Antares’ extensive knowledge of Thai business law enables us to assist you in choosing the best entity for your business. Thailand’s foreign business laws are complex and we can help you navigate these laws and set up the right corporate structure in order to ensure you are in compliance.
Setting up a company in Thailand and choosing the proper corporate structure can be a complex process. In a challenging legal environment, one-size-fits-all solutions do not regularly meet your business venture’s specific requirements. Rather, one in-depth understanding of your business is the key to providing you with a custom-tailored solution for your investment. This necessitates a consideration of your planned investment in Thailand, the number of foreign staff, your specific area of business, your customer’s demands, as well as the legal, tax and administrational requirements from your headquarters, if any.
Our experienced lawyers will guide you through the legal obstacles and advise you with respect to practical implications resulting from local culture, language and customs.
We strive to enable you 100% foreign ownership of your investment. In the case that practical or legal restrictions prevent such an outcome, we are able to advise on a structure that allows you to maintain full control over such corporate structure – to the maximum extent legally feasible.
Depending on the nature of your business, the following corporate structures might suit :
If you decide to have a Thai business partner or investor, the restrictions of the Foreign Business Act would not apply if the Thai partner would hold the majority of shares in your company.
With the appropriate corporate structure, you are able to create limits on your Thai partner’s control over such company. Some examples include categorizing different classes of shares, regulating dividend distribution and setting up a separate shareholders’ agreement. Therefore, a majority in equity does not automatically have to translate into a majority of voting rights and/or dividends.
At Antares, our experienced lawyers can draft for you the Memorandum of Association and Articles of Association, which regulates the specifics of the company, such as share structure and distribution, types of shares, voting rights, quorum, directors, dividends, auditors, and any other essential regulations and characteristics of the company. In the last step, these corporate documents are filed and the company’s Certificate of Registration as well as other supporting documents will be issued.
We strongly advise against using Thai nominee shareholders (investors who are holding stocks on behalf of someone else) to artificially create a majority Thai company, as this will be considered a circumvention of the Thai Foreign Business Act. Therefore, any Thai investor must credibly appear as being a genuine investor (e.g. the ability to finance the share capital signed up for, with respect to such person’s financial situation and/or educational background).
Should you not be able to find a credible Thai investor, we do recommend considering the Thai holding company option.
Under Thai laws, having a Thai shareholder which holds shares on behalf of somebody else without having invested their own capital (“Nominee Shareholder”) is illegal and therefore, not recommended.
We strongly suggest finding a genuine Thai partner to join your business venture. However, it can be difficult to find an affluent local investor to set up such a partnership. Through a holding structure, a wealthy local investor is not needed and a trusted local person is sufficient.
Basically, a holding company structure consists of two separate legal entities. Instead of offering shares in your operating company, we will set up a second company (“Holding Company”) to hold the majority of shares of your operating company. This holding company will have a substantially lower registered capital (as low as 100,000 THB) than the operating company, having the sole purpose of holding the majority of shares of your operating company as an investor.
As a result, you need to find a Thai investor who is able to credibly finance 51% of 100,000 THB – rather than 51% of more than 1 million THB. The holding company requires a loan from your head office in order to finance the purchase of the majority of the operating company’s shares. Via a respective loan and pledge agreement, these shares will be pledged to the head office as a collateral for this loan.
The operating company will be held 51% by the holding company and 49% by yourself. The holding company will be held 51% by your real local investor and 49% by yourself. Therefore, both will be regarded as Thai companies and be able to engage in any business activity.
We can help you establish this corporate structure in five to seven business days.
A branch office is a 100% foreign-owned extension of the foreign headquarters, using the same name as its parent company. It is not an independent legal entity, separated from the head office, and there are no shareholders or directors.
As opposed to an ordinary company setup, the application is not an automated process, but rather an application considered and approved by a special committee based on the project’s merits for Thailand (e.g. technology transfer). The success of the application depends on the size, capital and track record of the parent company, as well as on how innovative the product/service is and whether there is already a local competitor in the market.
Due to the complexity of the application, the setup costs and time required are considerably higher than those for an ordinary company. The entire process requires approximately two to three months from the day that all required documents are on hand.
A successful application requires working capital of at least 3 million THB per each business category and has to be brought into Thailand in certain intervals until the end of the third year.
Even if a branch office is not a legal entity separated from the head office, it is considered to have an independent tax entity status. The income directly earned by the foreign head office from sources within Thailand might be considered as being subject to Thai tax by the Thai Revenue Department.
A representative office is an 100% foreign owned extension of an overseas headquarters, using the same name as its parent company. It is not an independent legal entity, separated from the head office, and therefore has no (local) shareholders or directors.
A representative office provides services to the head office, affiliated company or group company. However, the representative office must not engage in any profit-seeking/profit-making enterprises, not make sales offers, nor engage in business negotiations with any individual or juristic person in Thailand.
The representative office is required to remit its entire operating expenditure (e.g. for salary and rent) from abroad, in a total of at least 2 million THB.
The representative office may undertake one or more of the following activities:
• Finding suppliers of goods or services in Thailand for the overseas head office
• Checking and controlling the quality and quantity of goods purchased or hired by the head office for manufacturing purposes in Thailand
• Providing advice on various aspects of goods sold by its head office to agents, distributors or customers in Thailand
• Providing information to interested persons in Thailand concerning goods or services of the head office
• Reporting to the head office on movements of business in Thailand
Up to two foreigners can qualify for a work permit. If goods/services are sourced or their quality is controlled, up to five work permits may be issued.
The application process requires approximately five to seven business days from the day that all required documents are on hand.
Since the representative office do not generate income, it is not subject to Thai taxation.
The Board of Investment (BOI) is Thailand’s investment promotion agency and provides investment information and services to both Thai and foreign investors.
A useful BOI application requires that your planned business venture is a promoted activity and meets a certain minimum investment capital and further conditions as set for each individual promoted activity. Some of the categories eligible for a BOI investment promotion include:
• Agriculture and agricultural products
• Mining, ceramics, and basic metals
• Light industry
• Metal products, machinery and transport equipment
• Electric industry and electric appliances
• Chemicals, paper, and plastics;
• Service and public utilities
• Technology and innovation development
Activity-based incentives and exemptions may be granted to successful applicants, such as:
• Exemption on corporate income tax for up to 15 years
• Exemption or reduction on import duty on machinery and raw materials
• Visas and work permits for foreigners without meeting the capital and Thai employees ratio requirement
• Permission to bring foreign skilled workers and experts
• Permission to own land
A BOI application can be successfully completed in two to three months.
U.S. citizens and corporations enjoy special rights and benefits via the Treaty of Amity and Economic Relations between the Kingdom of Thailand and the United States of America (also called US-Thai Amity Treaty). U.S. citizens are allowed to fully own a company, branch office or representative office in Thailand without the need of a Thai partner and without being restricted by most of the limitations imposed by the Foreign Business Act.
The U.S. Amity Treaty basically gives U.S. citizens the same benefits Thai nationals enjoy, except for the following:
• Owning land
• Exploiting land and other natural resources
• Engaging in the business of inland communication and transportation
• Engaging in fiduciary functions and banking
• Engaging in domestic trade of indigenous agricultural products
Antares has extensive experience with the Amity Treaty applications and can support you in applying for a Certificate of Treaty Protection, also called Foreign Business Certificate, from the Department of Business Development.
The estimated timescale for the certificate application is 30 days from the date we have all required information, documentation and required signatures at hand.
Even though a general field of business may be allowed, business owners may still need at least one special business license. A business license is a permit issued by the relevant government divisions that allows companies or individuals to legally operate their business in a particular industry and location and includes:
• Factory Licenses
• Recruitment License
• Tourism (TAT) License
• Food and Drug Administration (FDA) License
• Warehouse Inspection Approvals
• Import/Export License (Paperless)
• Restaurant (Food) Licenses
• Alcohol Licenses
• Cigarette Licenses
• Copyright Music Licenses
• Entertainment Licenses
• Hotel Licenses
• Publishing Licenses
We have a vast experience in procuring business permits and licenses in Thailand. We can advise you if your company requires any additional licenses and support you in obtaining it from the appropriate Thai authorities.
Mergers and acquisitions can be complex, but they are often the quickest and most efficient way for companies to transform their businesses, gain access to new markets and technology, improve operating margins, and reduce their exposure to market risks.
Many times, negotiations take place under severe time restraints, which tends to add a lot of pressure and confusion. Consulting a lawyer who possess the expertise and experience to handle such situations will help to ensure the process goes smoothly.
Antares can disseminate the cultural differences and help you understand the different way Asian companies handle business. We can help you achieve a successful transaction, whatever a merger or acquisition, in the most professional and timely manner.