in most countries, there are three kinds of business
organizations in Thailand: Sole
proprietorships, partnerships, and limited companies. The most
popular form of business organization among foreign
investors is the private limited company.
Private limited companies require a minimum of
seven 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
Ministry of Industry administers The Factory Act, which
governs factory construction and
operation, as well as safety and
pollution-control requirements. In some cases, factories
do not require licenses, in other in stances the
requirement is simply to notify officials in advance of
start-up, and in some cases licenses are required prior
to commencing operations. Licenses are valid for five
years, and are renewable.
Thailand recognizes three kinds of intellectual
property rights: patents, trademarks, and copyrights.
Patent Act protects both inventions and product designs
and pharmaceuticals. The Copyright Act protects literary,
artistic works, and performance rights, by making it
unlawful to reproduce or publish such works without the
owner's permission. The Trademark Act governs
registration of, and provides protection for, trademarks.
Alien Occupation Law requires all foreigners working in
Thailand to obtain a Work Permit prior to starting work
in the Kingdom, except when they are applying under the
Investment Promotion Law, in which case they have 30 days
1. Tax Registrations
a. Taxpayer identification card:
All companies must apply for a taxpayer identification card within sixty days of formation. This is true even if the company does not immediately begin operations.
b. Value Added Tax (VAT) registration:
A company is not required to register under the Thai VAT law until its revenues reach an annual level of
Baht 1,200,000. In most cases, however, it is recommended that a company register under the VAT immediately after formation. A company registered under VAT is entitled to a tax credit for all Thai VAT charges incurred when purchasing goods or services. This credit can be used to offset against the remittance to the Revenue Department of VAT received by the company from its customers. A company not registered under the VAT is not entitled to this credit. A company registered under the VAT must register separately each individual branch office or place of business, unless permission has been granted for the filing of a consolidated return.
2. Bank Accounts
The specific requirements for opening a corporate account vary from one bank to another, but virtually all banks will at a minimum require a certified copy of a resolution of the company's board of directors authorizing the opening of the account and designating who is empowered to sign on the account. The resolution should:
a. Identify the bank branch's name and address.
b. Specify the types of accounts to be opened (savings, current, etc.).
c. Identify the authorized signatories.
d. Specify whether the signatory is authorized to incur a debt by way of overdraft. Often, the bank will require that the board of directors issue a power of attorney for the persons authorized to sign on the account, especially when an authorized signatory is not an authorized director of the company.
3. Shareholder Register
Section 1138 of the Thai Civil and Commercial Code (TCCC) requires a limited company to maintain a register of shareholders. It must contain the following particulars.
a. The names, addresses and occupations of the shareholders, a statement of the shares held by each shareholder, distinguishing each share by its share number, and the amount paid or deemed paid on each share.
b. The date on which each shareholder was entered into the register as a shareholder.
c. The date on which a person ceased to be shareholder.
d. The numbers and dates of certificates issued to bearer.
e. The date of cancellation of any name or bearer certificate.
The register of shareholders must be maintained at the registered head office of the company and must be made available for inspection by shareholders during normal business hours.
4. Share Certificates
Section 1127 of the Thai Civil and Commercial Code (TCCC) requires that a company issue share certificates to each shareholder after the share value has been paid in full. The share certificate must, at a minimum, contain the following particulars.
a. A director's signature.
b. The seal of the company.
c. The company name.
d. Number of shares to which it applies.
e. The amount of each share.
f. The amount paid on each share (if not fully paid).
g. The shareholder's name or a statement that it is a bearer certificate.
5. Documentation of Capital Received On Shares
The process of registering a limited liability company in Thailand does not require proof that capital has been paid on shares. However, whether or not capital has been paid on shares does become apparent at the time the company is audited at the end of its first fiscal year. This frequently results in frantic efforts by companies to document past amounts paid into the company. Company officials are well advised to meet with their auditors immediately after formation of the company to assure that proper documentation and record keeping is in place. This is especially true with regard to funds transferred into Thailand from abroad, for which one should always request a Thor Tor 3 form from the receiving bank. The Thor Tor 3 form is often required for proof of receipt of funds from abroad when dealing with government agencies, such as the Board of Investment or the Land Department, and can be useful for other purposes as well.