Business in Thailand : Types of Thai Business Structures

Thailand recognizes three types of business structures :

A. Partnership

Thai and Western concepts of partnership are broadly similar. Thailand provides for three general types of partnerships:

1.	Unregistered ordinary partnerships, in which all partners are jointly and wholly liable for all obligations of the partnership.
2.	Registered ordinary partnerships. If registered, the partnership becomes a legal entity, separate and distinct from the individual partners.
3.	Limited partnerships. Individual partner liability is restricted to the amount of capital contributed to the partnership. Limited partnerships must be registered.

B. Limited Companies
There are two types of limited companies, i.e., private or closely held companies, and public companies. The first is governed by the Civil and Commercial Code, the second by the Public Company Act.

Private Limited Companies in Thailand have basic characteristics similar to those of Western corporations. A private limited company is formed through a process which leads to the registration of a Memorandum of Association (Articles of Incorporation) and Articles of Association (By-laws), as its constitutive documents.

Shareholders enjoy limited liability, i.e., limited to the remaining unpaid amount, if any, of the par values of their shares. The liability of the directors, however, may be unlimited if so provided in the company's memorandum of association or the articles of incorporation. The limited company is managed by a board of directors according to the company's charter and by-laws.

All shares must be subscribed to, and at least 25 percent of the subscribed shares must be paid up. Both common and preferred shares of stock may be issued, but all shares must have voting rights. Thai law prohibits the issuance of shares with no par value. It also stipulates that only shares with par value of five baht or above may be issued. Treasury shares are prohibited.

A minimum of seven shareholders is required at all times. A private limited company may be wholly owned by aliens. However, in those activities reserved for Thai nationals, aliens' participation is generally allowed up to a maximum of 49 percent.

The registration fee for a private limited company is 5,500 baht per million baht of capital.

Public Limited Companies registered in Thailand may, subject to compliance with the prospectus, approval, and other requirements, offer shares, debentures and warrants to the public and may apply to have their securities listed on the Stock Exchange of Thailand (SET).

A minimum of 15 promoters is required for the formation and registration of the memorandum of association of a public limited company, and the promoters must hold their shares for a minimum of two years before they can be transferred. The Board of Directors of a public limited company must have a minimum of five members, at least half of Them are Thai nationals. Shares must have a face value of at least five baht each and be fully paid up. Restrictions on share transfers are unlawful except those protecting the rights and benefits of the company allowed by law, and those maintaining a Thai/foreigner shareholder ratio. Debentures may only be issued with the approval of three quarters of the voting shareholders.

The registration fee is 2,000 baht per million baht of capital for a public limited company.

C. Joint Venture
A joint venture may be described in accordance with general practice as a group of persons (natural and/or juristic) entering into an agreement in order to carry on a business together. It has not yet been recognized as a legal entity under the Civil and Commercial Code. However, income from the joint venture is subject to corporate taxation under the Revenue Code, which classifies it as a single entity.

D. Other Forms of Corporate Presence
Branches of foreign companies. There is no special requirement for foreign companies to register their branches in order to do business in Thailand. However, most business activities fall within the scope of one or more laws or regulations which require special registration, either before or after the commencement of activities. Foreign business establishments must, therefore, follow generally accepted procedures. It is important to clarify beforehand what constitutes income subject to Thai tax because the Revenue Department may consider revenues directly earned by the foreign head office from sources within Thailand as subject to Thai taxes.

As a condition for approval of an Alien Business License to a branch of a foreign corporation, working capital amounting to a total of five million baht in foreign exchange must be brought into Thailand within certain intervals over a four-year period.

The branch may be allowed to operate for a period of five years, unless a shorter period is indicated in the application as a result of a contract to be performed in Thailand. Extension of the original duration of the license to operate may be granted, provided the working capital required to be brought into Thailand is met.

A representative office of foreign corporations may also be established to engage in limited "non-trading" activities, such as sourcing of goods or services in Thailand for its head office or inspecting and controlling quality of goods which its head office purchases in Thailand. Other activities can cover disseminating information about new products and services of its head office, and reporting to its head office on local business development and activities.

The working capital contributions as discussed above in respect to branches apply.

E. Regional Offices
On December 28, 2001, the Board of Investment (BOI), chaired by Deputy Prime Minister and Minister of Finance, Somkid Jatusripitak, met and approved amendments to the investment promotion conditions for regional headquarters (Category 7.9) with the aim of increasing employment, the transfer of management technology and enhance personnel practices.

The amendments brought the BOI's promotion of regional headquarters in line with the Ministry of Finance measures to support the establishment of Regional Operating Headquarters (ROH), announced on December 11, 2001.

Projects approved under this category (7.9) will be eligible to receive BOI non-tax incentives, such as permission to own land and permission to bring in foreign experts and technicians, as well as an attractive range of tax-based measures that will be awarded by the Revenue Department at the Ministry of Finance.

Conditions for approval have been liberalized to make Thailand more attractive as a site for establishment of ROHs. The previous condition requiring a company to supervise activities in at least five countries has been reduced to three countries, and the requirement that companies invest a minimum of 40 million baht in real estate has been eliminated.

Promoted projects will be required to have paid up registered capital of at least 10 million baht and overseas revenue must account for at least half of a project's annual income. Below is a brief description of the ROH. For complete information, check with the Ministry of Finance. Description:

A regional office of a multinational corporation may also be established to coordinate and direct the operation of the branches and affiliates of the head office in the region on behalf of the head office.

A regional office has the ability to coordinate and supervise the company's branches and its affiliated companies in the region on behalf of the head office. The regional office may provide these branches and affiliated companies with:

1.	Advisory and management services
2.	Financial management services
3.	Training and personnel development services
4.	Marketing control and sales promotion plans
5.	Product development
6.	Research and development services

Benefits from Establishing a Regional Office
Companies establishing regional offices are eligible to receive BOI non-tax incentives, such as permission to own land and to bring in foreign experts and technicians, as well as an attractive range of tax-based measures awarded by the Revenue Department at the Ministry of Finance. Inquire at the Ministry of Finance for details.

Such companies are not required to be registered or incorporated as juristic persons in Thailand, and do not have to submit any financial statements to the Department of Commercial Registration. The Department will assist in customs clearance of the personal effects of transferred foreign staff and in their applications for further temporary stay in the Kingdom or change in visa type.

Work Permits for aliens performing work in the regional office will be granted for up to 5 persons depending on necessity and volume of work in each particular case.

Conditions for Permission to Establish a Regional Office:

Regional Office must not:
	Derive any income from its activities. Expenditures incurred by the regional office shall be borne by the head office.
	Have the power to accept a purchase order or make a sales offer.
	Negotiate or enter into business arrangements with any natural or juristic person within the Kingdom.

A permit to establish a regional office, valid for five years, can be granted after application with the Alien Business Section of the Department of Commercial Registration at the Ministry of Commerce. The fee is five baht per every 1,000 baht of registered capital, not to exceed 5,000 baht.

When a permit to establish a regional office is issued, it may be subject to the following conditions:

1.	The total debt financing used in the business shall not exceed seven times the portion of the capital owned by shareholders or the owner of the business.
2.	Money used in the regional office shall be remitted from abroad and shall not be less than a total of 5,000,000 baht. During the first year period, at least 2,000,000 baht of the total must be remitted, at least half of which must be remitted within the first six months. Then, no less than 1,000,000 baht should be remitted each succeeding year until the full 5,000,000 baht has been transferred. Documents verifying this transfer must be presented to the Department of Commercial Registration.
3.	At least one person who is responsible for operating the regional office must have their domicile in the Kingdom.

The Director-General of the Department of Commercial Registration is also authorized to impose any conditions on a business permit granted under the rules.

F. Regional Trade and Investment Support Offices
In April, 1996, the Board of Investment announced the establishment of trade and investment support offices would become a new category of activities eligible for investment promotion. Projects in this category are eligible for BOI non-tax incentives, including:

1.	Permission to own land for an office.
2.	Permission to bring in foreign nationals to undertake investment feasibility studies.
3.	Permission to bring in as many foreign technicians and experts as required.
4.	Permission to take or remit foreign currency abroad.
5.	No limit on number of shares owned by foreigners.
6.	The range of activities eligible for promotion is.
7.	Controlling and advising affiliated companies.
8.	All types of consulting services, except those engaged in:
	Buying and selling securities.
	Foreign currency exchange.
	Accounting.
	Advertising.
	Legal affairs.
	Architecture.
	Civil engineering.

STEP 1 : OBTAINING A NON-IMMIGRANT VISA

If you want to work in Thailand, you need a work permit. However, before you can apply or be issued a work permit you must have a non-immigrant visa. This is required to apply for a work permit. Ideally, it should be acquired prior to your arrival in Thailand. Siam International Legal Group can assist you in obtaining it in your home country or in nearby country near Thailand. In addition, we can help you convert a tourist visa to non-immigrant visa inside Thailand but it can take up to 1 or 2 months for this conversion process.

Requirements for getting a non-immigrant visa outside the country :

The applicant has been offered a job or starts a Thai company to employ himself/herself
The company requests that the applicant be given a non-immigrant visa so the company may apply for a work permit for him/her
The company knows the person to be dependable, upstanding, and law abiding and that they will respect the laws and customs of the Kingdom of Thailand.
You should apply for this visa within 30 days before you plan to depart your country. The Consulate or consular officer will ask for copies of the registration documents and financial statements from the company

STEP 2: OBTAINING THE WORK PERMIT EMPLOYEE PROVIDED DOCUMENTS:

Passport - copies of every page. Each copy must be signed by employee.
Non-Immigrant Visa
Departure Card TM.6
Education degree (signed copy) *
Transcript (signed copy) *
Certificates or licenses held by applicant (signed copy) *
CV or Resume – describe in detail the applicant's past positions, duties, performance, length and place of employment.
Photos, three (3) in quantity which are 5 x 6 centimeters in size (not passport photos) with full face and taken wearing business attire (no hat and some jurisdictions require suit and tie). Must have been taken within six (6) months.
Marriage Certificate (if married to Thai National). This includes the original and signed photocopies. Also include wife's Thai ID card, birth certificates of children, and household registration.

* Thai government officials may require these documents to be certified by your country's embassy (this requires bringing your degree, resume, license or certificate to your embassy to declare it is a true and original document. You are required to pay an authentication fee to your embassy. In addition, they can require you to translate these documents into the Thai language from your foreign language.

EMPLOYER PROVIDED DOCUMENTS:

Commercial Registration Department Certificate showing that the organization for which the applicant is going to work has been duly registered as a juristic person, giving the name of the Managing Director and/or Director, and its objections and registered capital. *
Shareholders List certified by the Commercial Registration Department.*
Factory License (if required) issued by Factory Department, Ministry of Industry.*
VAT Certificate - Phor Phor 20*
Withholding Tax – Phor Ngor Dor 1 (if renewing work permit)*

* Thai government officials require that all documents to have the seal of the company stamped on every page and the true and authorized signature(s) of the Managing Director and/or Directors next to the seal. In addition, government officials have in past requested official copies of registration, shareholder, licenses and certificates to have been issued by their respective agencies within the past 90 days of your application for work permit.

Getting Work Permit Approved
A job description is often the determining factor in the approval or denial of a work permit. Unless the written job description requires skills that a Thai is not likely to possess, the application will not be approved. Our licensed lawyers are skilled in writing professional and accurate job descriptions in order for you to gain quick approval. The Labor Department often seems to want to reduce the number of permits actually issued to help demonstrate that they are protecting Thai jobs. Therefore if your company applies for three permits, they may only approve one or possibly two. You need professional help in ensure all of your applications will have a successful outcome.

Once the application is submitted for your Work Permit
Our staff will submit the documents for your work permit, during the processing you must not let your visa expire. The Labor Department's system links the non-immigrant visa ("extension of stay") you listed on your application to the work permit paperwork. A typical time frame for approval of the work permit for a company of 2 million baht registered capital is seven (7) business days in Bangkok and up to 2 months in Phuket. BOI approved companies can enjoy 3 hour processing times at the One Stop Service Center. The Labor Department will issue a receipt stating your return date for receiving your work permit book.

Signing for your new Work Permit
Your first and only appearance for the work permit will be at the Labor Department upon its approval. You must appear in person with your passport and sign the work permit book in the presence of the Labor Department staff. The Labor Department puts a stamp in the back of your passport at the time of receipt.

Restrictions on Your Work Permit
The work permit once approved allows you to work at the noted company and location. If you change employers or place of work, you must make a new application. Also if you resign or are terminated or laid off, according to the law, within 10 days of this, you must return your work permit to the Labor Department. Don't count on your company doing it. It is your responsibility and you are liable to return it to the Labor Department.

STEP 3: THE TAX ID CARD
Once your work permit has been arranged, the next step is for your company to apply for a Thai taxpayer identification card. This ID card has a tax ID number which you will need to list on tax documents.

STEP 4: OBTAINING THE RE-ENTRY PERMIT
Extension of Stay vs. Re-entry Permit

Definition: "Visa" is issued outside of Thailand by a Thai Embassy or Consulate in which you request entry into the Kingdom of Thailand. Once allowed to enter the Kingdom, the Immigration Officer will stamp a date in your passport. This is referred to as your "Extension of Stay."

Definition: "Extension of Stay" is the time period you are allowed to remain in the Kingdom of Thailand. This is typically the date stamp in your passport by the Immigration Officer either after arriving in the Kingdom through a border checkpoint or issuance by the Immigration Police after a request for an extension of stay.

Many people misunderstand the difference between an extension of stay and re-entry permit much to their own disadvantage. Here is the key point: your "extension of stay" stamp is the controlling date. Everything is dependent on this date.

Your re-entry permit or work permit is only valid until the date stamped in your passport to leave the country. Any re-entry permit you obtain will expire when your "extension of stay" expires. If you depart the country without a re-entry permit, your "extension of stay" is invalidated as well as your work permit.

This is the key distinction so after going through the process of getting a longer period of time for your "extension of stay" and work permit; please ensure your have a re-entry before departing Thailand. Siam International Legal Group can assist you to obtain a single re-entry entry permit (one time use) or multiple re-entry permit (unlimited use).

STEP 5: RENEWING YOUR VISA AND WORK PERMIT
Your Work Permit expires when your Extension of Stay does

You will need to renew your stay in Thailand before you can renew your work permit. This can be done in Thailand or in some cases you must leave the country. If you cannot obtain your extension inside Thailand, you will have to get a new non-immigrant visa from a Thai Embassy or Consulate abroad as explained above. If you have an unexpired multiple-entry visa, all you have to do is go over the border and then return. If required to go outside Thailand to obtain a new visa, you will need to provide the Embassy or Consulate with copies of your work permit and new recommendation letter from your company, company registration documents, and financial and tax reports. Siam International Legal Group with its global presence can assist you in any country with renewing your visa. Again, all of this must be done prior to your work permit expiration.

Reporting your Stay every 90 days

You are required to report to Immigration Police every 90 days for persons on a long term extension of stay. Persons holding a multiple entry visa will simply depart Thailand and renew their extension of stay after each 90 day entry. Our firm offers professional service with a yearly package to perform the task of the reporting to Immigration each 90 days.

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