All major economies of the world are now facing economical retardation or stagnation due to the COVID-19 pandemic. But surprisingly, the Royal Thai Government is creating new scopes for foreigners to start a business in Thailand. Although these initiatives are focused on national economic growth, yet, it creates the opportunity for many foreign investors to achieve high ROI.
So, if you are interested in opening a company in Thailand, expect great support from the officials for the same. The only hindrance in the process will be your ability to reach Thailand. The reason behind this can be COVID-19 vaccination availability, permission from your government or international border regulations.
If any reason threatens your visit to Thailand, do not worry. There are options by which you can start your business in Thailand in remote mode. Before we guide you through the remote process, let us explain to you the basic guidelines for starting your company in Thailand.
Basic Structure to Start a Business in Thailand
The first thing to think about is the ownership structure of the business. Foreign ownership of Thai firms is subject to severe restrictions. A Thai business cannot be more than 49 per cent foreign-owned, with a few exceptions.
As a foreigner, if you are starting a business in Thailand will almost always need to partner with Thai majority owners, who will own at least 51 per cent of the venture.
As a minority shareholder, the foreign company founder can still retain ownership of the company. You may, for example, become the company’s sole managing director.
You can also split the stock into two types, with one having double the voting power of the other.
Even if precautions are taken to ensure control, many foreign entrepreneurs would be uncomfortable with the prospect of not owning a majority stake in their own company.
Do this in Remote Mode:
Now you may feel as to how this can be accomplished in a remote mode?
The answer is online communication modes and digital meeting tools. It is quite obvious that you will never partner with any Thai person for a business whom you do not know personally. Therefore, you can start the proceedings by asking your Thai acquaintance to start the process.
Irrespective of your geographical location, you can use digital communication and meeting tools to get connected with all stakeholders. Lately, the Royal Thai Government has lifted restrictions on foreign currency remittance. Therefore, you can also transfer the required funds to start your business in Thailand to your partner’s bank account whenever required.
Start Business in Thailand under Foreign Ownership Restrictions
In your process to start a business in Thailand, you should also know whether your idea and candidature are eligible to do so. That can be confirmed by your Thai partner who can consult with legal firms to affirm the same.
But there can be exceptions. Let us tell you about this.
According to the Treaty of Amity between Thailand and America, US citizens are exempt from the 51 per cent Thai ownership law. The treaty’s latest version was signed in 1966, but it is based on earlier agreements dating back to 1833.
The Amity Treaty between the United States and Thailand allows American citizens to own up to 100% of a Thai business. Communications, transportation, agriculture, and real estate are only a few of the industries that aren’t protected by the treaty.
The Thailand Board of Investment (BOI) makes an exception to the majority foreign ownership rule for companies that receive special promotion. Obtaining BOI promotion, on the other hand, is not a practical choice for most companies. The application process for the BOI promotion can take up to six months, and several trips to BOI Headquarters are needed.
In addition, strict criteria for invested capital, debt-to-equity ratio, and business-type applies. Companies that have been promoted by the BOI must adhere to more stringent accounting standards as well as Revenue Department inspections. You’d be much better off doing business with an established BOI company than attempting to start one from scratch.
Company Promoters
A minimum of three promoters is needed to form a new Thai Limited Company. They must be individual individuals, not legal entities, and they must each set aside money to buy at least one share of the business.
Do this in Remote Mode:
Simply follow the remote steps as mentioned in the previous stage. Collaborate and coordinate with your Thai partners and associates over digital platforms. Do online research at your end related to the Amity Treaty and BOI promotions. Communicate your ideas to your Thai counterparts. They will try to bring up its feasibility practically.
Registering a Company Name to Start Business in Thailand
The first step in establishing a new Thai company is to reserve a company name with the Department of Business Development. Since the DBD has the ability to reject your preferred name, you can apply your top three options in order of preference.
A business name will be reserved for 30 days after the DBD approves it. As a result, you’ll have to finish the company registration process within this time frame.
Do this in Remote Mode:
Let your Thai counterparts proceed with this step. You can opt for e-agreements or agreements accepting digital signatures. All you have to do is guide them through the process and keep yourself updated about their activities.
Memorandum of Association to Start Business in Thailand
The production of a Memorandum of Association is the next step in establishing a company in Thailand. This is a contract between the company’s promoters that must contain a number of important details like:
- The reserved company name.
- The province of Thailand where the head office will be located.
- Company objectives.
- A declaration that shareholder liability will be limited.
- The amount of capital for registration.
- The name, address, age, occupation, signature, and the number of shares reserved to purchase for each promoter.
- The name, address, age, and signature of 2 witnesses.
The Memorandum of Association must be registered with the Department of Commercial Registration. After that, all of the promoters must buy their reserved shares, and a Statutory Meeting must be held.
Do this in Remote Mode:
You can accomplish this step with a combination of the above steps mentioned. You can go for e-agreements or use digital signature. Along with that, you have to testify the same over video call or conference. You may also use Power of Attorney regulations to entrust someone with the power to represent you in Thailand.
Statutory Meeting to Start Business in Thailand
An official Statutory Meeting is a next step to complete the company setup process. The meeting agenda needs to include the following points:
- Adoption of the company regulations or Articles of Association.
- Ratifying any contracts entered into by the promoters or any expenses they incurred in promoting the company.
- Fixing the amount payable to the promoters.
- Ascertain the number of preference shares. Although it is not mandatory, yet, if any, you must know the numbers and respective preferential rights.
- Categorize the ordinary or preference shares as fully or paid-up by property or services. You should not use monetary value. Henceforth, you have to set the paid-up amount.
- Appointing the first directors and auditors and fixing their respective powers.
At this point, the business moves over to the directors of the promoters. The directors now have to collect the value of shares from the promoters. In the process, 25% payment of the value of shares must be in the money.
Do this in Remote Mode:
Al you need to do here is to use your Power of Attorney. An experienced law firm like Konrad Legal can guide you in the process of doing so. The BOI has already permitted the registration and use of Power of Attorney for foreigners to Thailand.
Registering a Thai Company
Finally, the approved director will prepare the company registration application and apply it to the registrar at the Commercial Registration Department after completing all of the preceding steps. This must occur within three months of the Statutory Meeting.
The application includes information on the total number of shares subscribed and the amount of capital charged. In addition, shareholders have to provide evidence of their funds’ origin.
Remember to fill out all of the paperwork and applications. From the business name reservation to the Memorandum of Association to the company registration, all must be in the Thai language. As a result, you’ll need to hire some knowledgeable Thai lawyers to guide you through each move.
Do this in Remote Mode:
You already know that your Thai partners will hold the majority of shares of your business in Thailand. Therefore, the approved partner would very likely be your Thai counterpart. Hence, your presence is not so important for the application at the Commercial Registration Department.
Again, you can simply use the digital modes of communication to stay in touch with your Thai partners. So now, owing to various amendments and modifications in company registration laws for foreigners in Thailand, you can start your business in Thailand in remote mode. All you need is proper internet connectivity and an established law firm in Thailand to assist you in the process.
For more information, you may mail us at [email protected]. We are a dedicated law firm located in Bangkok catering to Company Registration, Accounting and Taxation needs for foreigners in Thailand.
