Foreign investors interested in establishing a company in this jurisdiction should know that there are three major types of business structures in Thailand: the partnership, limited companies (L.L.C.) and sole proprietorship.
Partnerships in Thailand
Partnerships in Thailand can be classified as three types of business structures:
• Unregistered ordinary partnerships, in which all partners are accountable for all responsibilities of the partnership.
• Registered ordinary partnerships. The partnership is a legal entity, separate from the individual partners.
• Limited partnerships. The amount of capital invested determines the accountability of the partners. Limited partnerships must be registered.
The only differences between the three types of partnership are the tax treatment and the degree of liability of the partners. Our Thailand lawyers can provide you with more information regarding the characteristics of every type of business structure.
Limited Companies (L.L.C.) in Thailand
Limited companies in Thailand are divided into two categories:
• Private limited companies;
• Public companies.
Private limited companies are governed by the Civil and Commercial Code. In this type of business, there is no limit of capital investment. Foreigners can own 100% of the shares of a private company, but there are specific types of business that immigrants may not own on a majority basis, under the Foreign Business Act. In some cases, it may be possible to apply for a license or permission for majority foreign ownership. If you want to know more about setting up a company as a foreigner, you may reach our law firm in Thailand.
Thai private limited companies must have a minimum of three promoters to register the company and at least three shareholders must be maintained at all times.
By passing a special resolution of the shareholders as stated by the Civil and Commercial Code, a private company may be converted into a public limited company. On the other hand, a public company may not be turned back into a private company. You can find out more details on how to convert a private company by getting in touch with our Thai lawyers.
Public companies in Thailand are governed by the Public Company Act. These types of businesses are bound to more difficult demands regarding the minimum capital, number of investors, additional financial requirements and a bigger degree of liability to their investors.
When it comes to a sole proprietorship, only one person is accountable for the company and has unlimited liability (obligation of paying off all of the company debts if the company can’t make its payments); legal action can be taken against the proprietor’s (owner’s) business and his assets.
For more information on registering a company in Thailand, do not hesitate to contact our Thai law firm.