Miniumum Requirements For An Export Focused Company

[Foreigner]

I posted this topic also on the board for the experts of Sunbelt to answer, but I wan to collect as many information as possible. Therefore I also post this topic here for others to add aditional information. Thanks in advance!

I stay long enough on a TR visa in Thailand to know enough of the country and want to start a business in Thailand and having my further future in this country.

The business plan I am writing is export focused.

1. Supporting B2B, Thailand based, to some European countries and connecting them to Thai suppliers (no B2B Internet Platform).

2. Giving foreign companies the possibility to use us as a representative office or agency.

3. Thailand export E-market (B2C and wholesalers), operating as a distributor for selected Thai products and suppliers.

I need to change my visa and apply a work permit. I need 3 promoters to establish a Thai Limited, no problem, but I don't like the idea that Thai having a majority of 50% + of the shares. I have read the website of BOI Thailand and have some questions.

• Is establishing a Limited the best solution for a business like this?
• Is it possible to have a majority in a company like this as a foreigner?
• I want to work alone for the first year, and don't have many expenses. Is it necessary to have a registered capital of 2 million THB as a minimum or can this be less, because I also want to apply a work permit through this company?
• What is the minimum registered capital that has to be paid up, because I don't need to invest 2 million THB to start a company like this?

[raro]

• Is establishing a Limited the best solution for a business like this?

yes, and not only in this case

• Is it possible to have a majority in a company like this as a foreigner?

nope, unless ou're American citizen under the amitrice act (but quite difficult) or under BoI

• I want to work alone for the first year, and don't have many expenses. Is it necessary to have a registered capital of 2 million THB as a minimum or can this be less, because I also want to apply a work permit through this company?

yes, and also the 4 Thais that you have to employ. Exceptions may apply if you go for BoI, but I give it a slim chance to go through.

• What is the minimum registered capital that has to be paid up, because I don't need to invest 2 million THB to start a company like this?

m/m investment for BoI companies is 1 Mio, if you have your legally married Thai wife as shareholder (I think she needs to hold a major(ity) stake) it is again 1 Mio, in all other cases I could think of it is 2 Mio.

[Foreigner]

Thanks raro.

I am planning now to establish a limited with Thai majority of the shares. I have one question left:

Is it possible for me to have preferred shares under my 49 % shares so I am able to controle the company anyway?

Sunbelt answered:

Posted 2010-09-20 17:47

Establishing a limited company in Thailand would seem be the most appropriate route for you. In order to work in Thailand a foreigner needs to have a current Work Permit. As an individual, you are not allowed to simply apply for a work permit. This means that you would not be able to work legally in Thailand unless a company in Thailand with the ability to hire foreigners (A Thai corporation, Amity Treaty Company in Thailand, Representative Office, etc) offers you a job.

If you/your business only exports products from Thailand you are then eligible to operate this company with the majority of the shares being owned by a foreigner or foreigners but if you are performing any other service or function inside of Thailand such as those you have mentioned you must have at least 51% of your shares held by a Thai national or a Thai corporation. Alternatively, if your company provides supporting services to off shore companies and/or Thai companies you may also be able to have the majority of the shares being owned by foreigner if:

1. To apply for an Alien (Foreign) Business License, with this route, you must be able to illustrate that the Thais (Economy, knowledge/educate the Labour Force) are benefiting from your business operation. Which means that your business must be highly advance, in the technology aspect.

2. To apply for a BOI (under the category of Trade and Investment Support Office), but part of this requirement would be that in each year your designated BOI company must have over 10 Million Baht as company’s overhead and operating expenses.

3. If you are a US citizen, you can apply for Alien (Foreign) Business License under the Thai-US Amity Treaty. This enable you to own the majority of the shares.

4. If you are a Australian, you can apply for Alien (Foreign) Business License under the Thailand-Australia Free Trade Agreement, most of the permitted activities enable you to own up to 60% of the total equity, and few permitted activities would enable you to own nearly up to 100% of the total equity.

5. If you are a Japanese, you can apply for Alien (Foreign) Business License under the Japan-Thailand Economic Partnership Agreement, depending on the type of industry, there are ranges of ownership percentage that permitted to Japanese in total equity.

The minimum registered capital for a Thai Co. Ltd. (without BOI nor the Alien Business Licenses) that would be able to support a work permit for a foreign national is 2 Million Baht and you must have 4 Thai employees that have been registered in the Social Security Fund and are shown in the company’s PND 1 (Company’s Monthly Withholding Tax Filing). If you are legally married to a Thai national the requirement for the registered capital of 2 Million Baht could be lowered to 1 Million Baht.

According to the Labour Department, when applying for a work permit they expect you (and your shareholders) to have fully paid up the registered capital at the time of application but in practice with the Ministry of Commerce and the audit issue they expect you (and your shareholders) to have fully pay up the registered capital over the course of the company’s first year. Paying up the required registered capital can be done in the form of cash, assets or services. The simplest methods of paying up the registered capital is cash. If you are paying by assets, you are required to provide full details of the assets, and their current value. While paying the required registered capital by service, you would required to illustrate the full details of services that you have previously provided and how they benefited this designated company. This can prove to be a very difficult procedure to get approved and it must be agreed and approved by the company’s shareholders.