When establishing a company in Thailand, there are 4 common forms. The characteristics of each form are summarized below.
1. Private Company
2. Limited Company
3. Public Company (including company with BOI)
4. Representative Office
In Thailand, the establishment of foreign-owned Private Company is prohibited by the law; therefore the establishment of such company would have to be under trusted Thai partner.The employment of foreign citizen will not be permitted under the form of Private Company, and legal rights of all investment will go under Thai partner and hence, the risk is inevitably higher.
The merit of establishing Limited Company is its rather simple requirements with minimum of 3 founders/shareholders. However, in comparison to Public Company, individual shareholders will carry more direct responsibility of the business. Furthermore, as of July 2008, the deregulation of Thai law to change the required founder of Public Company from 7 to 3, has lessened the advantages of Limited Company format.
Public Company formation can be done by gathering minimum of 3 founders (As of July 2008, the law has been deregulated, with number of minimum founders to be decreased from 7 to 3). The foreign-owned businesses in Thailand are often established in Public Company format.
Whilst establishing a Public Company, it is not required to prove the capital fund under Thai law. However, with law regarding to foreign intervention in Thailand, foreign business can only hold a share of up to 49%; therefore unless the case has been approved by Board of Investment (BOI), rest of 51% must be capitalised by Thai investor.
The Representative Office will be allowed minimum business transaction, mainly a work related to reporting back to the main head quarter in overseas.
The establishment of Representative Office, when compared to that of local establishment, require more cost and time, whilst strict limitations being applied.
For further question or assistance, please contact us.