Introduction to setting up a business in Thailand
The following is an overview of establishing a business in Thailand.

As in most countries, there are three kinds of business organizations in Thailand: Sole proprietorships, partnerships, and limited companies.


The most popular form of business organization among foreign investors is the private limited company. Private limited companies require a minimum of three promoters and must file a memorandum of association, convene a statutory meeting, register the company, and obtain a company income tax identity card. They must also follow accounting procedures specified in the Civil and Commercial code, the Revenue Code and the Accounts Act. A balance sheet must be prepared once a year and filed with the Department of Revenue and Commercial Registration. In addition, companies are required to withhold income tax from the salary of all regular employees.

The Ministry of Industry administers The Factory Act, which governs factory construction and operation, as well as safety and pollution-control requirements. In some cases, factories do not require licenses, in other instances the requirement is simply to notify officials in advance of start-up, and in some cases licenses are required prior to commencing operations. Licenses are valid for five years, and are renewable.
Thailand recognizes three kinds of intellectual property rights: patents, trademarks, and copyrights. The Patent Act protects both inventions and product designs and pharmaceuticals. The Copyright Act protects literary, artistic works, and performance rights, by making it unlawful to reproduce or publish such works without the owner's permission. The Trademark Act governs registration of, and provides protection for, trademarks.

The Alien Occupation Law requires all foreigners working in Thailand to obtain a Work Permit prior to starting work in the Kingdom, except when they are applying under the Investment Promotion Law, in which case they have 30 days to apply.

Non-Immigrant visas provide the holder with eligibility to apply for a work permit, and allow the holder to work while the work permit application is being considered.
Investment Incentives offered by Thailand’s Board of Investment
Thailand’s Board of Investment offers significant incentive for investors who meet certain criteria. The incentives are offered to encourage investors to based their businesses in Thailand in accordance with the development plans and priorities of the Kingdom.
Incentives are both financial: e.g. reduction of import duties on machinery & essential materials, and reduction of corporate income tax, and non-financial; e.g. relaxation of work permit requirements for foreign workers, permission to own land etc.
For more details refer to the Incentives tab in the Board of Investment website.
Outline of a “Private Limited Company”
Private limited companies in Thailand have basic characteristics similar to those of Western corporations.
A private limited company is formed through a process that leads to the registration of a Memorandum of Association (MOA) or Articles of Incorporation and Articles of Association (by-laws) as its constitutive documents.
The shareholders enjoy limited liability, i.e. limited to the remaining unpaid amount, if any, of the par value of their shares.

The liability of the directors, however, may be unlimited if stipulated as such in the company's MOA.

Limited companies are managed by a board of directors in accordance with company law and its Articles of Association. Director proxies and circular board resolutions are not allowed in Thai Board of Directors’ meetings.
All shares must be subscribed to, and at least 25% of the subscribed shares must be paid up. Both common and preferred shares of stock may be issued, but all shares must have voting rights. Thai law prohibits the issuance of shares with a par value of less than five baht. Treasury shares are prohibited.
A minimum of three shareholders is required at all times.

The registration fee for the MOA and establishing the company is 5,500 baht per million baht of registered capital.
Foreign Ownership of a Private Limited Company
Under certain conditions, a private limited company may be wholly owned by foreigners. However, in those activities reserved for Thai nationals under the Foreign Business Act, foreigner participation is generally allowed up to a maximum of 49% capital shares.
The 49% capital shares limited in certain reserved businesses can be exceeded or exempted if a Foreign Business License is granted. If the desired business is unique, does not compete with Thai businesses, or involves dealings among members of an affiliated company, the chance of approval is more probable. Conditions, such as minimum capital, transfer of technology and reporting requirements, may be attached to Foreign Business Licenses.
Requirements for Private Limited Company registration
Company promoters are responsible for registering the company with the Ministry of Commerce (MOC). The promoters must be individuals, not juristic persons. They must be available to sign documentation during the registration process. There must be a minimum of three promoters for a private limited company and at least 15 promoters for a public limited company.

The promoters of a private limited company must be 12 years of age or older.

Each promoter of a private limited company is required to be among the company’s initial shareholders immediately after the company’s registration and is required to hold a minimum of one share upon the company's registration. They are generally free to transfer those shares to existing shareholders or third parties, thereafter, if they wish. It is not required for the individuals serving as promoters to reside in Thailand.
Promoters' potential legal liability is generally limited to the par value of the shares they will hold after registration is completed. The promoters are also responsible for paying expenses associated with the company's registration. After registration, however, the company may choose to reimburse the promoters for those expenses
How long will it take to register a Private Limited company?
The registration of the company can be accomplished on the same day as the registration of the Memorandum of Association provided that:
(1) All registered shares have been subscribed for;
(2) A statutory meeting is held to transact the business with the presence of all promoters and subscribers, and all promoters and subscribers have approved the transacted business;
(3) The promoters have handed over the business to the directors; and
(4) The payment of at least 25% of the total shares has been paid by the shareholders.

The company can apply for and obtain the company’s tax ID card and register the Employer account under the Social Security Act with the MOC on the same day as the registration of the Company.
However, if the company does not wish to apply for the company’s tax ID card or register the Employer account under the Social Security Act with the MOC on the same day as the registration of the Company, it can apply for the company’s tax ID card and register the Employer account with the Revenue Department and the Social Security Office respectively later.

Note: If the registered company falls under the definition of “foreign” (as defined in the Foreign Business Act (FBA)), after registration of the company, it will normally be required to obtain Cabinet approval, a Foreign Business License, or a Foreign Business Certificate, as the case may be, prior to commencing operations. This process will likely take several months, and approval is not a guaranteed outcome.
Where is the company registration filed?
For a private limited company, all documents associated with the company’s registration must be submitted to the Registrar of the Department of Business Development (DBD) of the Ministry of Commerce (MOC); or, if the company’s location is to be situated outside of Bangkok, it must be submitted to the Office of Provincial Business Development in the province in which the company’s business will be situated.

All documents associated with the registration of the company’s tax ID card (in cases where the company does not apply for the company’s tax ID card with the MOC when registering the Company) and VAT certificate must be submitted to the Filing Office of the Revenue Department in Bangkok; or, if the company’s location is to be situated outside of Bangkok, to the Provincial Revenue Office where the company’s location will be situated.

However, the Company either located in Bangkok or outside of Bangkok can also apply for the company’s tax ID card and VAT certificate through the website of the Revenue Department.
All documents associated with the registration of the Employer account under the Social Security Act (in cases where the company does not apply for the Employer account under the Social Security Act when registering the Company) must be submitted to the Filing Office of the Social Security Office in Bangkok; or, if the company’s office is to be located outside of Bangkok, to the Provincial Social Security Office in the province in which the company’s business will be situated.
Getting assistance to set up a company
The process of company registration is fairly complex. It is recommended that you seek professional help. There are legal advisors who are members of the NZ Thai Chamber of Commerce who have experience and who are willing to help.
Name registration – the first step to set up a company
The first step of the company registration process is name reservation. To reserve a name, the company can either (1) submit a signed Name Reservation Form (one of the promoters is required to sign the form) to the Department of Business Development of the Ministry of Commerce or (2) fill in a Name Reservation Form and submit it through the Department of Business Development’s website (http://www.dbd.go.th/dbdweb_en). The promoter is required to supply the requested company name together with two alternative names.

The registrar will then examine the application in order to ensure that: (a) No similar company names have previously been reserved; and (b) The names do not violate any ministerial rules. If the applicant’s intended name is in conflict with either of the above, that name will be rejected and the registrar will consider the alternative names submitted. This process can normally be completed within 2-3 working days.
If all three names submitted are rejected, the applicant will be required to re-submit the form with three new names. The registrar has considerable discretion with regard to the matter of company names. Many times, the first name or even the first two names are rejected due to the violation of one of the two rules stated above.
Once the name is approved, the corporate name reservation is valid for 30 days, with no extensions. However, after the name has expired, the promoter can still re-apply for Name Reservation again and again if the name is still available.
Memorandum of Association – second step to set up a company
After the name reservation has been approved, the company must then submit its Memorandum of Association (MOA) to the Department of Business Development of the Ministry of Commerce. For a private limited company, the MOA must include the Company’s name (the same as the name reserved); the location of head office (located at which province); (3) objective of the company; registered capital must be divided into each share with the same value (each share’s value must be at least 5 Baht); the name, address, age, occupation and number of shares that persons who start up the company reserve to buy the shares); and the name, address, age of two witnesses. The capital information must include the number of shares and their par value. At the formation step, the authorized capital, although partly paid, must all be issued.

The official fee for registration of the MOA for a private limited company is 50 baht per 100,000 baht of registered capital. A fraction of 100,000 baht is regarded as 100,000 baht. The minimum fee is 500 baht and the maximum fee is 25,000 baht.
However, if the company falls under the definition of “foreign” under the FBA, before commencing its business, the following rules shall be applied:

• If the company engages in activities specified in the FBA, its minimum registered capital would be greater than 25% of the estimated average annual operating expenses of the operation, calculated over 3 years, but not less than 3 million baht.
• If the company does not engage in activities specified in the FBA, its minimum registered capital would be 2 million baht.
If the company intends to employ foreigners, other minimum registered capital requirements may also be applied.
Statutory Meeting – third step to set up a company
Once the share structure has been defined, a statutory meeting is called, during which the following are determined:
(1) The adoption of the regulations of the company, if any;
(2) The ratification of any contracts entered into and any expenses incurred by the promoters in promoting the company.
(3) The fixing of the amount, if any, to be paid to the promoters;
(4) The fixing of the number of preference shares, if any, to be issued, and the nature and extent of the preferential rights accruing to them;
(5) The fixing of 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;
(6) The appointment of the first directors and auditors and the fixing of their respective powers;
Note: No resolutions of the statutory meeting are valid unless passed by a majority including at least one half of the total number of subscribers entitled to vote, and representing at least one half of the total number of shares to such subscribers.
After the statutory meeting is held, the promoters must hand over all business to the directors of the company.
Application to establish – fourth step to set up a company
Within 3 months of the date of the statutory meeting, the directors must submit the application to establish the company. If not registered within the specified period, the company’s statutory meeting shall be voided and if the company wishes to register again, the promoters shall arrange the meeting for persons who reserve to buy the shares again.

During the registration process, the promoters will be required to supply the name, license number, and remuneration of the auditor whom the company is planning to hire.
The company registration fee for a private limited company is 500 baht per 100,000 baht of registered capital. A fraction of 100,000 baht is regarded as 100,000 baht. The minimum fee is 5,000 baht and the maximum fee is 250 000 baht.

The company is then registered as a legal entity (or juristic person).
How to obtain a TAX ID Number?
A company liable for corporate income tax must obtain a tax ID card and number from the Revenue Department within 60 days of its date of incorporation or, in the case of a foreign company, from the date it begins carrying on business in Thailand.

Companies that have turnover in excess of 1.8 million baht must also register for VAT with the Revenue Department within 30 days of the date the annual turnover exceeded that threshold.
Employees & Social Security
If the company has at least one employee, the company has a duty to register the Employer account under the Social Security Act with the Social Security Office within 30 days of the start of employment.

The process for registration of the Employer account under the Social Security Act can normally be completed within 1 day provided that all required information and documents are fully submitted to the Social Security Office.
Foreign Employees & Work Permits
The Foreign Working Act of 2008 requires all foreigners working in Thailand to obtain a work permit prior to starting work in the Kingdom and describes the procedures for issuance and maintenance of work permits and lists certain occupations from which the foreigners may be excluded.

Exemptions

The Act grants exemptions from the work permit requirement to persons occupying the following professions:

• Members of the diplomatic corps;
• Members of consular missions;
• Representatives of member countries and officials of the United Nations and its specialized agencies;
• Personal servants coming from abroad to work exclusively for persons listed under the above items;
• Persons who perform duties on missions in the Kingdom under an agreement between the government of Thailand and a foreign government or international organization;
• Persons who enter into the Kingdom for the performance of any duty or mission for the benefit of education, culture, arts, or sports;
• Persons who are specially permitted by the Thai Government to enter into and perform any duty or mission in the Kingdom.

Special Cases

While most foreigners must apply for a work permit, and may not begin work until the permit is issued, the Foreign Working Act does provide special treatment in the following circumstances:
Urgent and Essential Work Exemption from work permit requirements is granted to the foreigner who enters into the Kingdom temporarily, but in accordance with the immigration law, to perform any work of any “urgent and essential nature” for a period not exceeding 15 days. However, such foreigner may engage in work only after a written notification on a prescribed form (WP-10), signed by the foreigner and endorsed by his employer, has been submitted to and accepted by the Director-General or his designee.
The foreigners entitled to this treatment may enter into Thailand with any kind of visa, including a transit visa. The term “urgent and essential work” is not explicitly defined and consequently, the issuance of this sort of exemption is a matter of administrative discretion.
Activities Not Requiring a WP-10

On 6 March 2015, the Department of Employment issued an announcement declaring that certain activities would no longer be classified as “work”, and therefore do not require a work permit. The categories are as follows:

• Attending a meeting or seminar
• Attending an exhibition or trade fair
• Visiting a business or engaging in business negotiations
• Attending special or academic lectures
• Attending technical training or seminars
• Purchase of goods at a trade fair
• Attending a meeting of directors of his/her own company

In addition, a foreign national arranging a meeting, seminar, or exhibition in cooperation with a government agency or state enterprise will be given a 30-day exemption according to the Royal Decree (No. 2) B.E. 2528.
Investment Promotion A foreigner seeking permission to work in the Kingdom under the Investment Promotion Act must submit an application for a work permit within 30 days of notification by the BOI that the position has been approved.

A foreigner in this category may engage in authorized work while the application is being processed.
Useful links
Office of The Board of Investment (BOI) - www.boi.go.th
Department of Business Development (DBD) – www.dbd.go.th
Bank of Thailand (BOT) – www.bot.or.th
The Customs Department – www.customs.go.th
The Excise Department of Thailand – www.excise.go.th
The Revenue Department – www.rd.go.th
One Start One Stop Investment Center (OSOS) – osos.boi.go.th
Doing Business in Thailand – links to useful articles
http://tilleke.com/sites/default/files/2011_PLC_Doing_Business_in_Thailand.pdf
http://www.grantthornton.co.th/insights/articles/doing-business-in-thailand/