The World Bank’s Doing Business in 2010 has ranked Thailand the 12th easiest place in the world (183 economies) to do business. Specific rankings in terms of ease include:

• Starting a business (55th).
• Dealing with construction permits (13th).
• Employing workers (52th).
• Registering property (6ht).
• Protecting investors (12th).
• Paying taxes (82nd).
• Trading across borders (10th).
• Enforcing contracts (24th).
• Closing a business (48th).

The principal forms of business organisation available to foreigners in Thailand are:

• private limited companies.
• public limited companies.
• branches of foreign corporations.
• representative offices.
• joint ventures.

A Private limited company – the most popular form among foreign investors – may be wholly owned by foreigners, except those in businesses reserved for Thai nationals. These businesses are specified in the Foreign Business Act of 1999.  

Businesses that fall under List 1, 2 or 3 of the Act have restrictions on foreign ownership and/or majority foreign shareholding. Businesses under List 1 cannot be operated by foreigners. Businesses under List 2 require majority Thai ownership (51 percent shareholding). List 3 can have majority foreign equity however permission and licensing must be granted by the Thai Ministry of Commerce. 

Refer to the Department of Business Development, Ministry of Commerce website for a copy of the Act and for procedures to apply for a business license. 

Foreign directors are allowed. A minimum of three shareholders are required. The Department of Business Development has more information.

There is no minimum registered capital required, but the registrar must be satisfied that the registered capital is sufficient to achieve the purposes of the company. At least 25 percent of the share value must be paid in when paying for the share price. Shares may be allotted as paid-in cash, services or property with the approval of the Statutory Meeting or the General Meeting of Shareholders.

At each dividend distribution, private and public limited companies must allocate at least 5 percent of after-tax profits to a reserve fund until the fund reaches 10 percent of registered capital. 

A public limited company must have 15 or more shareholders whose liability, similar to private limited companies, is limited to no more than the unpaid amount (if any) of the par value of the shares. At least five directors are required and half of them must reside in Thailand.

The procedures for incorporating a public limited company are similar to that for a private limited company, with a few significant differences. For more detailed information please contact your legal advisor. The Department of Business Development also has information. 

Applications to establish a branch must be submitted to the Foreign Business Committee. They normally take between four to six weeks to process.

Establishing a branch normally requires the support of a government ministry or agency or of a major organisation engaged in a particular activity.

Branch offices in Thailand are most useful for project work where expertise and guarantees of a strong head office company are beneficial. A branch office and its head office are treated as the same legal entity under Thai law.

Income earned from branch office activities is subject to Thai corporate income tax, but the company will not be taxed on income earned outside and unrelated to the business activities of the Thailand office.

As a condition for approval to establish a branch, working capital of THB 3 million (for each business type) in foreign exchange must be brought into Thailand within certain intervals as announced by the Ministry of Commerce.

The branch may be allowed to operate up to the period indicated in the application or until a contract is fulfilled in Thailand.  Extension of the original duration of the licence to operate may be granted if the working-capital requirement is met. 

Representative office activities in Thailand are restricted to:

• searching for local sources of goods or services for its head office.
• inspecting and controlling the quality and quantity of goods procured by its head office.
• providing advice in various fields relating to products directly sold by its head office to local distributors or consumers.
• disseminating information about new products and services of its head office.
• reporting to its head office on local business developments and activities.

The procedures for establishment of a representative office are similar to those of a branch office.

There are three major forms of partnership:

• an unregistered ordinary partnership.
• a registered ordinary partnership.
• a limited partnership.

Each form of partnership has different levels of liability for partners and different tax consequences for the partners and partnership. 

Many Thai firms are actively seeking joint venture (JV) partners which, along with capital, can bring technical, marketing and management skills to a business relationship.

In turn, Thai firms generally offer assets, valuable local vendor and government contacts, and established business relationships throughout the region.

JVs and licensing agreements are also important and popular market entry strategies for New Zealand businesses considering the Thai market.  Selection of a joint venture entry strategy is sometimes influenced by the requirements of the Foreign Business Act. 

Under the Foreign Business Act business that fall under List 1, 2 or 3 of the Act have restrictions on foreign ownership and / or majority foreign shareholding.  Businesses under list one cannot be operated by foreigners.  Businesses under list two require at least 40 percent of Thai shareholders. List three can have majority foreign equity however permission and licensing must be granted by the Thai Ministry of Commerce. 

The Department of Business Development, Ministry of Commerce website has procedures on how to apply for a business licence.

• Find out more about setting up joint ventures

Application must be made to the Registrar of Partnerships and Companies for approval of the company name.

There are restrictions on foreign involvement in the following sectors: farming and animal husbandry, newspaper, radio broadcasting, television or radio station, telecommunication business, insurance, land-trading and inland transportation.

(Additional sources used on this page: Deloitte Touche Tohmatsu, RSM Advisory (Thailand)

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Use of the information is at your own risk and we are not responsible for any adverse consequences arising out of such use. This is a complex area and we recommend that you seek legal advice before taking any related action.