Limited Company Capitalization

[dvdlock]

Hello,

I will shortly be moving from the UK to Thailand to live and work. My wife of 15-years is Thai, we have a 9-year old Daughter.

I would appreciate if anyone could help me understand a little more about capitalization of a Limited Company in Thailand.

Do the funds for capitalization have to be physically sitting in a Business Bank account untouched? Can the capitalization be in assets?

One of the first things we will be doing is buying a house. Would buying the house in the company name be of any value in terms of capitalization, or would it be best to keep this as a separate private entity?

We will also be bringing our car as part of our personal effects (I understand the import duty implications of this), could ownership of a car contribute or benefit in any way to our business venture.

Any advice/opinions would be welcome.

Thanks

Dave.

[Forkinhades]

best to speak to a lawyer mate, running a 'business' with a house as asset could prove expensive to run, and you do know that you have employ 7 thais, have a work permit, a business visa...........

Edited January 16, 2010 by Forkinhades

[N47HAN]

Its actually 4 Thais per wp , and 2 million capital per foreign worker

Yes the capital may be assets

[beechguy]

Actually, they say if married to a Thai, the capitalization is 1 million and 2 Thai employees. But, as noted above, I agree it's best to consult a legal firm on how best to structure and fund the company.

[raro]

Was investigating this myself and heard (but yet to be confirmed!!) that 25% must be paid-up by the shareholders (However, they are liable up to the full amount of their share value) BUT if you want to have a work permit under the company, 100% must be paid up.

Can someone from the legal experts confirm/not confirm this?

[dvdlock]

Hey Guys,

Many thanks for your responses. Interesting points there.

Back to the Capitalization part, I'm interested to learn more about what this actually means in terms of where the capital sits.

If I set up the company with the 49%/51% with Bht 2 million paid up capitalization for example. I'm assuming Bht 2 million is paid to the company as Capital. But then what happens? Does this money have to sit there in a bank account or can it be used by the the business as working capital?

If it has to remain in a bank account then possibly having it as a physical asset which I can use, like buying a house to live in (which I need to do anyway) would free up the Bht 2 million to use as working capital.

Sorry if that's as clear as mud, I'm just trying to understand it a little more.

As an aside, I emailed Siam Legal 10-days ago with an initial enquiry regarding this, and a few other points/issues but as yet, have not had a reply. I hope they are a little more swift when actually contracting them to set up the business and attend other legal matters for me!!!

Thanks again

Dave.

[Forkinhades]

As an aside, I emailed Siam Legal 10-days ago with an initial enquiry regarding this, and a few other points/issues but as yet, have not had a reply. I hope they are a little more swift when actually contracting them to set up the business and attend other legal matters for me!!!

Why dont you contact their office in the UK?

[RAZZELL]

Don't even think about trying to import the car!

Read the Motoring Forum for horror stories!

RAZZ

[dvdlock]

As an aside, I emailed Siam Legal 10-days ago with an initial enquiry regarding this, and a few other points/issues but as yet, have not had a reply. I hope they are a little more swift when actually contracting them to set up the business and attend other legal matters for me!!!

Why dont you contact their office in the UK?

Now there's an idea, why didn't I think of that...... Thanks.

Don't even think about trying to import the car!

Read the Motoring Forum for horror stories!

RAZZ

Thanks Razz, I'll take a look.

I know the duty is extortionate but it still appears to be cheaper than buying the same age car (2002 Jeep Grand Cherokee) in Thailand. It really is unbelievable the cost of even used cars there.

If the horror stories are relating to damage to car etc. I may have a change of mind, I'll take a look. Thanks.

[Naam]

I know the duty is extortionate but it still appears to be cheaper than buying the same age car (2002 Jeep Grand Cherokee) in Thailand. It really is unbelievable the cost of even used cars there.

people like you should not ask for any advice. they know already everything

[raro]

I know the duty is extortionate but it still appears to be cheaper than buying the same age car (2002 Jeep Grand Cherokee) in Thailand. It really is unbelievable the cost of even used cars there.

people like you should not ask for any advice. they know already everything

Yet no need for a response like that.

Hear it from a freight forwarder: The import of a used car is in fact impossible. There is the odd guy who went down that road and succeeded but we refuse such shipments from the start or charge you by the hour that we are working on it.

[TPI]

I know the duty is extortionate but it still appears to be cheaper than buying the same age car (2002 Jeep Grand Cherokee) in Thailand. It really is unbelievable the cost of even used cars there.

people like you should not ask for any advice. they know already everything

Having bad day "Naam"??

[raro]

As for your initial question, the paid-up capital can be used for operational expenses, overheads etc.

Buying a house? Well, I don't think so unless it is your office building.

[dvdlock]

people like you should not ask for any advice. they know already everything

Such I nice person. Bet you work in Public Relations!!!

I know the duty is extortionate but it still appears to be cheaper than buying the same age car (2002 Jeep Grand Cherokee) in Thailand. It really is unbelievable the cost of even used cars there.

people like you should not ask for any advice. they know already everything

Yet no need for a response like that.

Hear it from a freight forwarder: The import of a used car is in fact impossible. There is the odd guy who went down that road and succeeded but we refuse such shipments from the start or charge you by the hour that we are working on it.

Thanks Raro. Appreciate your reply.

[dvdlock]

As for your initial question, the paid-up capital can be used for operational expenses, overheads etc.

Buying a house? Well, I don't think so unless it is your office building.

Again, appreciated. It's all helping me to understand the big picture, and in fact, to further develop my moving plans.

Thanks again

Dave.

[TravelerEastWest]

I am curious why will you be setting up a company?

If you have a sole proprietorship you may possibly save a huge amount of money in taxes.

A Thai wife can do this, Americans also should be able to and possibly someone from the UK.

If liability is an issue you could get insurance.

I would consult a good CPA specializing in taxation, later you can talk to a lawyer. Paperwork for setting up companies is fairly simple. The tax aspect of your venture may be the most important for setting things up.

An expert CPA will be expensive but probably worth it.

As for your house and car it is perhaps possible that you could use the value as part of your capitalization if you go the company route.

Keep in mind that Thailand does not have subchapter S corps or a Thai version. Which basically gives you a corporate entity with the ability to sell shares and have limited liability without double taxation.

So with a corporate business you will be taxed twice - once at the entity level and then again personally.

Also trading as a sole proprietor you will likely be able to avoid an annual audit as well as detailed record keeping for tax deductions.

if your car is brought over as a depreciating asset for your business you might do well and be able to afford the fees of one of the large shipping companies that use licensed brokers as part of the import team.

I know that when we moved to Thailand duty free importing of house hold goods was very easy with no bribes needed. what was needed was a detailed listing of what was imported.

If your company will be good sized and you need to go that route BOI approval could be helpful in terms of tax breaks and helping you with licensing.

Again a really good CPA can work wonders for you.

Good luck with your move.

[dvdlock]

TravelerEastWest, Many thanks for your response.

Setting up a company is not 'set in stone' but is certainly one of the options I am researching.

Once we get our feet back on the ground in Thailand I will of coarse be spending some time with advisers, Siam Legal, SunBelt or similar, to help me decide the options best suited to our situation.

In the meantime I am doing as much research as I possibly can in preparation. Having a better understanding of the implications of Living and Working in Thailand, as well as types of business set-up, Work permits etc. will no doubt allow me to move more quickly, and confidently once we get there.

The TV forum is a great place to learn much more about the above and learn from other peoples personal experiences in the process. Thanks to everyone.

Liability is not my focus currently, important as it may be. The line of work in Thailand will be Exporting goods the the UK. Possibly a Sole Proprietorship may well be the way to go. At this stage I honestly don't know. What is certain is that I want to be able to work 'legally' in the most cost effective manner that I can.

Your comments/advice is very much appreciated and I have taken this on board.

Many thanks & regards

Dave.

[MyNameMe]

As an aside, I emailed Siam Legal 10-days ago with an initial enquiry regarding this, and a few other points/issues but as yet, have not had a reply. I hope they are a little more swift when actually contracting them to set up the business and attend other legal matters for me!!!

Why dont you contact their office in the UK?

Because their office in the UK is a virtual office, I went there once on a visit to check it out

MNM

[TravelerEastWest]

 It sounds like you are doing a good job with your homework and this forum is a good place to get ideas.

As for advisors you may want to find a good specialized tax CPA (Chartered Accountant in the UK?)

I find general lawyers and accountants (such as what you will typically find in the type of businesses that you mention) are not qualified to give the best advice for situations such as yours.

Perhaps if you look around you can find a small firm that was started by a CPA that was trained in one of the large firms all of which have (real - smiling) offices in London. I mention the large firms because they have "alumni" lists and you may be able to get a small firm referral.

Best of luck with your new venture.

[Sunbelt Asia]

Dear Dave,

In regards to your query about the capitalisation of a Thai limited company, Thai nationals are required to display an amount equal to the value of their shares in a bank account. This amount will be checked during the company set up process but is not required to be kept there for a certain period of time. However, foreigners are not required to display these funds. Therefore, you will not be required to display the full 2,000,000 Baht in a bank account upon setting up the company. Providing you have 4 Thai employees and 2,000,000 Baht of registered capital, you will be able to obtain a work permit.

If you require any further information please do not hesitate to contact Sunbelt Asia on 02-642-0213.

Best regards,

Foreign Business Advisor

Sunbelt Asia Co. Ltd

www.sunbeltasia.com

[email protected]

Edited February 12, 2010 by Sunbelt Asia

[torrenova]

Providing you have 4 Thai employees and 2,000,000 Baht of registered capital, you will be able to obtain a work permit.

Except that he is married to a Thai and these rules are halved

[dvdlock]

Thanks again for the replies.

The 1,000,000 Baht registered capital and 2 Thai employees sounds OK. Would I be permitted a period of grace in order to get the company started prior to engaging the Thai employees? I had read somewhere on TV that if the business is Exporting only, the company could be 100% owned without the 49/51% split with a Thai, could anyone comment on this please.

My objective is to keep things a simple and as cost effective as possible. The Sole Proprietor option sound like a better way to get started and to keep thinks simple. As a UK citizen would this be an option. If Sole Proprietorship was in my wife's name, would I be able to get a work permit, and would this possibly be a better option than setting up a company?

Thanks again for your input.