Thailand is a country that once visited, tends to linger on in your mind for long especially after experiencing the happy way of life of Thai people, stunning natural scenery and pleasant weather all year round. The joy of life in Thailand draws many visitors to return, often on a permanent basis.
Setting up your own company is always a big decision. This is even more so when you set up a company in a foreign destination. Business registration in Thailand is a different process as compared to most Western countries.
The Thai business market is a very exciting. Thailand is a developing country with good quality of life, combined with a market place that is full of opportunities. From production to the service sectors, there is lot of potential for entrepreneurs to make money in the expanding Thai market. Learn more – Why you should choose Thailand over other countries to do business.
Before one decides to setup a company in Thailand, one needs to understand all the basic laws, regulations and modalities associated with setting up a new business in Thailand. Thailand has certain restrictions on applications and ownership of a Thai business by foreigners. The reason is because Thai laws generally protects the interests of Thai people and their land. However, as with most laws and processes, there are exceptions and workarounds. That said, with a good lawyer and expert guidance on the operational aspect of setting up a business, the Thai market potential can be fully leveraged.
Who will your partners be?
Unlike a few countries like UK, where it is easy to register as a sole trader or independent contractor, in Thailand, you have to form a company. Partnerships are available, but often the protection for investors isn’t as good as with a PLC. PLC stands for a private limited company.
However, to create a PLC company, you must have at least three people involved in the company. They must be share holders too. This means that you need to have investors or a lawyer that can arrange this for you.
Thai Business Restrictions
Thailand has laws to protect the interests of Thai people. These laws also include restricted areas of business for foreigners. Even then a company can actually be registered as a Thai entity.
So what does this mean? It means that if 51% of the shares registered are Thai owned, then the company will have similar rights to that of a Thai person. Which means it can buy land and even trade in the restricted business areas.
There are ways to protect foreign investors while allowing the company to be registered as Thai. Options like preferential shares hold more voting power, repayment of investment back to shareholders, and sole foreign director/signatories are some examples. Consult with the Startup Specialists if you need more information. Learn more about Starting a business in Thailand.
This is something that many people worry about. However, with a PLC, liability is greatly restricted, if not protected. With a standard registration, a person is only liable for the value of the shares that they own. Liability can’t go beyond this value.
However, for most businesses, it is unlikely that they will ever have a problem. Many business types can’t actually cause serious injury or damage to someone’s income/business, and hence, very unlikely to ever have an issue.
As with any country, the key is to have good safety and risk management, combined with good insurance. A decent business insurance policy will pay any possible claims and will normally also handle the legal side, as to reduce their own expenses.
This way, the business can protect itself from potential issues before they arise.
How to structure a Thai company
Thai law is quite complicated when it comes to business, but thankfully there are ways to simplify things. As a foreign entity, business operations are restricted. This means that if the owner owns over 49 percent of the shares, then they may have to follow the foreign business restrictions.
The way around this is to have a couple of Thai business partners, or nominated partners, to register the company as a Thai private limited company. This then allows the business to do almost anything that is legal for a Thai person, as it becomes classified as a Thai business. Even then, the company can be under the full control of the foreign owner; to ensure the investment is safe.
To give control to the foreign owner, the foreign shares can have weighted voting rights, or the foreigner can be the sole signatory on the company. This means that despite having Thai names on the shares, the foreign business investor can have complete control. If they have real and active Thai business partners, this can also be set up to give the foreign business owner equal voting rights and control, regardless of the lower amount of shares held. For most, this adds a nice level of security to owning a business in Thailand.
Hiring a specialist for company registration
Due to the legalities involved and paperwork required, most people never try to Register a Thai Company on their own. For a start, most of the official paperwork will have to be in Thai language. And those that aren’t already in Thai, will need to be translated. Then there is a certain order to the registration process and many elements of this process which require previous phases to be completed before they can be actioned upon. This process can be very confusing without proper experience of the entire process.
A good lawyer can handle this for a foreign business owner. There are numerous steps, but most are fairly straight forward, as long as all investors and signatories are available to sign papers and if necessary, available to visit offices (normally not required). Startup in Thailand is a leading business consulting firm in Thailand that can provide all kinds of business related Legal assistance in Thailand.
Hiring the services of a Thailand market entry specialist can help to get a business registered legally and in a hassle-free manner. They can also provide ‘in-country’ support for the business and provide business connections with the right people across levels.
Interesting Reads :
- Thailand Market Entry
- Representation Services in Thailand
- What you should consider before doing business in SE Asia
- Road to a startup business in Thailand through the Board of Investments
- Top 10 Reasons for Startup in Thailand
- Top 10 Business Opportunities in Thailand
- Is it Worth Investing in Thailand this year?