Establishment of a legal entity by foreigners

The importance of establishing a legal entity by foreigners

Setting up a legal entity in Thailand by a foreigner is a complex process that requires strict compliance with laws and regulations. Doing business in a country with a different culture, laws, and regulations from the home country requires a thorough understanding of all aspects. Therefore, foreign investors must prepare and thoroughly study the relevant laws to ensure that the business can operate legally and minimize potential risks.

Relevant laws and regulations

Setting up a legal entity by a foreigner requires compliance with important laws, such as the Foreign Business Act B.E. 2542 (1999), which sets restrictions on the types of business foreigners can conduct. Additionally, receiving promotion from the Board of Investment (BOI) and international agreements can make it easier to conduct business.

Types of legal entities that can be established

  • Limited Company – Foreign investors prefer this type the most.
  • Public Limited Company – Suitable for businesses that want to raise funds from the public.
  • Joint Venture – A format where foreigners can invest together with Thai people

Procedures for establishing a juristic person

  1. Check the company name
  2. Register a juristic person with the Department of Business Development
  3. Request a special permit (if any)

Shareholding Proportion Requirements

Generally, foreigners may hold no more than 49% of the registered capital, unless they are promoted by the BOI or have a special agreement that allows them to hold more shares.

Working in Thailand and applying for permits

Foreign investors wishing to work in Thailand must obtain a valid work permit and work visa.

Taxation and financial reporting

  • Must comply with tax regulations such as corporate income tax and VAT.
  • Legal entities must submit annual financial reports to the Revenue Department.

Adapting to Thai business culture

  • Building good relationships with Thai partners is important.
  • Understanding business negotiation methods and respecting local customs helps businesses run smoothly.

summarize

Setting up a legal entity in Thailand by a foreigner is a complex process. Foreign investors must thoroughly study the information and seek expert advice to ensure the business operates correctly and smoothly in the long run.