FAQ and All You Need to Know about Incorporating a Company in Thailand

Despite recent political unrest and ongoing border conflicts, Thailand has continued to attract foreign investors across several business sectors in recent years. While the overall concept of company incorporation may be similar to that of other countries, the specific criteria and process for establishing a company in Thailand differ in important ways.

In this article, we address the most frequently asked questions from our clients about incorporating a company in Thailand. Our aim is to provide clear, practical explanations to help you begin the incorporation process with confidence.

Question 1. Does Thai law allow a company to be 100% foreign owned?

The Thai Civil and Commercial Code (the “CCC”), which is the law governing and regulating a limited company, does not prohibit foreigners from holding 100% of shares in a company. Therefore, a company can be legally established and exist with all its shares being held by foreigners.

However, if foreigners own 51% or more of a company’s aggregate shares, the company will be regarded as a foreign company. It will then be subject to certain restrictions on business commencement—such as limitations on operating specific types of businesses—under the Foreign Business Act B.E. 2542 (the “FBA”). The details of these restrictions will be further elaborated.

Question 2. What is the minimum number of shareholders and any other requirements?

Currently, the CCC requires a limited company to have at least 2 shareholders at all time. Shareholders can be individuals and/or juristic persons. Noted that the company promoters, who play the key role in forming and registering the company, must be individuals and must subscribe at least 1 share when incorporate the company. Due to this requirement, these 2 individual promoters will be the initial shareholders of the company.

Question 3. Is there any requirement on the minimum number or nationality of director?

A company must have at least 1 director. Apart from appointing directors, the company must also register the authorized signatory directors and the signing conditions to bind the company. There are no restrictions or requirements on the qualifications or nationality of the director.
However, in case the company is 100% Thai-owned but a foreigner is named the sole or joint authorized director, the company will be required to submit to the Department of Business Development (the “DBD”) the letter or certificate issued by the bank to confirm that all Thai shareholders in the company have a sufficient account balance to subscribe for the shares.

The requirement that Thai shareholders must demonstrate financial capability by providing sufficient account balances exists to ensure that they are truly able to subscribe to the company’s shares, rather than serving as nominees for foreign investors. This measure helps maintain genuine local ownership and prevents circumvention of foreign investment regulations, thereby supporting transparency and the integrity of Thailand’s business environment.

Question 4. What is the minimum registered capital for a Thai company?

There is no minimum registered capital required by the law and the company can be incorporated with the registered capital it deems appropriate for commencing its business.

If the registered capital exceeds 5 million Thai Baht, the company will be required to submit, together with the application for incorporation to the DBD, the banking evidence which proves the remittance of share payment into any of the directors’ bank account.

If all directors are foreigner and unable to open the bank account in Thailand for receiving the share payment, the DBD permits the required bank evidence to be submitted within 15 days after the DBD registrar approved the incorporation. Failure to comply with this timeframe, the DBD is empowered to revoke the incorporation.

Question 5. What are the Articles of Association and how are they important?

Articles of Association (the “AOA”) are the by-laws of the company. Apart from the provisions of the CCC, directors and shareholders are obligated to manage and control the company in accordance with the AOA. Basically, the AOA will specify certain basic rules about the company, such as, classes and groups of shares, number of directors, limitation of the authority of directors, how to summon shareholders’ or the board of directors’ meetings, how board of directors’ and shareholders’ resolutions can be passed, etc.

The Articles of Association of the company can be established in one of the following ways:
• Adoption of the provisions of corporate law under the CCC in the absence of any customized articles.
• Standard template of AOA as provided by the DBD: The company adopts a government-issued template, which contains standard provisions approved by the authorities and is designed for general use.
• Company’s own version of AOA: The company drafts its own set of rules, tailored to its specific needs and preferences, allowing for customization of governance and internal procedures.

If the company decides to draft its own AOA, the DBD registrar will review to ensure that no articles are in contradiction to the provisions of the CCC. As such, this option will result in the longer registration period compared with the adoption of the CCC or standard template of the DBD as the company’s AOA.

However, in the case of a joint venture company, certain clauses agreed upon by the parties to the joint venture agreement should be incorporated into the AOA. For example, provisions regarding meeting quorum, voting rights, and dividend entitlements should be included. Including these clauses in the AOA helps guarantee that the terms of the joint venture agreement are properly implemented and observed by all parties and the company itself.

Question 6. Is it necessary for the company to have an office in Thailand?

Yes, the CCC requires the company to register the address of its premises when incorporating the company and this premises must locate in Thailand. In addition to the address, an 11-digit house registration number must also be provided in the application.

This house registration number can be found in the document called “Thai House Book” or in Thai as “Tabien Baan” which is an administrative document issued by the local municipality to the house owner or the landlord. In case the company leases space in the office building, the house registration number must be requested from the landlord or lessor.

Question 7. Is it necessary to appoint an auditor by the time of the company incorporation?

The CCC does not require the company to appoint its auditor by the time of its establishment. Therefore, the appointment of auditor and the determination of the remuneration can be resolved by the shareholders’ meeting later after the company incorporation.

Question 8. What is the fiscal year for a company in Thailand?

The fiscal year refers to the 12-month period used by a company for accounting and tax purposes. In Thailand, the company can choose its own fiscal year (e.g., April 1 to March 31 or July 1 to June 30) as long as it is clearly stated in its Articles of Association, which does not necessarily have to follow the calendar year (January 1 to December 31).

Many companies prefer their fiscal year to start and end on the same date as their parent company. This alignment simplifies the process of combining financial statements and ensures consistency in reporting across the corporate group, making financial consolidation more efficient.

Question 9. How long does it take to register a company in Thailand?

The registration process typically takes about 3–5 working days after the complete application and supporting documents are submitted to the DBD registrar. The DBD registrar may require additional time to review the application, depending on the volume of pending cases and the complexity of the submission.
For example, if the Articles of Association of the company are complex and contain many special clauses, this may take additional time for the registrar to review and approve the application. In some instances, the registrar may request amendments to the content of the Articles of Association to bring it in line with the provisions of the CCC. For instance, a clause that grants unusual voting rights to certain shareholders might need to be revised to comply with standard company law requirements.

Question 10. Can a company immediately commence business in Thailand after being registered?

Once the company is registered with the DBD, it can commence business within the scope of objectives it registered with the DBD. However, if 51% or more of total shares in the company is held by foreigner, its business operation will be subject to the restriction under the FBA.

By virtue of the FBA, a foreign company is prohibited from carrying out certain types of businesses in Thailand unless they obtained a Foreign Business License (FBL) or Foreign Business Certificate (FBC) issued in accordance with the approval from the Board of Investment of Thailand (BOI), the Industrial Estate Authority of Thailand (IEAT), or in compliance with any treaty to which Thailand is a party.

There are 3 Lists of prohibited businesses for foreigner as annexed to the FBA as follows:

List 1: Businesses that are strictly prohibited for foreigners by special reason, such as land trading, rice farming, livestock farming, radio broadcasting station, extraction of Thai medicinal herbs, making or casting Buddha Images and monk alms-bowls, etc.

List 2: Businesses related to national safety or security or having impacts on arts, culture, traditions, customs and folklore handicrafts or natural resources and the environment, such as production of wood carvings, domestic transportation, salt farming, mining, etc.
List 3: Businesses that Thais are not ready to compete with foreigners, such as engineering services, architectural services, legal and/or accounting services, other services, construction, retail sale, wholesale, etc.

For legal assistance, please contact: [email protected]

Mr. Krittin Pollagan

Partner