A Thai limited company is a legal entity that protects shareholders’ financial assets. A limited company must prepare financial statements and abide by accounting procedures.
It is advisable to have one or more directors who are Thailand nationals. A Thai director’s understanding of local regulations can facilitate registration and minimize scrutiny from authorities and stakeholders.
Company Name Reservation
Company name reservation is an important first step in setting up a business in Thailand. The name can be reserved by submitting an application to the Department of Business Development. Once the name is approved, it will be used in all the documents necessary for company registration.
Foreign investors have several business structures they can choose from when establishing a firm in Thailand. The most common is the limited company, which offers a number of advantages such as:
It is a legal entity with its own assets and liabilities. Shareholders’ liability is limited to their contributions into the share capital. In addition, it can engage in various types of businesses without restriction based on its criteria, and the directors of the company are not required to be Thai citizens or residents. This is the most popular choice of business structure for foreigners in Thailand. Foreigners may have a majority of voting rights and can be fully in control of the company, if it does not engage in any restricted activities that require a Foreign Business License or registration under the Treaty of Amity.
Memorandum of Association
The Memorandum of Association (MoA) is a legal document that establishes a company’s fundamental principles and objectives at the time of its incorporation. It is a requirement by law that all limited companies have an MoA.
The MoA must include essential details about the company, including its name and registered office address. It also must state how much capital the company is authorized to issue.
Once the MoA has been approved by the company registrar, entrepreneurs must convene a statutory meeting to approve the Articles of Association, decide on the types and rights of shares, appoint directors and define their powers, and appoint an auditor. The statutory meeting must be held within three months from the date the MoA is approved.
Upon successful completion of the statutory meeting, the promoters can submit the signed original copies of the MoA and other required documents to the company registration office. Tetra Consultants can help you prepare the MoA and draft the Articles of Association based on your KYC information and business plan.
Statutory Meeting
The statutory meeting is an essential step in the establishment of a company. This meeting is governed by the Companies Act, 1956 and must be conducted in accordance with the prescribed rules. The meeting must be conducted within three months of the date of incorporation and must include a list of members, their names, occupations and shares, as well as proof that they have paid up their share capital in full.
During the statutory meeting, the company must also present its financial statements and declare its profits. This will help to ensure that the company is operating in a responsible manner. The statutory meeting is also an opportunity for shareholders to discuss the company’s business plan and ask questions.
Tetra Consultants can help you organize a statutory meeting and prepare the incorporation documents required for the company’s registration. We will draft the Memorandum of Association based on your business plan and register it with the Ministry of Commerce.
Registration
When all the requirements for setting up a Thai limited company are fulfilled, it can be registered by submitting the required documents at the local office of the Department of Business Development and applying for corporate tax and VAT registration. The company also needs to open a bank account and obtain the needed sector-specific licenses.
At least three natural persons as shareholders are required at the time of company registration. Promoter’s shares are not transferable until the company is registered. The Company is managed by directors who must prepare financial statements every month and submit them to the DBD within a period of four months from the Company’s financial year-end.
Thailand is a very popular location for international entrepreneurs as it is known to offer low labor costs and a large and highly educated workforce. This is in addition to the modern infrastructural facilities that facilitate business operations here. The country also benefits from a wide range of attractive investment incentives, such as reduced corporate income tax (CIT) and value-added tax (VAT). For more information on starting a company in Thailand, feel free to contact us.
