Setting Up A Company In Thailand

[kevintan]

Dear all,

I have gone through several websites and threads here to understand more about the requirement to set up a company in Thailand.

It seems most of the people with questions here are of American or other western Europe nationals therefore the problems I encounter might be different.

1st off, I am a Malaysian and planning to set up this company mainly with my partners (2 other Malaysian) mainly in F&B industry.

But after reading from some sites, it is stated that Private Limited companies had the foreign ownership limited to 49% and only certain special application to the BOI would enable it to become a full foreign ownership companies.

Therefore, the option of looking for a local partner is in mind however we have not yet decided about it yet. At the same time I also have a few questions in mind.

Questions :

1) Is it possible to set up a company with complete foreign ownership in the F&B Industry, (because I saw in the "Restricted Business Activities under the Foreign Business Act of 1999, it does mentioned "Sale of food and beverages" )Here

2) I also read a few posts here and some stated that there is a need of 2m baht min. as paid up capital to start up a Ptd Ltd company. Is this true or is it 2m bhat min. as authorised capital? Does this only apply to foreign owned company only? or also to locals?

3) What about work permit and visa application. I have read somewhere that 2m baht as min. paid up capital would enable us to apply for permanent/long term working permit. What if I don't intend to invest 2m baht yet, and plan to use the temporary working permit/visa. How to go around with this?

4) Assuming there's too much hassle and problems faced to set up a full foreign company ownership, is it ok to set up a 51/49 company with a local partner however limiting his/her power as a shareholder only as a sleeping/inactive shareholder and therefore have no control of company management and direction and also assets of the company? Is this possible assuming the local partner accept the terms and agreements?

I would appreciate if anyone could give me some advise or guide about on my concerns.

Thanks in advance.

Regards,

Kevin

Edited May 27, 2011 by kevintan

[raro]

1) Is it possible to set up a company with complete foreign ownership in the F&B Industry, (because I saw in the "Restricted Business Activities under the Foreign Business Act of 1999, it does mentioned "Sale of food and beverages" )Here

you can apply with the ministry of commerce for a foreign business license. Talk to a (good) lawyer about this. It is a lot of paperwork!

2) I also read a few posts here and some stated that there is a need of 2m baht min. as paid up capital to start up a Ptd Ltd company. Is this true or is it 2m bhat min. as authorised capital? Does this only apply to foreign owned company only? or also to locals?

You do not need 2 Mio Baht. Same rule for Thais and foreigners.

3) What about work permit and visa application. I have read somewhere that 2m baht as min. paid up capital would enable us to apply for permanent/long term working permit. What if I don't intend to invest 2m baht yet, and plan to use the temporary working permit/visa. How to go around with this?

Contrary to what I just said, you need 2 Mio Baht to get a work permit for the company. A temporary work permit you can only get for short visits to Thailand. Your business visa does NOT qualify as a work permit! There are some imminent changes to all this, but until it is confirmed I won't post it here to avoid confusion.

4) Assuming there's too much hassle and problems faced to set up a full foreign company ownership, is it ok to set up a 51/49 company with a local partner however limiting his/her power as a shareholder only as a sleeping/inactive shareholder and therefore have no control of company management and direction and also assets of the company? Is this possible assuming the local partner accept the terms and agreements?

Yes, the Thai shares can have a limited voting right. Whether or not your Thai partner accepts this, is up to your negotiation skills.

[kevintan]

1) Is it possible to set up a company with complete foreign ownership in the F&B Industry, (because I saw in the "Restricted Business Activities under the Foreign Business Act of 1999, it does mentioned "Sale of food and beverages" )Here

you can apply with the ministry of commerce for a foreign business license. Talk to a (good) lawyer about this. It is a lot of paperwork!

2) I also read a few posts here and some stated that there is a need of 2m baht min. as paid up capital to start up a Ptd Ltd company. Is this true or is it 2m bhat min. as authorised capital? Does this only apply to foreign owned company only? or also to locals?

You do not need 2 Mio Baht. Same rule for Thais and foreigners.

3) What about work permit and visa application. I have read somewhere that 2m baht as min. paid up capital would enable us to apply for permanent/long term working permit. What if I don't intend to invest 2m baht yet, and plan to use the temporary working permit/visa. How to go around with this?

Contrary to what I just said, you need 2 Mio Baht to get a work permit for the company. A temporary work permit you can only get for short visits to Thailand. Your business visa does NOT qualify as a work permit! There are some imminent changes to all this, but until it is confirmed I won't post it here to avoid confusion.

4) Assuming there's too much hassle and problems faced to set up a full foreign company ownership, is it ok to set up a 51/49 company with a local partner however limiting his/her power as a shareholder only as a sleeping/inactive shareholder and therefore have no control of company management and direction and also assets of the company? Is this possible assuming the local partner accept the terms and agreements?

Yes, the Thai shares can have a limited voting right. Whether or not your Thai partner accepts this, is up to your negotiation skills.

First off, thank you very much for your time and effort to reply to my queries.

1) Alot of paperwork ! Ok, we will have to consider about this then. We might not continue to pursue to set up a foreign own F&B company. But if we do, we know that we would need a good lawyer. THANKS!

2 & 3) We do not need 2mil THB as capital. OK this part I understand.

But we need 2mil THB to get the WP for company? or is it for us(the foreign shareholder?) I'm still a little confused here.

A temporary WP(or is it working visa?) can grant us only short visits to Thailand. Understood, but may I know how short is short? 1month? 3months?

Our business Visa is not equal to a WP, that is what you're trying to say, right?

4) Understood, it will have to depend on our negotiation skills to get it done.

1 more question, Would it be easier to get our local partner to set up a wholly local owned company and hired us as the management team?

That being said, we would not have any share in the company but we will be working as the director or management team. Is this scenario possible?

If possible, how do we get our WP done? Do we use the company to apply for us and would it be easier?

Thank you again for your time and effort.

I wish to get these clarified before proceeding to take any further actions.

Regards,

Kevin

[raro]

2 & 3) We do not need 2mil THB as capital. OK this part I understand.

But we need 2mil THB to get the WP for company? or is it for us(the foreign shareholder?) I'm still a little confused here.

A temporary WP(or is it working visa?) can grant us only short visits to Thailand. Understood, but may I know how short is short? 1month? 3months?

Our business Visa is not equal to a WP, that is what you're trying to say, right?

4) Understood, it will have to depend on our negotiation skills to get it done.

1 more question, Would it be easier to get our local partner to set up a wholly local owned company and hired us as the management team?

That being said, we would not have any share in the company but we will be working as the director or management team. Is this scenario possible?

If possible, how do we get our WP done? Do we use the company to apply for us and would it be easier?

Thank you again for your time and effort.

I wish to get these clarified before proceeding to take any further actions.

Regards,

Kevin

2&3: you don't need 2 Mio to register a Co., Ltd. but for every work permit under this company, 2 Mio Baht is required. So if you want to employ two foreigners, you would need 4 Mio Baht and so on.

Temp work permit: AFAIK only possible for a couple of days, but not 100% sure here.

It doesn't really matter whether the company that employs you is 100% or partial Thai owned. The above applies to any company with a Thai majority. A company with a foreign majority is only possible with BoI promotion and/or special permissions as mentioned before.

[kevintan]

2&3: you don't need 2 Mio to register a Co., Ltd. but for every work permit under this company, 2 Mio Baht is required. So if you want to employ two foreigners, you would need 4 Mio Baht and so on.

Temp work permit: AFAIK only possible for a couple of days, but not 100% sure here.

It doesn't really matter whether the company that employs you is 100% or partial Thai owned. The above applies to any company with a Thai majority. A company with a foreign majority is only possible with BoI promotion and/or special permissions as mentioned before.

Thanks again for your info.

Now I can better grasp the situation.

So it doesn't really matter if the company is local or foreign owned but as long as for each foreigner I would want to employ, I would need to put in capital of 2m THB to get the WP done, am I right?

[raro]

yep

[kevintan]

yep

Thanks very much raro for your priceless info.

It is very much appreciated.

Would like to treat you to a cuppa coffee should I meet you in Thailand, haha.

[raro]

Can be arranged

[raro]

Can be arranged

[raro]

Can be arranged

[raro]

Can be arranged