Setting up a LTD and non LTD company in Thailand.

[DerekMarshall]

Hi guys and gals,

 

What is the process and cost of setting up a limited liability and non limited liability company in Thailand. the 51 - 49 % ownership is not a problem as 

my daughter is a Thai national. 

 

Also how do I ensure I have control, i.e deciding voting rights in the funcionality of the company. 

 

Thanks in advance. 

[CNXTim]

Speak to a good lawyer in the place you plan to operate. and be prepared for a lot of documents to sign.

[mark j grygiel]

The US Embassy has a list of recommended Thai lawyers who speak English.

 

[khunPer]

Get a lawyer used to set-up limited companies with foreign shareholders to do it for you, a bit of documents and registration. Normally a complete, but simple set-up will cost between 30k and 50k.

 

Your daughter can be shareholder, but if minor a guardian will take care of her interest. Some lawyers suggests using preferred shares, so the foreign owner has a number of preferred shares with 10 votes each instead of 1 vote, giving vote majority; however this method may not be accepted in case a problem is solved by Court. Proxy shareholders are not allowed and there shall be a minimum of 3 shareholders; and Thai shareholders must proof funds for their shares.

 

You can control the company with your 49 percent – plus eventually preferred shares – and you daughter’s portfolio as long as she’s minor, if you are the guardian and do not makes decisions against her interest. Other than that you will need a trusted Thai person who will not vote against you to hold 2 percent.

 

If you need a Work Permit the nominal capital must be of 2 million bath and 4 Thai employees.

 

You will have running operation costs for accountant and auditor’s annual report, which for a small operation with only few transactions can be as low as 30k baht annually, and you shall expect to pay a few thousand baht in company tax.

[BlackJack]

What province?

[TravelerEastWest]

You need a good CPA, not a lawyer unless you have some unusual and complicated issues.

 

You can easily use preferred shares to keep control.

 

Let your accountant advise on the shareholder issue - you can have the trusted Thai shareholder transfer later their shares to your daughter and keep only one share.

 

Expect costs to be about half what others have posted using a CPA instead of a lawyer.

 

Assuming a real business that pays taxes has audits etc you can use the company to buy land.

[khunPer]

You need a good CPA, not a lawyer unless you have some unusual and complicated issues.

 

You can easily use preferred shares to keep control.

 

Let your accountant advise on the shareholder issue - you can have the trusted Thai shareholder transfer later their shares to your daughter and keep only one share.

 

Expect costs to be about half what others have posted using a CPA instead of a lawyer.

 

Assuming a real business that pays taxes has audits etc you can use the company to buy land.

»You can easily use preferred shares to keep control«

 

For Thais, but if preferred shares gives a foreigner more than 49 percent of the votes that may not be accpted by a Court, according to people with knowledge to Thai law and some lawyers.

[DerekMarshall]

Thank you Guys for the awesome info. 

 

What is CPA? 

 

I intend to buy some agricultural land for my Daughter that may produce an income for her or very least some rice. I Wish to keep the l

and out of the reach and control of her Thai Relatives, of which for information I have no reason to distrust good people, good family. 

I of course..best interests of my daughter at heart.

 

As my daughter is 8 months old I do seek a controlling interest, in terms of taking care of her assets. Work permit? do I need one? I wish to take what would be considered an advisory role while being a non majority shareholder with controlling interest. Technically I believe I wont be working, but giving advice (grey area)  4 Thai workers won´t be a problem. 

 

 

For the gentleman or lady that asked, the land is in Roi Et. 

 

 

Thank you everyone for the above informative posts. 

 

 

Edited August 6, 2014 by DerekMarshall

[khunPer]

»I intend to buy some agricultural land for my Daughter that may produce an income for her or very least some rice. I Wish to keep the l and out of the reach and control of her Thai Relatives...«

 

Investing in some land for your daughter is a very good idea. 

 

Just for your information and possible help. I did also buy some farmland up Isaan for my daughter when she was about ½ year old, some 8 years ago.

 

With the running costs of a company for just accountant and auditor, you will probably need more than 20 rai to generate enough profit just to break even; the profit for Thai rice farmers is in the area of 1,500 to 2,000 baht per rai.

 

Source The Nation 31-03-2008:

Production cost 1 Rai EQ 7,000 to 8,000 baht total incl. Fertilizer.

1 Rai produce average 600-700 kg (white) rice

 

Source Thai PBS 2014-07-22:

According to the survey of the Centre for International Trade Study of the University of Thai Chamber of Commerce, Thai farmers have the least profit from rice sales because of higher production cost.

It said production cost/ton of rice paid by Thai farmers is 9,763.40 baht while rice harvest yields 450 kilogrammes per rai.

 

I just bought the land in my daughter’s name and let someone else grow rice or cassava (grandma in village arrange that). The average outcome or net fee for my daughter is around 500 baht per rai each year, and that is a very normal Thai farm rent. No problem with farming, costs, harvest, workers and wages, control, rice storage, selling at the right time for the right price etc.

 

Some farmland up Isaan has Chanute land deed title and shall be registered at a Land Office; the price per rai can be fairly high for Chanute land. Other farmland has a lower deed and is more realistic priced, and can only be transferred between “relatives”; normally the Head-of-Village makes the agreement and sign as witness, so probably no problem to transfer name on deed when upgraded to Chanute title – lots of farmland shifts owner that way, also outside of family or relatives.

 

Look at it as good child savings; land prices will go up over time, especially over that long period of about 20 years till your daughter is not minor and can decide herself what to do with the land. In the meantime the outcome can also be saved up in for example equity with a LTF fund book in a bank, which is tax-free after 5 years holding (up to 500,000 baht a year). All made legal and with no need for a proxy limited company.

 

In my daughters case the farmland has raised about 200 percent in value over some eight years, compared to sales price of similar land close by last year – now worth 3 times the buying price – and the outcome in the fund book has made a total plus over 25 percent; the savings began about 6½ years ago and the last funds were bought this year, so also a fairly good long term investment. 

 

Edit: You can also look at this way. 8 years ago the rent was in the area of 500 baht per rai, this year still around 500 baht per rai, so it has not gone up. In the meantime land prices for farmland has in average doubled, so the outcome interest is halved, compare that to the interest on a fixed bankbook. The real profit is the rise of farmland value. If land price in average doubles over 10 years, you will have a 4-5 times higher value after 20 years, and then converted to other kind of dividend paying saving, where you get some 3-4 percent of 4-5 times the capital, it will be worth much more than the outcome of some farmland; i.e. investing 100,000 in farm land gives 1,500 to 2,000 baht outcome per year and do not rise much, whilst 100,000 x 5, 20 years later may pay 15,000 baht a year when converted to bonds or equity.

Edited August 6, 2014 by khunPer