Thailand is one of the countries known for making it a bit hard to own a business if you’re a foreigner. In fact, Thailand actively tries to assist local entrepreneurs and provides them with a lot of support so they can create their own company. However, you can still invest in a Thailand-based company and be the owner. Yet there are restrictions to keep in mind, which is why you need to document yourself before you make any decision.
Limitations to keep in mind
A Thai limited company will limit the foreign business ownership rate to 49%. That means a local can own the business if he gets the other 51%. However, if the remaining 51% is split between other investors, then you will still own the business since you have the highest number of shares. That helps a lot, because you get to have more control and still own the business yourself with minimal restrictions. You rarely have something like this, which is why you need to take it into consideration before you commit.
Another thing to note is that you will have limits in regards to the type of business you can create. You are not allowed to do stuff like casting or creating Buddha images, land trading, auctioning Thai antiques, extracting medicinal herbs, fishery, forestry, livestock businesses, rice farming, orchard farming, TV, radio or newspaper broadcasting. This is extremely important to keep in mind and it will give you the support and results you expect without that much of a hassle.
Are there any ways to obtain a 100% foreign ownership?
There are some legal ways to achieve that and the way you can access them is a bit different and distinctive. But it will still work, provided that you take your time and adapt to the process in a meaningful and powerful way. For example, you can get a foreign business license. Or you can create a regular business using the ideas above and then receive full ownership via the Board of Investment promotion. Obviously there’s also the option to register via the Treaty of Amity but this particular approach is available only for the US citizens, so it’s something to keep in mind.
The Thailand Board of Investment is a governmental agency and their focus is to promote foreign investment in Thailand by giving services, incentives and information that foreign investors might need. It’s important to note that the Board of Investment exists mainly to help foreigners, so the Thailand government is actively helping people improve their business and achieve growth in the long term. That might seem very hard to do, but it does bring in front astonishing potential. For the most part investors are satisfied with the BOI incentives and services.
Types of companies you can have in Thailand
First you have the limited partnership. In this situation, a partner’s liability is limited and in the other case it becomes unlimited, which is a very important thing to keep in mind. However, the limited partnership is required to be registered, which does not happen in the case of a Thai partnership for example. But that’s expected considering the scope and requirements brought by such a partnership in the first place.
A regional office is that office which conducts business in Thailand but the head office is outside of the country. There are some limitations here, so the regional office can only do product development, marketing, financial management, personnel development and training programs, affiliate and branch operation, directing, communicating and coordinating locally as well as research and development. It’s a very important aspect to keep in mind and one that has the potential to help you immensely if you choose to do it wisely and with the right approach. A thing to note is that the foreign business needs to have an active office in Asia.
The regional office is very limited, maybe the most limited option. You can report on the Thailand business movement, source goods and services in the country, introduce product info, inspect the goods quality and share advice. The branch office is not limited to non-trading activities so in this case you are allowed to earn income. The branch office is governed by the FBA act, so if one of the activities falls under the act, you will need a foreign business license if you want to pursue any commercial activities in the country.
If you want you can also go with a limited company. The company can be private, with just a few shareholders, in this case you create it via a memorandum of association. Or it can be public, in which case you need 15 promotors and the memorandum listed above. The promoters need to have shares for 2 years and only after that will they be able to transfer, which is something to keep in mind. You can also establish a board of directors, this needs to have at least 5 members in total and half of them need to be from Thailand as well.
Is it possible for a foreigner to control the company as a minority shareholder?
Even if you are a minority shareholder you can still get control over your business and you are also eligible for being the managing director of this business. While it’s not ideal to have a smaller amount of shares when compared to Thailand natives, you can still run the business as a foreigner, which is a very important aspect to keep in mind.
It’s a good idea to avoid starting the business with a partner and setting up the business in his own name. That will not end well and most of the time it will just end up being a bit of a hassle. It’s definitely something you want to avoid, so take your time with this and adapt to the process as you go along. Ideally you want to have multiple shareholders but you should be in control. And as you can see, that’s legally possible, you won’t have to worry about it at all. It’s important however to receive some assistance and support just to be safe, otherwise there can be problems.
Can you buy property while in a Thai partnership?
If you do go with a Thai partnership, one of the main things you will likely focus on is buying a property. This is legal, you are allowed to do that as a foreign investor. However, you will need to maintain a regular compliance of the company at all costs. On top of that, you also need to maintain the same company address and you also need to file the balance sheets yearly. The local rules state that if the company is not earning the right amount of income, it can end up being de-listed. Obviously you want to avoid that, so getting some legal assistance and support will help quite a lot in a situation like this. But even so, adaptability is key, you will have to buy the right property while avoiding super large costs.
Is it possible for associates to overrule a foreign investor?
A minority shareholder from another country can obviously be overruled, these things happen quite often and you don’t really have that much to do in a situation like this. Some lawyers are creating companies particularly for the foreigners and they are assigned some Thai majority shareholders that aren’t really that interested in the company to begin with.
Using this approach makes a lot of sense because there’s no real equity for the investors. As a result they will not be very interested in this approach as a coup might take place and you really have to tackle it with the utmost attention. There are still risks, especially if you don’t use the right approach and you just leave anyone to handle this kind of stuff. It’s definitely going to be a challenge at times, but then again it can be worth it if you do it right.
Is it mandatory to have any capital when you start a Thai business as a foreigner?
If you want to create a limited company in Thailand you will need 2 million Baht, and the government setup fee is 7000 Baht too. In case you have a Thai spouse, the amount is reduced to half, which in this case is 1 million Baht. Still a lot, but not as much as initially imagined. However, if the company creation is happening just so you can get the foreign business license, then you will need 3 million Baht for each one of the business activities.
These are all very important requirements for you to keep in mind. It’s important to note that based on the business type you create and how you conduct your company you will need a different capital. Keep in mind that these figures are limited capital requirements. Your business can be a lot larger and with a much higher capital margin, it’s important to make that distinction and keep all of this in mind as you try to obtain the best results.
Buying and owning assets as a foreign national
This is possible, as long as you are in partnership with a Thai national. The smart approach here is to have an agreement through which the Thai entity is relinquishing its authority and you will have all the power in your business. Then you need to file the tax return, pay administrative fees and any other fees. However, you will be able to acquire and buy assets as you see fit, something that’s very convenient and helpful at the same time. Some even go down the route of getting a 30-year lease on a property. But you don’t need a business to do that, as the partner can offer land for 30 years so you can build a house on it. So there are some ways to handle this situation without actually having a business. On the other hand, being a business owner and actually being able to own that asset is a much better idea and it certainly helps you a lot.
Acquiring the foreign business license
You can see this as a work permit but it’s created specifically for companies. Even if you receive the FBL, you will still be limited to a particular set of categories. This doesn’t mean you can create a business in every sector with a single permit. You will need a permit for each one of the businesses that you want to create. And the business performance of the other companies you created will be a factor in getting a new permit too. This is also helping the Thailand government because it allows them to maintain control over who and how starts a business in the country. If there’s a huge influx of foreign companies and nationals are not creating businesses, then they have the power to stop foreign nationals from starting a new business.
Do you need a visa as a foreign investor in Thailand?
If you want to start a business in Thailand, you will be required to have a non-immigrant B visa. What that means is it allows you to conduct any form of business inside the country. That being said, you can apply for this visa at the Thailand consulate in your own country. Apply for a visa will usually cost you 2000 Baht for a single entry (valid 3 months). Or you can go with 5000 Baht for multiple entries (valid 1 year).
Then you have to think about who you want to hire. Some foreigners want to bring people from their country to work here. This is all about the registered capital. If you go with the 2 million Baht, that will help you employ a foreign national, but if you want to hire more than a person then you will have to pay the same amount per person. It can end up being costly if you want to hire multiple foreigners. But on the other hand, it can also be extremely helpful.
As you can see, a foreigner can own a company in Thailand but there are some very specific requirements to keep in mind. It’s important to hire an assistant or a lawyer with a lot of experience in creating a business in Thailand. This will help you a lot and it will give you a lot more control over the entire process. Take your time, create a good business plan and make sure that you adhere to the local requirements. Then you should have no problem getting the best possible results with your business!