Thailand's most common forms of legal entities are used for business or other purposes. By national legislation, companies may be subject to certain restrictions depending on the state of the organization. At the same time, the correct form of enterprise and taxation can make doing business more transparent and comfortable.
Common types of companies in Thailand
In such a company, there must be a minimum of two shareholders (from 07.02.2023) and a director, and it must have a licensed auditor. A foreign citizen can own up to 49% of the shares of such a company, and the majority of shares must belong to Thai citizens or companies. Such a company does not require a foreign business license.
A foreign business license is required when foreign capital prevails over Thai capital in a company. The foreign capital license is used to regulate the activities of foreign companies in Thailand. It concerns restrictions on the permitted spheres of activity and requirements for the size of the authorized capital.
Applications for a license are reviewed by the Foreign Business Committee within 60 days. The restrictions on activities are divided into three groups.
A private partnership or partnership is one of the available forms of company organization in Thailand. There are two types of partnership (partnership): total (unlimited) and limited liability. Depending on the distribution of Thai and foreign shares and the roles in managing the company's activities, it may be necessary to obtain a foreign business license.
A foreign company may establish a representative office in Thailand to engage in non-profit activities on behalf of a foreign company. As part of the activities, the representative office provides services only to its head office. A representative office exists solely at the expense of the head office and is funded exclusively to cover the necessary costs for this purpose.
Funding from the head office is not subject to taxation. Nevertheless, the company's representative office must keep accounting records and show no profit in the annual balance sheet.
Under Article 78 of the Civil Code, an association may be formed for any act of mutual success, not for the division of profits or income. The association must have a charter and be registered by the provisions of this Code.
A registered association will be a legal entity by Article 83 of the Civil and Commercial Code.
Associations are often created for state registration of charitable activities.
Unlike representative and regional offices, branches are not limited to managerial functions under Thai law. In addition, components of foreign companies can earn income from their activities.
Depending on the business category, a foreign business license may be required. The foreign company is responsible for the performance of the obligations of its Thai branch.
A regional headquarters or regional operating headquarters (ROH) may be established to serve branches or associates located both within and outside of Thailand.
Regional headquarters may be supported by the Board of Investment (BOI).
Regional offices differ from branches in their structure. Regional offices are not separate legal entities and operate in Thailand on behalf of the head office abroad.
Regional offices must obtain a foreign business license. The permitted activities of a regional office in Thailand are governed by Schedule 3 of the Foreign Business Act 1999 (FBA).
Foundations in Thailand refer to legal entities established for charitable activities to support those in need. The participants cannot directly benefit from the profits made by the foundation as a result of its activities.
Charitable purposes may be in religion, art, science, literature, education, or any other public interest. In any case, foundation registration is a long process requiring many approvals.
A company in Thailand can be dissolved either by law or by court order. The dissolution of a company by special permission is the basis for the dissolution of the company by law. The liquidation of a company is carried out in two stages.
There is a merger process in which two companies are combined into one business entity. On the other hand, acquisition refers to buying another firm. Acquisitions are also known as takeovers and can be either friendly or hostile.
The takeover process can be very complicated and time-consuming.
