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Benefits of Setting up a Limited Company in Thailand
20/07/2023
Thailand has become a favorable destination for foreign investors looking to establish businesses. Thailand offers numerous advantages for entrepreneurs with its strategic location, supportive government policies, and thriving industry. One of Thailand’s most popular business structures is a limited company, also known as a limited liability company (LLC).
This article will explore the benefits of setting up a limited company in Thailand and provide a comprehensive guide for foreign investors.
Key points
- Limited companies provide limited liability to shareholders, ensuring security and protection.
- Minimum capital of 50,000 THB (in practice)
- Potential for full control over operations and decision-making as a foreigner
- Flexible options for various types of businesses
- Foreign investors can own up to 100% of shares (with some restrictions depending on business activities)
- Ability to open corporate bank accounts
- Eligibility for work permits and visas for foreign executives and staff members
- Foreign companies face stricter government restrictions under the Foreign Business Act.
What is a Limited Company in Thailand?
A limited company in Thailand is similar to an LLC in other countries. It is a preferred choice for many foreign investors who wish to start a business in the country. A limited company has directors and shareholders (Thai and foreign) and offers limited liability to its shareholders. Limited liability means that shareholders can only lose the capital they have invested in the company, providing them with a high level of security and protection.
What are the Requirements for Setting up a Limited Company in Thailand?
To start a limited company in Thailand, you will need:
- 2 shareholders
- One or more directors
- 50,000 THB minimum capital (2M THB if you want to hire a foreign employee)
- A registered corporate address in Thailand
The shareholders must be individuals for registering the company (“promoters”). Once registered, the shares can be transferred to corporate shareholders.
The directors must be individuals. It is not possible to have corporate directors in Thailand.
What are the benefits of a Thai Limited Company?
Setting up a limited company in Thailand has several advantages that make it an attractive option for foreign investors. Let’s explore some of these benefits:
Limited Liability
One of the key advantages of a limited company in Thailand is limited liability. Shareholders are only liable to the extent of their investment in the company. This provides them with financial security and protects their assets in case of any liabilities or debts incurred by the company.
Full Control
A limited company allows for flexibility in terms of control. Shareholders can adjust share voting rights and dividend allocations, giving them full control over the company’s operations and decision-making process.
Flexible Options
A limited company in Thailand can engage in various types of businesses with relative business licenses. Shareholders, directors, objectives, names, and addresses can be flexible, allowing for easy adaptation to changing business needs.
Foreign Ownership
Foreign investors can own up to 100% of the shares in a limited company in Thailand, provided their activities fall under the business criteria without restrictions of the Foreign Business Act. This allows for full ownership and control of the business by foreign investors.
Please note that if the activities are restricted by the Foreign Business Act, a Foreign Business Licence, registration under the Treaty of Amity, or obtaining a BOI promotion will be required for 100% foreign ownership.
Corporate Bank Account
A registered Thai limited company can apply for a corporate savings account, checking account, and/or foreign currency account. This provides convenience in managing finances and enables online banking functionality.
Work Permit & Visa
A limited company in Thailand can apply for multiple work permits to accommodate foreign executives and staff members. The number of work permits depends on the registered capital and other criteria set by the labor department. In practice, a company will need the following for each foreign employee:
- 2 million THB in registered capital
- 4 Thai employees registered with Social Security with at least 3 months of Social Security contributions and personal income tax on salaries paid.
The company must also be registered for VAT.
Please note if the foreigner is married to a Thai national, the requirements are as follows:
-
- 1 million THB in registered capital,
- 2 Thai employees registered with the Social Security with at least 3 months of Social Security contributions and personal income tax on salaries paid
How to Set up a Limited Company in Thailand as a Foreigner?
There are two main ways to set up a limited company in Thailand as a foreigner:
Thai Company
- Majority Thai ownership
- No foreign business licence required
- 2M+ THB in registered capital* to hire foreign employees
- No main restrictions on activities
- 1:4 foreign-to-Thai employee ratio
A limited company majority-owned by a Thai national generally does not encounter restrictions and can engage in any business activity. However, a partnership with a Thai national will be required to meet the legal requirements for being a Thai company. The Thai partner shall not be a nominee.
Foreign Company
- Majority foreign ownership (> 49% up to 100%)
- 3M+ THB in registered capital to obtain the Foreign Business License,
- Restrictions on activities as per the Foreign Business Act
- A foreign business license (FBL) is required if the company engages in restricted business activities
- 1:4 foreign-to-Thai employee ratio
If a limited company is majority-owned by a foreigner, it is considered a foreign company. It must obtain a Foreign Business Licence before engaging in restricted business activities unless it is promoted by the Board of Investment (BOI) or registered under Treaty Amity. Foreign companies face stricter government restrictions and limitations on their scope of business under the Foreign Business Act.
If the company has been granted a BOI license, the minimum capital required by the BOI is 1 Million THB.
How can Belaws help?
For more information about setting up a Limited Company in Thailand, why not talk to one of our experts now?
Please note that this article is for information purposes only and does not constitute legal advice.
Our consultations last for a period of up to 1 hour and are conducted by expert Lawyers who are fluent in English, French and Thai.
Consultations can be hosted via WhatsApp or Video Conferencing software for your convenience. A consultation with one of our legal experts is undoubtedly the best way to get all the information you need and answer any questions you may have about your new business or project.
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Frequently asked questions
What is the Treaty of Amity between US and Thailand?
The Treaty of Amity between the United States and Thailand is a special economic bond that grants certain privileges to American citizens and businesses operating in Thailand.
What did the Treaty of Amity do?
The Treaty of Amity allows American citizens and companies to enjoy benefits and rights when establishing and operating businesses in Thailand. It grants national treatment and exemption from many restrictions on foreign investment.
What was the Treaty of Amity and Commerce Thailand 1833?
The Treaty of Amity and Commerce signed in 1833 between the United States and Thailand established a special economic relationship. It provided favorable treatment to American citizens and companies operating in Thailand.
Can Americans own 100% of a Thai company?
Yes, under the Treaty of Amity, American citizens and companies are allowed to hold the majority of shares or wholly own a Thai company. This provides them with greater control and flexibility in managing their business operations.
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