Would you believe Thailand is facing a massive decline in new business establishments post covid? Well, the statistics show that the business entries have majorly declined due to the impact on the economic scale in Thailand. Due to limited private consumption, businesses are trying to cut down on their capital expenditure and settle in with the limited finances. Perhaps, many companies are still expanding across the country, and what better place than Thailand?
Irrespective of the type of business you wish to expand in Thailand, it is always a daunting task to deeply understand an unfamiliar process. Of course, starting or establishing a business branch in Thailand would be the first experience, and embracing it with grace and perfection calls for a proper dig in the process. Now, starting or expanding a business in Thailand doesn't just need the required capital. It is much more than the external inputs. From FDA registration to learning properly about the process, you need to understand how challenging it is to establish something new and additional. To minimize the negative impacts, it is always advised to seek professional help.
Foreign Business Law In Thailand
Besides all the havoc created during the process, certain specific law enforcements are applicable in Thailand.
Thailand restricts the economic areas for foreigners under the Foreign Business Act. Certain laws and regulations in Thailand are yet to get familiar with. Starting a business in Thailand is an intimidating task that calls for proper understanding and acknowledgment of the rules and regulations applicable in Thailand. Although there are abundant opportunities in the service and industrial sector in Thailand, you need to keep law enforcement in mind to progress in the area.
Here are some answers to the law-related queries while starting a business in Thailand.
The Laws Governing Business Setup in Thailand
The establishment of any foreign business is governed by the Foreign Business Act of 1999. The law is to be strictly followed while setting up a new business in Thailand. Not just the implications but all the penalties applicable to the business formation need to be considered. It is extremely crucial to acknowledge the restrictions imposed by the law. The non-compliance with the law can end up costing you a three-year prison term. It can also cost the accused a 100,000b to 1,000,000 Baht fine. The Foreign Business Act informs you about a range of business and industrial activities that might not even be included in the “foreign” unless the license is applied. The foreign business establishments are nowhere prohibited from carrying on with their business, but they should not indulge in the following activities-
- Radio and television broadcasting and newspaper publishing
- Rearing livestock
- Fishery
- Extraction of Thai medications
- Trading inland
- Rice farming and orchard farming
- And many more.
The Different Types Of Companies You Can Start In Thailand.
Foreigners can start with any of the company types. No matter the standard module of the startup, people can always think of starting their own business or a company in Thailand. Think of the type of company you wish to establish and go onboard by learning about the process.
Have a look at the potential business plans you can start in Thailand-
Limited Partnership:
A limited partnership is one of the most common and practically beneficial types of business plan you can think of. In this type of partnership, one partner's liabilities are limited, and the other partner’s liabilities are unlimited. The limited partnership module can be easily registered as a Thai partnership.
Representative Office:
Representative offices have certain limitations on the activities like providing advice on the products sold to the customers, imparting services in Thailand, or introducing the information concerned with new services. Setting up a business that indulges in any of these activities is permitted in Thailand.
Limited Company:
The limited company endorses different situations. One of the categories is where the company has only a limited number of shareholders and is called a privately held company. The other one is a public limited company where a minimum of 15 promoters are needed for the formation of a memorandum of association of the public company.
Nominee Shareholder & A Majority Shareholder
Setting up a company or a business in Thailand brings up the term “nominee shareholder.” We usually hear the term in our daily lives when we are involved in the company formations. A nominee shareholder is a shareholder that doesn’t have any specific financial interest in the formed company. Thailand's Foreign Business ACT 1999, having a nominee shareholder is illegal and is a punishable act that can lead to substantial fines. So, when you hear about a nominee shareholder while setting up in Thailand, avoid getting it named after your partner because it can be a real pain in the future.
Majority shareholders and minority shareholders are the people or foreigners who are set as the company's managing directors.
How does the capital matter while setting up a business in Thailand?
Capital requirements are equal for all types of business formations and in every country. When you plan to set up a business in Thailand, a Thai majority shareholder company's minimum capital requirement is 2 million Baht. The government stands a share fee of around 7,000 Baht.
Depending on the existence of your spouse in the same country, you are required 1 million Baht to start up a business.
In case the business wants to obtain a Foreign Business License under the FBA, the capital you require would be THB 3 million for every business activity.
The Bottom-Line
Setting up a business in Thailand requires more than just professional BOI services. People today are desperately looking after settling abroad and receiving the Thailand Smart Visa. With the right set of understanding of the process and knowledge in the area, the concerned person can be easily liable to settle in along with a new business formation. Many companies today are looking for options where they can establish a branch office. Thailand comes out to be one of the most desired places.
Interloop Solutions and Consultancy Pvt. Ltd. offers BOI services and professional advisory services where you get to understand the whole setup of a representative office or a new business. Contact the professionals to know more.
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