There are several different types of companies in Thailand that are legally recognized and each serves different needs, corporate structures, and functions. The kind of company you form depends on the ownership, stakeholders and location of the business taking place and profit being made.
If you are looking at forming a company in Thailand, it will help to have a local lawyer that is familiar with Thai law and can advise you each step of the way. If you don’t yet have Thai legal representation, you can find a lawyer in Thailand with exactly the specialties you require at Asia Law Network. Simply filter your search by region and law specialty and get results for lawyers specializing in your legal need. You can trust that all the law professionals on Asia Law Network are pre-verified for you and can help you with forming a company in Thailand. You can even set up a consultation through the site.
Below is an overview of the various types of companies in Thailand that are recognized by the governing bodies.
Four Types of Organizations:
1) Sole Proprietorship: A firm owned by a single person that has not been incorporated.
2) Partnership: Similar to a business partnership in the West, this simple structure is owned by at least two people. Thai partnerships are subdivided further into three kinds of partnerships:
- Unregistered Ordinary Partnerships: All partners are equally liable for all the company’s business, obligations and legal complications.
- Registered Ordinary Partnerships: Once registered, the partnership is a legal entity that exists distinctly and separately from the partners while the partners remain liable.
- Registered Limited Partnerships: Each partner’s liability is tied to the amount of capital he or she invested in the partnership except for the managing partner(s), whose liability extends beyond the company’s assets and into their own personal assets, if necessary.
3) Thai Limited Company: Similar to a Limited Liability Company (LLC) in the US, these companies require at least three shareholders and a director. The benefits of a Limited Company are that the management and shareholders can help to keep each other accountable and that the liability of the shareholders is limited. There are also three subcategories of limited companies in Thailand:
- Private Limited Company: This is the top choice of company formation for foreign investors and founders. The type of company requires at least seven promoters which can include the shareholders and director. These companies are responsible for paying income tax as well as well as withholding tax from any employees.
- Limited Partnership: As listed above, this company formation falls under two different categories as both a partnership and a limited company. The liability of some of the partners is limited to the amount they invested in the partnership while at least one partner is liable for the business’s obligations without limit. This person is often called the managing partner.
- Public Limited Company: This structure requires a minimum of 15 promoters and offers the opportunity to allow the public to buy shares in the company. Best for larger companies with budgets that might require public shareholders, permission to accept public shareholders requires an application with the Securities Exchange.
4) Representative Thai Office: This is the legal company structure to put in place when an existing foreign company doing business outside of Thailand requires a business license to perform professional activities inside Thailand. A representative office can advise the parent corporation on business in Thailand and manage any purchasing or manufacturing done in Thailand.
This is the easiest company formation, but it also excludes the company holding it from making profits from business activities taking place in Thailand.
The representative office is best for activities such as storing commercial goods, quality control over manufacture within Thailand and managing regional branch openings all over Asia. Application to set up a representative office can be submitted to the Department of Commercial Registration.
Don’t hesitate to get in touch with your lawyer to ask which company formation fits your unique business needs. Don’t have a lawyer for forming a company in Thailand? Find exactly the law help you need from one of the verified lawyers on Asia Law Network.
This article is written by Adrian Mah from Asia Law Network.
This article does not constitute legal advice or a legal opinion on any matter discussed and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and practice in this area. If you require any advice or information, please speak to practicing lawyer in your jurisdiction. No individual who is a member, partner, shareholder or consultant of, in or to any constituent part of Interstellar Group Pte. Ltd. accepts or assumes responsibility, or has any liability, to any person in respect of this article.