share capital collection is complete, the authorized Director must prepare the request for registration of company’s establishment and submit the form to the registrar. The request must be submitted to the registrar within 3 months from the date of the company’s statutory meeting.
If the following steps can be performed within the same day, then the promoter can prepare the Memorandum and the Director can register the Memorandum. Thus the company can be established on the same day.
1. All the shares that were reserved should be bought by the respective parties so that the company can be registered
2. Arrange a statutory meeting to establish the company according to the Civil and Commercial code
3. Personnel who set up the company shall assign all affairs to the Director
4. Director should request the personnel who reserve to buy shares and pay such funds according to the Civil and Commercial code 1110.
Registration
Registration is twofold.
1. Registering the Memorandum
2. Registering the establishment
Registration procedure
To register the establishment, the personnel who set up the company or the company’s director shall request to verify and reserve the company’s name. Upon reserving the name, a request for the registration of memorandum of association will be submitted within 30 days by reserving the name in person or via www.dbd.go.th
1. Prepare the request for registration and other attachments and submit to the Registrar
2. Pay the fee
3. Obtain the certificate of registered transactions
4. Receive the certificate of registration
Time restrictions for setting up a Limited Liability Company
- Request for registering the company’s establishment-must be submitted within 3 months from the date of the company’s establishment
- Request for registering new directors-must be submitted within 14 days from the appointment of the directors
Fees for registering a Limited Liability Company
5. Registering the Memorandum of Association 500 – 25,000 Baht
6. Register the establishment 5,000 – 250,000 Baht
7. Registering for tax documents
A tax ID card and a number must be obtained from the Revenue Department within 60 days from the date of incorporation. For foreign companies, a tax ID card and a number must be obtained from the date it initiates business activities in Thailand.
8. Registering for an employer account under the Social Security Act
An employer account must be established within 30 days from the start of employment. The registration process would normally take 1 day.
Public Limited Companies
Investment capital requirements
- There is no minimum capital requirement. However, each share must have the same par value
- The Promoters must subscribe to at least 5% of the total share capital and must maintain such shares for 2 years from the date of registration
- The Securities and Exchange Commission (SEC), compliant with the SEC Act, is responsible for approving the offering of shares and supervision of the Stock Exchange of Thailand (SET)
Management
- Must have at least 5 Directors and at least half of the Board of Directors must have a registered address in Thailand.
- At least 50% of the Promoters must be residents of Thailand.
- A Limited Liability Company will be managed by a Board of Directors.
- Foreigners can be appointed as Directors
- For companies which have received permission to conduct business under list 2 of the Foreign Business Act, at least two fifths of the Directors should be Thai nationals.
- For a company established under the Thai-US Treaty, majority of the Directors should be American or Thai nationals.
Accounting/auditing requirements
- Directors must arrange for an annual general meeting to obtain shareholder approval of the company’s audited financial statements within 4 months from the end of the fiscal year
- Directors must file the audited financial statements, including the shareholder list to the Company Registrar within 1 month after holding the shareholders meeting.
- Directors should publish the balance sheet in a newspaper (public media) for at least 1 day within 1 month from the date on which it was approved at the Shareholders’ meeting.
- Financial statements must be audited by and subject to the opinion of a certified auditor.
Incorporation process
1. Corporate name reservation
To reserve a company name, the company can either submit a signed Name Reservation form to the Department of Business Development of the Ministry of Commerce or fill in a Name Reservation form and submit it through the Department of Business Development’s website. Two alternative names should also be provided in case there is a conflict in the name selected by the company.
It takes up to 2-3 business days to reserve a company name.
Once the selected company name is approved, the corporate name reservation will be valid for 30 days.
2. File a Memorandum of Association (MOA)
After the name reservation has been approved, the MOA must be submitted to the Department of Business Development of the Ministry of Commerce.
For a Public Limited Company the MOA must include at least the name of the company, purpose of the company, province in which the company will be located, registered capital, number of share, and the names, date of birth nationalities and addresses of the promoters and the number of shares each of the promoters has subscribed.
There must be at least 15 promoters to register the MOA and prepare the prospectus to buy all the shares specified by the MOA. Promoters should be at least 20 years of age. The promoters of Public Limited Company must be among the company’s initial shareholders.
3. Convene a statutory meeting
Once the shares subscribed reaches the number specified by the prospectus (not less than 50% specified by the Memorandum of Association) a statutory meeting should be convened. The following would be determined during the meeting.
- Adoption of Articles of Association
- Ratify any contracts entered into and expenses incurred by the promoters
- Finalise the remuneration, if any, to be paid to the promoters
- Finalise the number of shares, if any, to be issued
- Finalise the number of ordinary or preference shares to be allotted as fully paid or partly paid up capital
- Appointment of the initial directors and auditors
After the statutory meeting, the promoters should hand over all business matters to the directors of the company.
4. Registration
Within 3 months after holding the statutory meeting, the directors must register the company.
Time restrictions for setting up a Public Limited Liability Company
- Submit the prospectus to the registrar within 15 days from the date the prospectus is submitted to the Securities and Exchange Commission.
- Promoters should convene a statutory meeting when the number of subscribed share has reached the number specified in the prospectus (must not be less than 50% of the number of shares in the MOA) within 2 months from the date on which the subscribed number of shares reach the specified number and no later than 6 months from the date on which the MOA is registered.
- Board of Directors should request for the company’s registration within 3 months from the date of establishing the company
Fees for registering a Public Limited Liability Company
1. Registering the Memorandum of Association 1,000 – 25,000 Baht
2. Register the establishment 1,000 – 250,000 Baht
*However, if the company is specified as “foreign” under the Foreign Business Act, the following rules shall apply
- Engages in business activities specified by the Foreign Business Act, the minimum registered business capital would be greater than 25% of the estimated average annual operating expenses, calculated over a 3 year period, and not less than 3 million Baht.
- If the company does not engage in activities specified by the Foreign Business Act, minimum registered capital should be 2 million Baht.
Registering for tax documents
A tax ID card and a number must be obtained from the Revenue Department within 60 days from the date of incorporation. For foreign companies, a tax ID card and a number must be obtained from the date it initiates business activities in Thailand.
Registering for an employer account under the Social Security Act
An employer account must be established within 30 days from the start of employment. The registration process would normally take 1 day.