*/ */

Legal services in Thailand for Company Establishment

The Company Limited as a 100% Subsidiary

The Company Limited is the most common legal form in Thailand and more or less corresponds to a German GmbH. It may be established as a “Wholly Foreign Owned Enterprise (WFOE)” with 100 % foreign shareholders. Incorporation is straightforward, requires three initial shareholders and is quickly set up.

It is expected that 100 % foreign companies have a minimum capital of 2 million THB. Nonetheless, sound legal advice is required since foreign invested companies are restricted in their activities.

One should have a look at this at the time of incorporation.

Producing in Thailand

What not many people know: Foreigners are permitted to have production facilities almost without restriction as 100% foreign owned entity in Thailand. Foreigners may even obtain land ownership if the manufacturing plant is located in a certified industrial site.

Of course, there are some rules to follow in Thailand as well. Land use regulations do not permit production facilities in all areas. Usually, a “Factory License” is required, which depends, among other factors, on the technical equipment and the number of employees.

For those who would also like to take advantage of the attractive tax benefits offered by the Board of Investment (BOI), Sanet’s attorneys will be happy to advise on the extensive incentive schemes and their conditions.

The Foreign Business License (FBL)

Such a license may be granted to companies that are majority-owned by foreign investors and wish to engage in business activities that are prohibited to foreigners under Thai law.

The company’s services and activities must provide significant benefits to the Thai economy and/or society. Typical activities supported by an FBL are infrastructure projects, public-private partnerships (PPP) or build-operate-transfer (BOT) agreements. Current practice is rather restrictive. In addition, the application process is complex, the necessary consulting is expensive, and the outcome of the application process is always uncertain after nine to twelve months.

The biggest snag, however, lies in the vaguely defined scope of the subsidized business activities. It is therefore impossible to make a serious forecast about the outcome of the application process. In order to minimize the economic risk, one is well advised not to pursue FBL as the only route into the Thai market.

The Representative Office (RO)

The RO must not “accept purchase orders, make sales offers or conduct business negotiations with any person”. It is also not permitted to have its own revenue; instead, the parent company directly and entirely bears all of the office’s expenses. The Representative Office is thus a foreign company’s “beachhead” in Thailand and is limited to procuring products, inspecting them for quality, observing and reporting about the state of the market, and – to a certain extent – supporting contracted distributors or importers.

As a “Sales Office” it is in violation of the law and the persons responsible, both national and foreign, are subject to criminal and tax consequences.

Caution, illegal!

Anyone who uses a nominee with Thai citizenship to set up a company or in sales is in violation of the applicable criminal law and must expect heavy fines. In addition, he can be prosecuted with a prison sentence of up to three years.

Caution should be exercised when hiring Thai nationals directly as sales representatives. Anyone who hires local employees without a Thai company is operating a foreign permanent establishment and falls under the Foreign Business Law. Hiring employees through non-Thai personnel agencies or, for example, local law or personnel offices, is also a prohibited circumvention and is strongly discouraged. The authorities will ask what the business purpose of the employer has to do with the distribution of foreign goods.

From analyzing the market to a 100% subsidiary. Spaleck Thailand Managing Director Hermann Kahle (center) and his German Management team led by Managing Director Andreas Ahler relied on the advisory services of the Sanet Group as their "One-Stop-Service" in Thailand.

BOI PROMOTION THAILAND: CONGRATS TO SPALECK THAILAND

Sanet is proud of having successfully guided Spaleck GmbH on its path to direct market entry into Thailand and Southeast Asia. After successfully managing the legal...
Sanet Legal & Finance offers customized accounting for SMEs in Thailand including reporting, evaluations, payroll and tax returns

Sanet Legal Ltd. becomes “Sanet Legal & Accountancy“: Accounting in Thailand

The Sanet Group in Bangkok is now offering accounting services in Thailand for international SMEs. Sanet Legal Ltd. will thus be formally renamed “Sanet Legal...

Case Study: Troublesome Joint Venture in Thailand

As a consultant and “cultural ambassador”, Sanet helps a German machine builder with its Joint Venture in Thailand. The German machine manufacturer held 75%...

Work Permit for Thailand: This is the Legal Situation

“If you sweat you work” Based on this satirically exaggerated principle, the Thai legislature requires a work permit for any activity that requires mental or physical...

INVESTMENT IN THAILAND PAYS OFF

If you want to service the Asian markets from an environment characterized by a secure legal system, a top infrastructure and state-of-the-art industrial parks, the...

Thailand Privilege Visa: How to Expect Privileges and Exclusivity in Thailand

If you are looking for the right visa for a long-term stay in Thailand, you will probably come across the Thailand Privilege Visa. The new edition of the Elite Visa...
Your own employee in Thailand

Your own employee in Thailand: High fines for illegal activities

Having their own employees in Thailand seems to be the cheap and direct way to sales and service in Thailand for many foreign companies. But beware: The law prohibits...
Retirement visa Thailand: SANET - your experts with years of experience in the Thai legal system

Retirement Visa for Thailand – here´s how!

Many people dream of moving to Thailand once they retire. There are a few things to take care of before that can be done, applying for a Retirement Visa being one of...
Erfahren Sie hier im Text die Vorteile eines Joint Ventures mit thailändischer Mehrheit in Bezug auf Stimmenmehrheit und Dividendenansprüche

How to make a joint venture a recipe for success in Thailand?

HOW TO MAKE A JOINT VENTURE A RECIPE FOR SUCCESS IN THAILAND It is easy for foreigners to set up a wholly foreign owned enterprise (WFOE) in Thailand. However, such...
Legal Pulses

Legal Pulses March

• The Free Movement of Skilled Workers in ASEAN • Only two shareholders now in the Co. Ltd. • the Elite Visa: here’s how!