Recent studies show that the Kingdom of Thailand is the best country to start a new business, according to The US News and World Report global perception-based survey. The survey included five voting pillars – affordability, bureaucracy, low manufacturing costs, global connection and access to capital. The survey looked across the board at agriculture, manufacturing, textiles, electronics and tin.
Data from the Trading Economics ranked Thailand 21st out of 190 world economies in The Ease of Doing Business. The index ranks countries against each other based on how the regulatory environment is beneficial to business operations. Thailand is a convenient hub in the ASEAN region.
The Thai Government is keen to increase investment year-on-year and frequently offers incentives to the business world. Joint ventures are openly encouraged for more profitable opportunities.
Thailand has various legal structures in place so that foreigners can undertake a range of business within the Kingdom. Upon understanding your business organisation, International Business Consultants will advise you on the appropriate legal structure required to operate your business within the country.
There are three primary forms of commercial business organisations in Thailand that you will need to consider;
A partnership
International Business Consultants will be able to clearly explain the various partnerships possible and the legal and tax implications for each.
-
Unregistered ordinary partnerships. Each partner is wholly and jointly liable for all obligations of the partnership.
-
A registered ordinary partnership is a legal entity that allows separation and distinction for individual partners.
-
Registered limited partnerships afford individual partners restricted liability to the amount of capital contributed to the partnership.
Limited Company
-
Private Limited Companies allow shareholders to enjoy limited liability. A board of directors manages the limited company according to the company’s charter and by-laws. There should be a maintained minimum of seven shareholders at all times. Aliens may wholly own a PLC (private limited company).
-
Public Limited Companies registered in Thailand are subject to compliance. The company may apply to have their securities listed on the Stock Exchange of Thailand (SET). The Board of Directors must have a minimum of five members, and at least half of them should be Thai nationals.
Joint Venture
Although not yet recognised as a legal entity under the Civil and Commercial Code the joint venture agreement may be described as a group of persons that form a general practice. Income is classified as a single entry and is subject to corporate taxation under the Revenue Code.
Company Formation and Management for Land Ownership
International Business Consultants do not recommend the formation of any company to hold land. No foreign person or entity may own land in Thailand. However, there are some specific limited exceptions available in Phuket. Units in condominium developments where subject to exchange control provisions, you can register direct foreign ownership. In such cases, ownership of the unit is absolute, and you can acquire co-ownership rights in the land associated with the condominium unit. Otherwise, you can only lease land.
The Sap-Ing-Sith Act
The Sap-Ing-Sith agreement is an exciting alternative for foreigners wishing to purchase land in the Kingdom of Thailand. Not only does it have numerous advantages, such as being able to take out a mortgage on the property. It gives the Sap-Ing-Sith certificate holder the right to transfer the rights without the consent of the property owner. Whilst the Sap-Ing-Sith is still only valid for 30-years, the same as a traditional leasehold, it shows that the Thai laws are moving in a positive direction. Accommodating foreign investors is a welcome and a positive move. It is still a very new option available on the market.
You can form a Thai registered company through any lawyer. However, it is advised that the intending purchaser deal with one of the specialised law firms in Phuket dealing with local land issues and experienced in working with foreign clients. It is essential that the company is carefully formed to establish unambiguous control by the client over the Thai company or the client’s investment can be at risk. When the company is formed correctly, that risk is removed, and effective ownership can be established.
