One of the downsides with working in Thailand is the regulation of how things are done here in order for you to work legally. Not just getting a Thai Business Visa and Work Permit can be an exhausting process if you don’t know the procedures (follow the links to learn about it) but especially if you plan to set up your own company in Thailand you are confronted with several hurdles that need to be overcome.
One of the big issues you face as a foreigner is that you are legally not allowed to hold a 51% ownership of a Thai Limited Company. There are three exceptions to this rule:
- You are an American citizen and set up a Thai Limited Company under the Amity Treaty that allows American citizens to hold 100% of the company shares.
- You set up a Thai Limited Company under the BOI (Board of Investment) that allows foreigners to own 100% of the company shares for selected business types in order to promote foreign investment in Thailand. Some of these business types include: Alternative Energy, Automotive Industry, Biotechnology, Consulting Services, Engineering, Food Industry, Gems and Jewelry, Logistics and Software Development. Find the full list here.
- You set up an Import-Export Company that allows foreigners to own 100% of the company shares.
To put it short, if you are no American citizen and want to set up one of the most common business types (like a bar, a restaruant, a hotel, a beauty salon, a massage shop or a motorbike rental shop) then you have no choice other than registering a regular Thai Limited company and find a Thai partner that holds at least 51% of the company shares.
This Thai partner can be either a natural or juristic person. And here comes the best practice to be in control of your Thai Limited Company unless you want to give your Thai girlfriend majority share ownership.
Joint Venture Option
You go to any major law firm in Thailand, the two most renowned ones being Sunbelt Asia and Siam Legal. Sunbelt Asia has the cheaper fees, Siam Legal 24 hours service – both are reliable and can handle any kind of legal issue for you.
What these law firms do in order to solve the foreign ownership issue is to register one of their sister companies (which are Thai Limited Companies founded just for this practice) as the majority 51% shareholder of your Thai Limited Company.
They will not just sign contracts to not claim any kind of profit and dividend payments but also issue their company shares as preferred shares. There are two types of company shares in Thailand:
- Ordinary Shares: 1 voting right per 1 share
- Preferred Shares: 1 voting right per 10 shares.
While you will hold ordinary shares the joint venture company of the law firm will hold preferred shares, that means their voting right is delimited from 51% / 10 = 5.1% while the rest (100 – 5.1% = 94.9%) are voting rights for foreign shareholders. Remember that you need to have at least three shareholders for your Thai Limited Company – of which only one of them has to be a Thai entity.
There you have the solution how to be in control of your Thai Limited Company as a foreigner. The fees for this joint venture service are around 25,000 Baht a year and the service can be cancelled on a yearly basis so if you have a Thai partner in the future that you trust it’s easy to transfer the shares from the Joint Venture Company to the Thai person.