There has been a notable increase in foreign corporate institution’s foray into Thailand’s business activities in recent years. This is largely because of the country’s robust economic growth that created a business-inducing financial climate. Here is a general overview of how a foreign company can be registered and operate in Thailand.
Types of Business Registration Options
Foreign companies have several options to choose from in establishing their corporate presence in the Kingdom. It is worthy to note, however, that a foreign company’s business activity must conform with the activities allowable to the particular business registration it chooses to register with.
- Limited Partnership – is among the most popular business registration type in Thailand. This partnership is composed of one party having unlimited liability while the other does not have.
- Ordinary Partnership – need not be registered unless otherwise chosen to be so by the partners per Section 1064 of the Thai Civil and Commercial Code. This type of partnership is composed of two or more partners who share unlimited liability that can be utilized in case of inability to service of debts.
- Representative Office – activities are limited to reporting business movement in Thailand, sourcing of services and goods in the country and in the conduct of inspecting and controlling goods for their quality and quantity. A representative office cannot earn income while operating in the country.
- Branch Office – earning income while operating in Thailand is possible for a branch office. However, the head office of the foreign business may also be held responsible for liabilities incurred by the office. Further, a branch office also needs to obtain a Foreign Business License under the Foreign Business Act B.E. 2542 (FBA) especially if its activity is among those listed in with the FBA.
To register a foreign company in Thailand is a tedious process. Nonetheless, such foreign business entity is required to do so otherwise it cannot be allowed to operate in the Kingdom.
- Company Name ReservationThe foreign company needs to reserve its chosen business name along with two additional alternative names that in case the primary name is already taken, either of the nominated names shall be taken. Once submitted, the ministry shall also verify if the nominated names do not violate any rules governing company names.
- Memorandum of Association FilingNormally, company name reservation only takes no more than 3 days after which it shall then be followed by the signing of a Memorandum of Association (MOA) by all shareholders.
The MOA contains the names of the shareholders, business scope and location as well as registered capitalization.
Once completed, the MOA and other supporting documents for company registration shall then be submitted to the Ministry of Commerce for processing and evaluation. If these have been complied along with the requirements set by the ministry then the office shall release the company’s certification, articles of association and shareholders’ list.
- Tax Registration
Once the 2nd step has been completed, the company shall then file for and be granted with a Tax Identification Card and VAT Certificate. All pertinent documents required for this step have to be submitted by the company to the Revenue Department.
- Opening a Corporate Bank Account
The company can choose to open a corporate bank account in Thailand. Requirements may differ between banks. Regardless, the company must comply with what has been required of them by the bank it chose to open a corporate bank account with.
- Thai Work Permit
The foreign company’s representative or worker must obtain a Non-Immigrant Visa before applying for a work permit with the Labor Department.
Foreign companies must be reminded that all legal documents in Thailand are written in Thai. This also means that any document obtained from outside of Thailand may need to be interpreted first before it can be used as a supporting paper or attachment.
This, plus the unfamiliarity with the whole business process, warrants the company to employ the services of a Thai lawyer with a good grasp of the English language and with the Thai business registration process.