The private limited company is the form of business entity that is most commonly used by foreign investors in Thailand. In this blog post we provide a brief step-by-step overview of the various stages in the business registration process.
Step 1: Registering the company name
The name you chose for your company must not be identical to/or resemble the name of any pre-existing registered partnership or company. Certain terms are also prohibited from use in company names. For example, you may not use the term “investment” in your company name but the term “capital” is allowed. The company name must end with the word “Limited”.
It is recommended that you reserve three names ranked by priority to maximise the chances of success. Your company name will be registered in Thai language, even if the name of your company is in English. Do not propose a name that is lengthy or difficult for non-English speakers. Remember that your clients will have to write it, so the more complicated the name then the more mistakes your clients will make when drafting checks, etc.
The name of your business can be different from your company name. You can also use the same name for several companies proved that you accompany that name with a different figurative word. For example ABC Trading Ltd, ABC Holdings Ltd, ABC Capital Ltd, etc. Once approved, the corporate name is only valid for thirty days and no extension is permitted. This means that Step Two of the company registration process must be completed within this period of time.
Step 2: Filing the Memorandum of Association
The Memorandum of Association is a special agreement made by the founders (promoters) of the company. The Memorandum of Association must contain:
- The name of the proposed company
- The province of the Kingdom where the registered office of the company will be situated
- The objectives of the company
- A declaration that the liability of the shareholders will be limited
- The amount of share capital which the company proposes to be registered
- The names, addresses, occupations and signatures of the promoters (at least three individuals – not corporate entities)
- The number of shares subscribed to by each of the promoters
The original copy (copies) of the Memorandum must be signed by the promoters and certified by two witnesses.
Step 3: The statutory meeting
The Statutory Meeting can be convened as soon as you register the Memorandum of Association. Its purpose is to:
- Adopt the regulations (i.e. Articles of Association) of the company
- Ratify any contracts entered into by the promoters or any expenses incurred by the promoters in promoting the company
- Fix the amount to be paid to the promoters
- Fix the number of preference shares (if any) to be issued, and the nature and extent of the preferential rights accruing to them
- Fix the number of ordinary shares or preference shares to be allotted as fully or partly paid up otherwise than in money, if any, and the amount up to which they shall be considered as paid up
- To appoint the first directors and auditors and the fixing of their respective powers
Step 4: Registering the company
The application can be lodged at the Ministry of Commerce on the same day that the Memorandum of Association is registered, providing that the Statutory Meeting has already been convened. The application for registration must be lodged no later than three months from the date of the statutory meeting, or you will need to provide a satisfactory explanation for the delay.
The following details must be provided in the application:
- The total number of shares subscribed or allotted (distinguishing ordinary shares from preference shares, if any)
- The number of ordinary shares or preference shares allotted as fully or partly paid-up otherwise than in money, and in the latter case, the extent to which they are paid-up
- The amount already paid in money on each share; the total amount of money received in respect of shares
- The names, occupations and addresses of the directors and if the directors have, power to act separately, their respective powers and the number or names of the directors whose signature is binding on the company
- The period for which the company is registered, if any has been fixed
- The address of the principal office and of all branch offices and any other relevant particulars
It is at this stage of the registration process that Thai shareholders may be required to disclose the source of their investment (refer to separate blog post on this topic). If the company intends to purchase land then there may be additional scrutiny of Thai shareholders by staff of the Land Department.
The director of the company will also need to sign a statement attesting that each shareholder has paid his/her share subscription. Receipts must be signed by the director and mention, the name of the shareholder, the amount paid, the amount of shares purchased, the value per share and that the money is collected for payment of the capital. Shareholders appearing on the first shareholder list must also sign the receipt, whereas shareholders that subscribe at a later stage are only required to sign the share transfer documentation.
Step 5: Registering for corporate income tax and VAT
Once your company has been registered, and within 60 days of incorporation or the commencement of operations, you will need to apply for and obtain a company corporate tax ID card from the Revenue Department. This process can be completed online.
You must obtain the company Tax ID in order to open a corporate bank account. If a foreign director of a company lacks a work permit, then the bank will generally request that the application documents for the opening of the company corporate account be co-signed by a Thai director.
Any business having a turnover of more than 1,800,000 THB per annum, and that is not subject to the Special Business Tax, must register for VAT within 30 days of the date they reach 1,800,000 THB in sales. In addition, should you wish to obtain a work permit then you will need to immediately register your company for VAT (more information about VAT).
The fees imposed by the Thai government in relation to the registration of a private Thai limited company are currently as follows:
|ITEM||GOVERNMENT FEES||STAMP DUTY|
|Registering company name||No charge||10 THB|
|Filing Memorandum of Association||50฿ per 100,000 THB of capital; minimum 500 THB, maximum 25,000 THB||200 THB|
|Statutory Meeting||No charge||–|
|Company registration||5,000 THB per million baht of capital up to 250,000 THB||400 THB|
|Tax ID registration||No charge||10 THB|
|VAT registration||No charge||10 THB|