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Business Registration in Thailand - Requirements

Formation of a Limited Liability Company in Thailand
I. Minimum Requirements

The formation of a limited liability company in Thailand requires a minimum of three shareholders. There is no minimum capital requirement, but as a practical matter companies with under one million baht registered capital are rarely formed. A minimum of 25% of the registered capital must be paid up. The company cannot hold shares in itself (treasury shares), nor can it accept shares in pledge.

Due to the provisions of the Thai Foreign Business Act (FBA), which places restrictions on the types of activities in which foreign held companies can engage, many persons wishing to form a company in Thailand choose to register a Thai held company. Under the terms of the FBA, to qualify as a Thai held company Thai individuals and/or Thai held entities must hold more than 50% of the registered capital of the company.

There are significant exceptions to the limitations on foreign businesses under the FBA. Most notably, an activity not included in the lists of activities under the FBA is not subject to the FBA's provisions. With few exceptions, a foreign business can engage in manufacturing in Thailand without having to be concerned about the FBA. However, nearly all types of service activities are listed under the FBA and thus subject to its rules. In most cases, a foreign business must obtain a Foreign Business License before engaging in a service activity. Specific exceptions to the FBA include: (1) companies enjoying Board of Investment (BOI) privileges, (2) American controlled companies operating under the Treaty of Amity and Economic Cooperation, and (3) companies located on industrial estates under the control of the Industrial Estate Authority of Thailand.

II. Process

The registration of a limited liability company is a three-step process:

1. Reservation of company name
2. Registration of Memorandum of Association
3. Registration of the Company
The process from the time of applying for a name to completed registration of the company usually takes between one and two months, although in some cases it can be completed in less than three weeks.
(A) Reservation of Company Name
The official name of a company registered in Thailand is always in the Thai language, but it is possible to also register the English or Chinese version of the name. The Thai version of an English name can either be a transliterated or translated version.

The client must provide a list of two or three names proposed for the company. An English-language version of a name must end with the words "Ltd.", "Co., Ltd." or "Corp., Ltd.", If the name of a country is to appear in the name, it must be set off in parentheses, e.g., "ABC (Thailand) Co., Ltd." The client should indicate its order of preference for the names. The Department of Business Development (formerly the Commercial Registration Department) will conduct a search to determine whether the name is the same or deceptively similar to a name already registered with the department. Upon of the company's name, the client will have thirty days within which to register its memorandum of association. Failure to do so within thirty days can result in the loss of the right to use the reserved name, although usually this time limit can be extended for an additional one or two months or after a brief wait a new application can be submitted.

(B) Registration of Memorandum of Association
Registration of the Memorandum of Association requires the following:
1. Company name: as reserved with the Department of Business Development.
2. Head office location: no specific address is required at this point. The name of the province and, for a company registering in Bangkok, the district, is sufficient.
3. Company objectives: BSA Law can prepare a list of objectives for the client, although to assist in the preparation the client is requested to provide a description of all likely business activities in which the company might engage.
4. Registered capital: the initial registered capital of the company, including the number and par value of shares. The shares must have a stated par value.
5. Promoters: the names, addresses and occupations of three (3) promoters must be provided. The promoters must be individuals (i.e., not a juristic entity, such as a company or partnership), each of whom agrees to subscribe to the purchase of at least one share of the company at the time of formation. The names of the promoters will appear on a subscription list requiring the signatures of each of the promoters, a factor to consider when choosing the names of the individuals.
6. Shareholder liability: under Thai law, the liability of shareholders of a Thai company may be limited or unlimited. A company almost always chooses limited liability.
The application for registration of the memorandum is usually approved by the Department of Business Development within one or two working days. Upon approval, you must wait a minimum of eight days before registering the company.
(C) Registration of the Company
Registration of the company requires the following:
1. Percentage of capital paid-up: a minimum of 25% of the company's registered capital must be paid.
2. Initial shareholders: names, addresses, occupations, and nationality of the initial shareholders of the company, including a statement of the number of shares held by each.
3. Initial shareholders: names, addresses, occupations, and nationality of the initial shareholders of the company, including a statement of the number of shares held by each.
4. Company seal: BSA Law can provide a simple seal upon request.
5. Bylaws of the company: BSA Law prepares standard bylaws unless the client specifically requests otherwise.
6. Directors: names, addresses, occupations, and nationalities of members of the initial board of directors. The directors of the company will have to sign applications, and provide signed copies of their passports (non-Thais) or personal identification cards and household registrations (Thais).
7. Authorized directors: the names of directors authorized to sign on behalf of the company should be identified. Additionally, the formalities of signing must be stated, such as whether the signature of one or more authorized directors is required and whether the stamp of the seal of the company is necessary. (Note: a foreigner who resides in Thailand and signs documents as an authorized director must have an alien work permit with the company)
8. Auditor: the name of a certified auditor, licensed to practice in Thailand, together with the auditor's C.P.A. number and the amount of remuneration to be paid for the audit of the first fiscal year, must be stated.
9. Fiscal year: normally the calendar year, but any other one-year period may be used instead.
10. Pre-formation costs or contracts: if the company intends to reimburse its promoters for expenses incurred before registration of the company, or if the company wishes to ratify any contract entered into before registration, such intention should be declared before registration.
III. Government Fees

The government fees for registration of a Memorandum of Association are 0.05% of registered capital, with a minimum of fee of Baht 500 and a maximum fee of Baht 25,000. The government fee for registration of the company is 0.5% of the registered capital of the company, with a minimum fee of Baht 5,000 and a maximum fee of Baht 250,000. There may also be incidental government fees, such as stamp duties during the registration process.

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