Doing Business in Thailand – Foreign Company in Thailand
The most popular form of business organization in Thailand among foreign investors is the private limited company.
Private limited companies require a minimum of the 3 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.
As a general rule, a Thai Private limited company limits foreign business ownership to a maximum of 49%, meaning foreigners can hold no more than 49% of the shares.
Definition of ‘foreign company’
Under Thai law, a company registered under the following laws must be deemed a foreign company:
1. The laws of another country (including all branches, representative offices, and regional offices of companies abroad operating in Thailand);
2. Thai law, but where 50% or more of its shares are held by foreign individuals or business entities.
The Foreign Business Act has identified 3 lists of activities in which foreign participation may be prohibited or restricted.
1. Activities stated in List 1 are designated as “businesses that foreigners are not permitted to conduct for special reasons”. Foreign companies are completely restricted from engaging in the activities contained in List 1.
2. Activities stated in List 2 are designated as “businesses related to national safety or security, activities affecting arts and culture, traditional and folk handicraft, or natural resources and the environment”. Foreign companies may only engage in the activities stated in List 2 with prior Cabinet approval.
3. Activities stated in List 3 are designated as “businesses in which Thai nationals are not yet ready to compete with foreigners”. To engage in activities stated in List 3, the foreign company must apply for and obtain a foreign business license prior to commencing the activity.
Please note that Companies promoted by the BOI are permitted to engage in certain business activities restricted under the Foreign Business Act by obtaining the foreign business certificate prior to conducting its business