Doing Business in Thailand
Thailand has been considered as the new economic hub in the Southeast Asian region. It has grown economically over the years. This scenario has been attracting investors to Thailand. Foreign investors are interested in the country’s wide and growing government support and incentives, sufficient infrastructure, skilled and cost-effective workforce. As such, Thailand has become one of the most preferred investment destinations in the world.
For possible foreign investors into the country, these following business entities may be considered:
What is a Partnership?
The Civil and Commercial Code of Thailand, defined two types of partnerships: ordinary partnership and limited partnership.
Section 1025 of the Code defined ordinary partnership as a kind of partnership in which all the partners are jointly and unlimitedly liable for all the obligations of the partnership. On the other hand, a limited partnership as defined in Section 1077 is that kind of partnership in which there are: (1) one or more partners whose liability is limited to such amount as they may respectively undertake to contribute to the partnership; and (2) one or more partners who are jointly and unlimitedly liable for all the obligations of the partnership.
What is a Company Limited under Thai law?
A company limited in Thailand jurisdiction can be classified either Thai majority-owned or foreign majority-owned.
The Thai majority-owned company limited is the easiest type of entity to be established and likewise the most straightforward. Foreigners doing business in Thailand prefer this option as compared to a foreign majority-owned.
In a company limited, the company is owned by at least three shareholders and managed by at least one director. Section 1097 of the Civil and Commercial Code states that any three or more persons may, by subscribing their names to a memorandum and in compliance with the provisions of the Code, promote and form a limited company. The shareholders’ direct participation in company affairs is somehow limited as the directors are responsible for managing the company affairs and in the same manner have fiduciary duties to the shareholders and the company.
Branch, Representative and Regional Offices
It is a common practice for multinational companies to establish presence in Thailand but do not want to operate as a separate legal entity. The multinational company may want the Thailand office to function and operate as part of its head office overseas.
Under Thai law, branch, representative as well as regional offices are treated as extensions of the head office overseas and not as separate legal entities. Thus, these companies are foreign-owned and must comply with the requirements set under the Foreign Business Act.
Business start-ups may find it very complicated to undergo the registration process and may take longer time to have the business set-up. This is because the registration procedures and the required documents may not be correctly drafted and would require several revisions from the Business Department. As such, you will be needing someone you can trust and who is able to communicate in Thai on your behalf to be able to successfully review your company registration.
We at Legal Unit Co., Ltd. provides for services to assist you in your corporate entity establishment in Thailand. Our competent licensed Thai lawyers and foreign attorneys/solicitors can take care of all the legal requirements of setting up your business.
Contact us for a free consultation today.