[86GlSqSK]

HOW TO...: Set up your own business

The Nation, Published on Dec 20, 2002

There are three kinds types of business set-ups in Thailand: sole proprietorships, partnerships and limited companies. Most expatriates intent on starting up a small or medium-sized business opt for a private limited company.

To do this you will require a minimum of seven promoters and a memorandum of association. You will also need to convene a statutory meeting, register the company, and obtain a company income tax identity card. Oh yes, and you’ll need a very strong forefinger and thumb to deal with all the forms, and about Bt3 million.

This Bt3 million is defined in the Foreign Business Law of 1999 as: “the capital of the alien entity in case of an alien being a juristic person incorporated in Thailand, and in case of an alien being a juristic person not incorporated in Thailand or being a natural person, in foreign currency that the alien remitted into Thailand at the time of starting to do business in Thailand”.

Although setting up a business in Thailand is not quite as difficult as understanding that last sentence, it can be a little too painstaking at times. “Why all the paperwork?” you’ll probably ask when writer’s cramp sets in as you sign yet another form or document. This tedium is exacerbated by the fact that – because everything is written in Thai – most times you don’t even know what you are signing.

It can also be a costly venture, especially if your business is small and budget tight. Besides forking out for government fees and licenses, you will also end paying a lawyer, as the process of company registration all but precludes an expatriate from going it alone.

The Foreign Business Law of 1999 lists types of businesses into three categories. Generally, businesses listed in Category 1 are prohibited to foreigners. Category 2 businesses are restricted to foreigners unless special permission is given. Businesses listed in Category 3 are ones in which licences that can be granted without exceptional considerations. You can see the category lists at the Board of Investment Website at www.boi.org.th

The Foreign Business Law of 1999 supersedes the Alien Business Law of 1972. Under the former law, foreign interest in a company had to be less than 50 per cent. The Foreign Business Law 1999 does not have the majority-Thai-owned requirement.

There are many lawyers in Thailand who make a very good living setting up businesses for foreigners. If you are going to start a business here, you will further improve their living standards. You are going to need a lawyer every step of the way. The process goes something like this:

l You’ll need to get a company name approved by the Commercial Registration Department at the Ministry of Commerce. The approved corporate name is valid for 30 days.

l A memorandum of association needs to be filed with the Commercial Registration Department. It needs to include the name of company that has been successfully reserved, the province where the company will be located, its business objectives, the amount of capital to be registered and names of the seven promoters. The registration fee is Bt50 per Bt100,000 of registered capital. The minimum fee is Bt500, the maximum is Bt25,000.

l Registered capital needs to be commensurate with the type, size and objectives of the business.

It is common for the foreigner, as managing director, to be the sole authorised signatory of the company. It is also common for the Thai promoters required for the establishment to be arranged by the lawyer. Moving further into the shadowy areas of the law, these shareholders relinquish any rights for collecting an income or profits from the company.

Once the share structure is set up, a statutory meeting is called to approve articles of incorporation and bylaws.

The application to establish the company must be set up within three months after the statutory meeting. Company registration fees are Bt500 per Bt100,000 of registered capital. The minimum fee is Bt5,000 and the maximum is Bt250,000.

Once the company is incorporated, a tax ID card and number for the company must be obtained from the Revenue Department within 60 days.

During the process you’ll be signing and dating mountains of forms and other documents already compiled by your lawyer.

Sometimes the lawyer will ask you to sign forms that have not yet been filled in, which in itself seems like a pretty risky proposition.

Your lawyer can also take care of work permits, which also involves mountains of paperwork and lots of signatures on documents you can’t read.

The number of work permits allowed for the company will depend on the amount of investment.

The Board of Investment has a couple of handy booklets on its website, downloadable in “pdf” format for free: “A Guide to Business in Thailand” and “The Costs of Doing Business in Thailand”.

It also lists what a business can expect to pay for various charges, licenses, lawyers fees, staff and office rental, as well as company and personal income tax charts.

Phil Macdonald

The Nation

[MrsGoo]

That was an interesting article.