Setting up a Thailand limited company is the most popular structure for foreign investors. It is a legally separate entity that protects shareholders from unlimited liability.
Before you can register your company, you must hold a statutory meeting and submit the articles of incorporation and by-laws. You will also have to establish an accounting system and prepare a book of account.
Company Registration
The company registration process starts with submitting the memorandum of association and statutory meeting minutes. The department also requires an affidavit of address and a letter of consent from the landlord of the office. The department will reserve the name of the Company for 30 days.
Once the documents are submitted, the company will need to register for value-added tax and corporate income tax. Depending on its business activities, the company may need to also register for special business tax or make a prepayment of business taxes.
Having the company registered allows third parties, including investors or banks, to examine its status regarding the details of the business such as financial state, shareholders list, directors, and more. The documentation package is collected by the specialists of Law & Trust International, and after being verified, it is transferred to the Ministry of Commerce. The founder also obtains a Thai taxpayer number which is essential to open a local bank account.
Articles of Incorporation
The drafting of articles of incorporation is one of the first steps in setting up a business in Thailand. This document outlines the company’s objectives and provides a legal basis for its operations. It also sets out the minimum capital requirements and identifies the number of shareholders. The company will also need to register for business taxes and obtain any sector-specific licenses.
A limited company is the most common type of business in Thailand. It is formed by at least three shareholders, and the liability of the owners is limited to their investment in the company. It is easy to set up and can provide tax benefits and work permits for foreign employees. Moreover, the owners can keep their personal assets separate from the business. The Company must place in a reserve fund at the time of distribution of dividends at least one-twentieth part of profits arising from its business. The Company must prepare financial statements and close the accounts within 12 months of its registration date.
Statutory Meeting
The statutory meeting is required by law to be held within a certain period of time after the company’s incorporation or registration. The meetings vary from jurisdiction to jurisdiction, but they typically involve a company’s board of directors and shareholders. The purpose is to ensure that the company’s shareholders are aware of the company’s activities and finances.
A statutory meeting must also approve the company’s financial statement every year. This is necessary to comply with Thai law. Companies must submit the audited financial statements to the Commercial Registrar and Revenue Department within one month of the end of their accounting period. Companies must also maintain books of account in compliance with the Civil and Commercial Code and Revenue Code, as well as adhere to strict accounting procedures. These books must be written in Thai and must contain the company’s registered address, tax ID number, corporate income tax payment status, and list of shareholders. The company must also apply for a value-added tax (VAT) number if its annual turnover is over THB 1.8 million.
Shareholders
A limited company is a separate legal entity with its own assets, liabilities, and profits. It is the preferred structure for most foreign investors. It is possible for foreign investors to own up to 49 percent of a private limited company, depending on the industry.
The Civil and Commercial Code prescribes that a limited company must have at least three natural persons as promoters (initial shareholders) at the time of its registration. These must remain the shareholders throughout the company’s operation. The company’s directors must be natural people, and their details appear on a public file.
Directors are jointly responsible for submitting the articles of association and by-laws to the Registrar of Companies, as well as ensuring that shareholders have paid their shares in full. They also have a statutory responsibility to keep the company’s books and follow accounting procedures prescribed by law. In addition, the appointment of a secretary is optional. A Thai limited company must be owned by at least three shareholders.