Company Structures in Thailand
Australian business entities or personalities may choose to identify and operate their companies in any of the available business structures in Thailand. However, it is highly advisable for these investors to consult with corporate lawyers in the Kingdom as the process as well as the laws involved may be very complicated for them as these may be very different with what they are used to in Australia.
The following are the short descriptions of these business organizations.
There are two types of limited companies in the Kingdom, the Private Limited Company and the Public Limited Company. Of the two as well as to compare with other forms of business structures in Thailand, it is the private limited company which can be considered as the most popular among business personalities and entities.
- Public Limited Company
- A public limited company in Thailand is covered by the Public Limited Companies Act of 1992.
- Must have at least fifteen (15) company promoters with at least 50% of this number must be residents of Thailand.
- Its shares can be offered and traded publicly though the stock market.
- Private Limited Company
- There should be at least three (3) company promoters.
- The shareholders' liability are limited to the amount of their unpaid shares.
- The management of the company and the owners are separate.
If a company is to be established in Thailand as a partnership, it can be either of the two types: the Ordinary Partnership and the Limited Partnership.
- Ordinary Partnership
- It is established by at least two persons.
- Registration is not really mandated but the partners may choose to register the company per Section 1064 of the Civil and Commercial Code.
- A partner can be held as jointly answerable to a wrongdoing done by another partner.
- Limited Partnership
- May share similar distinctions with that of an ordinary partnership
- Has two types of partners: one with limited liability and the other one has unlimited liability
- Registration is required.
The activities of a representative office are limited to five (5) different areas and all of which are to serve the company headquarters overseas:
- To search for sources of goods and or services in Thailand
- To check the quality and quantity of the products needed and ordered by the headquarters
- To provide due advise on what goods to order
- To provide customers in Thailand with information regarding the products of the company headquarters
- To report economic movements in Thailand
Aside from the restrictions above, a representative office in the Kingdom cannot earn or generate any income while operating in the country.
Similarly to a representative office, a regional office operates in Thailand in behalf of its headquarters located overseas but its scope of operations are limited to seven (7) activities only which are all under List 3 of the Foreign Business Act:
- Communicating, coordinating and directing for the headquarters
- To operate branches and affiliates which are located outside of Thailand but within the region
- Provide consultancy and management services
- To provide personnel training and development
- Financial management
- Do marketing control and sales promotion planning
- Product development
- Research and development services
A regional office in Thailand is also barred from earning income, purchasing, selling and negotiating. It is also required to apply for and be granted with a Foreign Business License prior to the start of its operations in the Kingdom.