The most common type of legal entity in Thailand is the limited company, which is similar in structure to a Limited Liability Company (LLC) in the United States. A Thai limited company must have at least two shareholders and be managed by at least one director.

Traditionally, Thai law required that 51% of the company's shares be held by Thai nationals, with the remaining 49% held by foreigners or foreign-registered entities. However, recent regulatory changes now allow foreigners to own up to 75% of the shares under certain conditions. This increased foreign ownership is permitted in sectors that are not restricted under the Foreign Business Act and when specific criteria are met, such as obtaining approval from relevant authorities or meeting minimum capital investment requirements.

Despite these restrictions, it has been common practice for foreigners to collaborate with Thai partners or use professional nominees to hold shares on their behalf. Through carefully planned corporate structures (which we can assist you with), foreigners can still maintain controlling interest in the company and manage the company's bank accounts.

A Thai limited company is a legally independent entity under Thai law, providing protection from unlimited liability. Unlike in some other countries, in Thailand only the director(s) are authorized to sign on behalf of the company, and individual shareholders are liable only up to the amount of their shareholding.

If you wish to set up a limited company where the majority of shares are owned by foreigners (up to 75% ownership under the new regulations), you have several options, and we can assist you with each of them:

1. Utilizing the New Regulations Allowing 75% Foreign Ownership: Establish a company in an industry where increased foreign ownership is permitted under the updated laws, ensuring compliance with any specific requirements.
2. Obtaining a Foreign Business License: Apply for a Foreign Business License (FBL) to operate a business that is otherwise restricted under the Foreign Business Act.
3. Board of Investment (BOI) Promotion: Seek promotion from the Thailand Board of Investment, which can grant permission for up to 100% foreign ownership along with other investment incentives.
4. Registration through the Treaty of Amity (for U.S. Citizens Only): If you are a U.S. citizen, you can register under the Thai-U.S. Treaty of Amity, allowing for majority foreign ownership in certain sectors.

Setting up a company in Thailand involves understanding the capital requirements, especially concerning foreign ownership and the ability to employ foreign nationals. Below is a comprehensive overview of the current regulations:

1. Minimum Registered Capital

• Thai-Owned Companies:
  • There is no official minimum capital requirement for companies that are entirely Thai-owned.
• Foreign-Owned Companies:
  • Under the Foreign Business Act (FBA), a company with any degree of foreign ownership must have a minimum registered capital of 2 million Thai Baht.
  • This requirement applies even if the business activities are not restricted under the FBA.
  • If the company engages in activities restricted to foreigners and lacks a Foreign Business License or Board of Investment (BOI) promotion, the minimum registered capital increases to 3 million Baht, which must be fully paid up.

2. Employing Foreign Nationals and Work Permits

• Minimum Capital per Work Permit:
  • To sponsor a work permit for a foreign employee, the company must have at least 2 million Baht of registered capital per foreign employee.
    • Example: For two foreign employees, the company needs a registered capital of 4 million Baht.
  • Additionally, the company is typically required to employ four Thai nationals for each foreign work permit.
    • Exceptions: BOI-promoted companies may have relaxed ratios for Thai to foreign employees.

3. Paid-Up Capital

• Initial Payment:
  • At least 25% of the registered capital must be paid up at the time of company registration.
  • The remaining 75% should be paid according to the company's articles of association but is generally expected within three years.
• Utilization:
  • The paid-up capital can be used as working capital to support the company's operations.

4. Companies Holding Property

• Property Ownership Regulations:
  • Foreign individuals and entities face restrictions on owning land in Thailand.
  • Establishing a company solely to hold property requires careful legal structuring to comply with Thai laws.
  • Warning: Using a Thai company as a nominee to circumvent foreign ownership restrictions is illegal and can result in severe penalties.
• Capital Requirements:
  • For companies established to hold property, the recommended minimum registered capital is 1 million Baht.
  • Note: This amount may not entitle the company to sponsor foreign work permits.

5. Board of Investment (BOI) Promoted Companies

• Incentives and Capital Requirements:
  • BOI-promoted companies may be allowed 100% foreign ownership and can benefit from various incentives, including tax exemptions.
  • The minimum investment requirement is typically 1 million Baht, excluding land and working capital.
  • BOI companies may have different capital and staffing requirements, especially concerning foreign employees.

6. Special Considerations

• Treaty of Amity (U.S. Citizens):
  • Under the U.S.-Thai Treaty of Amity, American citizens can own a majority stake in a Thai company.
  • The minimum registered capital for Treaty of Amity companies is generally 3 million Baht.
• New Regulations Allowing Increased Foreign Ownership:
  • Recent regulatory changes permit foreigners to own up to 75% of a Thai company's shares in certain non-restricted sectors.
  • Approval from relevant authorities and compliance with specific conditions are required.

7. Practical Steps and Bank Account Requirements

• Capital Deposit:
  • The required paid-up capital does not need to be deposited in a bank account before company registration.
  • After registration, the paid-up capital should be deposited into the company's corporate bank account.
• Documentation:
  • Proof of capital payment may be requested by authorities, especially when applying for work permits or visas.

8. Recommendations

• Consultation with Professionals:
  • Due to the complexities and frequent updates in Thai corporate laws, it is advisable to consult with legal and accounting professionals.
  • Proper guidance ensures compliance with all regulations and optimal structuring of your company.
• Compliance and Transparency:
  • Maintain clear records of all capital contributions and ensure all statutory requirements are met to avoid legal complications.

Conclusion

While there is no minimum capital requirement for Thai-owned companies, foreign-owned entities must adhere to specific capital requirements to operate legally and employ foreign nationals in Thailand. A minimum registered capital of 2 million Baht is generally recommended for foreign-owned companies, especially if you plan to sponsor work permits. Ensuring compliance with these regulations is crucial for the smooth operation and success of your business in Thailand.