Step 1: Reservation of corporate name:

The reserved name of the business should not be similar to any other companies or business organizations. The business should use such a name that is available and is in accordance with the guidelines and rules framed under the authority of the Business Development Office. It is recommended to have a clear understanding of the regulations of the Ministry Of Commerce of Thailand.

Step 2: Filing of Association Memorandum:

In this step, a Memorandum of an association has to be filled at the Business Development Office. This action must contain the registered name of the company, the territory of the business, location of the company, business objectives, the amount of capital invested behind the business, along with the name of the promoters.

Furthermore, the information of capital investment must include the par value and the number of shares as well. In addition, certain subjects have to be issued officially such as the authorized capital, the formation step, the payment structure, etc.

Step 3: Summon for a Statutory meeting:

In this step, the entrepreneur needs to define the structure of the business share. Once done, a statutory meeting will be arranged. In this meeting, the bylaws and the incorporation articles will be approved by an appointed auditor under the Board of Directors. According to the regulation of the Board of Directors, 25 percent par value of each and every subscribed share must be paid.

Step 4: Registration:

After completion of the statutory meeting, the next step will be to register the company. Within three months after the date of the statutory meeting, the directors will have to submit the technical and administrative application, on the process of registration. The company registration fee is decided by multiplying the registered capital with 500 baht upon 100,000 baht. The limit of a maximum fee is 250,000 baht and minimum fee is 5,000 baht.

Step 5: Tax Registration:

The legalization of business must include the liabilities for income tax department which obtains a definite tax ID card. The company must obtain the Tax ID from the Revenue Department within the duration of 60 days from the incorporation or initial day of the business operation. Moreover, according to the regulation, when a business operator cross the boundary of 1,800,000 baht per annum in product sales, the operator should register for VAT within 30 days of reaching the limit.

Reporting Requirements:

Any individual firms or start-up business organization must keep financial records in the books and follow certain accounting procedures which are specified in the commercial code, revenue code, and civil code of the Accounts Act. The related documentation can be maintained in any language, however, a translation in Thai language must be attached with the main submission. All the entries of accounting details must be written by ink, typewriter or printing copy.

The specific rule of Civil and Commercial Code, under section 1206 says that the account should be maintained as follows.

True accounts have to be kept by the directors of the respective companies. The true accounts include a few parameters such as:

• Of the sums expended and received by the company.
• Of the matters, based on which the expenditure and receipt take place.
• Of the assets of the company along with the liabilities and responsibilities.

One of the most important aspects is foreign ownership of the business. The regulation and guidelines regarding foreign ownership of a business or foreigner’s activities in the Thailand business is attributed to the Foreign Business Act of 1999.

The laws in Thailand are pretty nationalistic. A company registered in Thailand should be majorly owned by Thai nationals. In terms of shareholding, a company cannot be owned by more than 49 percent by foreigners. In some special cases, foreign ownership in a business is limited to a maximum of 39 percent shareholding.  This is one of the most important factors for foreigners in order to set up a business in Thailand. The Thai shareholders in a company partly or fully owned by the Thais, need to submit evidence of finance used to hold shares, including bank statements and other documents.

Generally, foreign business owners require a Foreign Business License from the Ministry of Commerce of Thailand. There are also some exceptions provided to foreign majority ownership aspect. These exceptions to companies is granted by the Board of Investment if the company employs a large number of Thai nationals, or have a large investment, or can provide strategic transfer of technology to Thailand.

One of the common practices for foreign shareholders is to “pay off” the local Thai shareholders with the help of a local law firm. Thai shareholders can also sign in an undated agreement to transfer the shares after the completion of the company set up process. The resigned Thai shareholders must confirm the transfer of shares to someone else because it cannot be left without an owner. The share must be transferred to another Thai shareholder or to the owner.

Contact Startup in Thailand for a detailed discussion regarding shareholding options in a Thai company.

Another simpler option for companies is to explore Representation in Thailand where companies do not have to worry about initial investments. It is ideal for companies looking to explore and expand Thailand at minimum risk.