Starting A Business

[BlimeyCharlie]

Hello folks.

I used to run my own business in the UK which i left behind. If i wanted to start a business here want do i need. I understand that i have to have so many Thai members and that i will own 49% if im right. Do i need to input a certain ammount of money first or can i just start register company name and open a bank account. This is not to buy land which i have no interest in doing.

Reason being i have been asked to start some projects in the UK. Just one will keep me going here for a year or more.

Many Thanks

[poorfarang]

This is what you need

[Sunbelt Asia]

Hello folks.

I used to run my own business in the UK which i left behind. If i wanted to start a business here want do i need. I understand that i have to have so many Thai members and that i will own 49% if im right. Do i need to input a certain ammount of money first or can i just start register company name and open a bank account. This is not to buy land which i have no interest in doing.

Reason being i have been asked to start some projects in the UK. Just one will keep me going here for a year or more.

Many Thanks

In order to set up a limited company in Thailand, the following procedures should be followed:

1/ Reservation of your Corporate Name

The name to be reserved must not be the same or similar to the name of any other companies. There are names that are not allowed and the name reservation guidelines of the Commercial Registration Department in the Ministry of Commerce need to be observed. The approved corporate name is valid for 30 days. No extension is allowed.

2/ File a Memorandum of Association

A Memorandum of Association must be filed with the Commercial Registration Department. This has to include the name of the company that has been successfully reserved, its business objectives, the capital to be registered, the province where the company will be located, and the names of the seven promoters. The capital information must include the number of shares and the value per share. At the time of formation, the authorized capital, although partly paid, must all be issued.

Although there are no minimum capital requirements, the amount of the capital should be of a respectable amount, and adequate for the business operation to function healthily.

3/ Convene a Statutory Meeting

Once the share structure has been decided, a statutory meeting needs to be called, during which the bylaws and articles of incorporation are approved, the Board of Directors are nominated and an auditor selected. A minimum of 25% of the value of each subscribed share must be paid.

4/ Registration

Within three months of the date of the Statutory Meeting, the directors must submit their application to establish the company.

5/ Tax Registration

Within 60 days of incorporation, or within 60 days of the start of operations, businesses liable for income tax must obtain a tax identity card and a number for the company from the Revenue Department.

Depending on the industry, you may need or not need Thai investors. If it manufacturing, export, hotel management you do not need any Thai investors.

If it is on the restricted list for a foreign- own company, then you can apply for the Foreign Business License or BOI (Board of Investment) and may not need Thai investors. You could also join with an American under the Amity treaty and not need Thai investors.

If you do need Thai investors, they must invest more cash or non-cash assets than the foreigners. If it is cash than the source of the money is traced. If it is a cash loan to a Thai company, it must be from a Thai to make it "Thai cash" and the Thai shareholding has to be more 51% versus 49%. Up to now, this is how the Foreign Business Act defined a foreign- held company. It is currently being debated even if those criteria were met to be classified as a Thai company; if a foreign director is on the board or if the dividends are less for Thais than the foreigners, if this is also considered a foreign held company.

In other words, goal posts can be changed soon because of new interpretation. Some feel if this happens with management control needing to be all Thai nationals, formidable competitors such as Dubai, Viet Nam, Cambodia, India and China will be the top five places foreigners will be looking to invest other than Thailand. We feel this control issue will impact foreign direct investment and will give these other countries the opportunity to eat Thailand's lunch. In the long term, it may force Thailand to get rid of these restrictive laws. Based on a recent editorial in the Bangkok Post, this may be the new push.

http://www.bangkokpost.com/230806_News/23Aug2006_news20.php

EDITORIAL

Regulations need to reflect reality

A new investigation panel led by the Commerce Ministry plans to hold its first meetings today as part of an investigation into the status of Kularb Kaew and its shareholdings in telecom giant Shin Corp. Temasek Holdings, the investment arm of the Singapore government, set up Kularb Kaew and two other holding companies as part of its takeover of Shin Corp in late January. Authorities are looking into whether Kularb Kaew, now 68%-owned by Sino-Thai businessman Surin Upatkoon, is a legitimate Thai company, or is in fact a nominee for Temasek. The question has profound implications for both Shin Corp and Thailand's business community _ if Kularb Kaew is deemed a nominee, Shin would be in potential violation of the Foreign Business Act and the Telecommunications Act, and could face fines or revocation of its operating licences for violating the 49% foreign shareholding limit for telecom operators. The investigation is being nervously watched by foreign businesses, as authorities are not looking only at the nationality of the shareholders to determine the status of Kularb Kaew, but the more subtle question of management control and the flow of funds from dividends paid by Shin to the shareholders.

Legal experts say if Kularb Kaew is indeed deemed a nominee under a new, expanded definition, so are tens of thousands of other joint ventures that operate with foreign shareholders. Indeed, Shin's largest competitor in the mobile phone sector, Dtac, is majority-controlled by Norway's Telenor through holding structures not unlike that used by Temasek and other companies. A cursory glance at the shareholder registrations for Thailand's listed companies shows that nominees are commonplace. PTT Plc, the largest and most profitable company on the Stock Exchange of Thailand, boasts among its top-10 shareholders innocuous names such as HSBC (Singapore) Nominees, State Street Bank and Trust, Nortrust Nominees and Chase Nominees. All four entities represent leading international financial institutions holding shares on behalf of anonymous foreign clients.

Nominees serve several purposes. For one, nominees allow the actual investors to hide their identity from public scrutiny. Institutional and individual investors alike often take pains to mask their interest in a public company due to market sensitivities. While not necessarily keeping with the principles of good corporate governance and transparency, nominees do help investors maintain a degree of secrecy from competitors regarding their investment strategy. Nominees also serve a more questionable purpose, by helping companies and individuals skirt tax and foreign shareholding laws.

The Foreign Business Act lists dozens of professions banned or restricted to foreigners for three broad reasons: national security, in the case of agriculture and mass media; the need to protect traditional Thai art, culture and handicrafts, such as in the production of Thai musical instruments; or industries where Thais simply cannot compete with foreigners, such as accounting, law, architecture and engineering.

Foreign shareholding restrictions are an anachronism in today's globalised economy. Yes, most countries maintain limits on foreign shareholding in key industries. But the fact is that limits do more harm to consumers than good, as restricted competition shelters domestic producers from market pressures to improve their products, services and prices. Protectionist policies all too often are politically motivated to protect domestic special interest groups, rather than based on sound economics.

Proponents of foreign investment restrictions argue that there is a real need to ensure that so-called sensitive industries, such as telecommunications, financial services or energy, are held in local hands in the interests of economic and national security. But the nationality of a company's shareholders offers no guarantee of a company's competence or commitment to customers and country. Independent regulators also exist to ensure that business operators comply with labour, environment and consumer protection rules. Allowing nominees to continue to operate unchecked only perpetuates the fiction that Thailand's outdated laws remain relevant. It would better serve the public if we strengthen the hand of regulators, liberalise our markets and revamp our laws to reflect the realities of today's world.

----------------------------------------------------

No matter what, we have contingency plans to deal with what ever goal post is thrown at foreign investors to protect their minor shareholdings if they do not qualify under Amity, BOI, and Foreign Business License such as amending the by-laws, where the stamp/seal of the company is located and is required for any signing of the documents. You in other words as a foreigner can give control to Thai management, but can have some type of reverse control, by requiring anything happens in the company, must require the foreigner shareholders vote as well.

To be frank, it is much easier and better for Thailand just to revamp the laws and open trade up. Because some investors no matter how much they love Thailand will invest elsewhere if you make it so complicated.

www.sunbeltasiagroup.com

[BlimeyCharlie]

Hello folks.

I used to run my own business in the UK which i left behind. If i wanted to start a business here want do i need. I understand that i have to have so many Thai members and that i will own 49% if im right. Do i need to input a certain ammount of money first or can i just start register company name and open a bank account. This is not to buy land which i have no interest in doing.

Reason being i have been asked to start some projects in the UK. Just one will keep me going here for a year or more.

Many Thanks

In order to set up a limited company in Thailand, the following procedures should be followed:

1/ Reservation of your Corporate Name

The name to be reserved must not be the same or similar to the name of any other companies. There are names that are not allowed and the name reservation guidelines of the Commercial Registration Department in the Ministry of Commerce need to be observed. The approved corporate name is valid for 30 days. No extension is allowed.

2/ File a Memorandum of Association

A Memorandum of Association must be filed with the Commercial Registration Department. This has to include the name of the company that has been successfully reserved, its business objectives, the capital to be registered, the province where the company will be located, and the names of the seven promoters. The capital information must include the number of shares and the value per share. At the time of formation, the authorized capital, although partly paid, must all be issued.

Although there are no minimum capital requirements, the amount of the capital should be of a respectable amount, and adequate for the business operation to function healthily.

3/ Convene a Statutory Meeting

Once the share structure has been decided, a statutory meeting needs to be called, during which the bylaws and articles of incorporation are approved, the Board of Directors are nominated and an auditor selected. A minimum of 25% of the value of each subscribed share must be paid.

4/ Registration

Within three months of the date of the Statutory Meeting, the directors must submit their application to establish the company.

5/ Tax Registration

Within 60 days of incorporation, or within 60 days of the start of operations, businesses liable for income tax must obtain a tax identity card and a number for the company from the Revenue Department.

Depending on the industry, you may need or not need Thai investors. If it manufacturing, export, hotel management you do not need any Thai investors.

If it is on the restricted list for a foreign- own company, then you can apply for the Foreign Business License or BOI (Board of Investment) and may not need Thai investors. You could also join with an American under the Amity treaty and not need Thai investors.

If you do need Thai investors, they must invest more cash or non-cash assets than the foreigners. If it is cash than the source of the money is traced. If it is a cash loan to a Thai company, it must be from a Thai to make it "Thai cash" and the Thai shareholding has to be more 51% versus 49%. Up to now, this is how the Foreign Business Act defined a foreign- held company. It is currently being debated even if those criteria were met to be classified as a Thai company; if a foreign director is on the board or if the dividends are less for Thais than the foreigners, if this is also considered a foreign held company.

In other words, goal posts can be changed soon because of new interpretation. Some feel if this happens with management control needing to be all Thai nationals, formidable competitors such as Dubai, Viet Nam, Cambodia, India and China will be the top five places foreigners will be looking to invest other than Thailand. We feel this control issue will impact foreign direct investment and will give these other countries the opportunity to eat Thailand's lunch. In the long term, it may force Thailand to get rid of these restrictive laws. Based on a recent editorial in the Bangkok Post, this may be the new push.

http://www.bangkokpost.com/230806_News/23Aug2006_news20.php

EDITORIAL

Regulations need to reflect reality

A new investigation panel led by the Commerce Ministry plans to hold its first meetings today as part of an investigation into the status of Kularb Kaew and its shareholdings in telecom giant Shin Corp. Temasek Holdings, the investment arm of the Singapore government, set up Kularb Kaew and two other holding companies as part of its takeover of Shin Corp in late January. Authorities are looking into whether Kularb Kaew, now 68%-owned by Sino-Thai businessman Surin Upatkoon, is a legitimate Thai company, or is in fact a nominee for Temasek. The question has profound implications for both Shin Corp and Thailand's business community _ if Kularb Kaew is deemed a nominee, Shin would be in potential violation of the Foreign Business Act and the Telecommunications Act, and could face fines or revocation of its operating licences for violating the 49% foreign shareholding limit for telecom operators. The investigation is being nervously watched by foreign businesses, as authorities are not looking only at the nationality of the shareholders to determine the status of Kularb Kaew, but the more subtle question of management control and the flow of funds from dividends paid by Shin to the shareholders.

Legal experts say if Kularb Kaew is indeed deemed a nominee under a new, expanded definition, so are tens of thousands of other joint ventures that operate with foreign shareholders. Indeed, Shin's largest competitor in the mobile phone sector, Dtac, is majority-controlled by Norway's Telenor through holding structures not unlike that used by Temasek and other companies. A cursory glance at the shareholder registrations for Thailand's listed companies shows that nominees are commonplace. PTT Plc, the largest and most profitable company on the Stock Exchange of Thailand, boasts among its top-10 shareholders innocuous names such as HSBC (Singapore) Nominees, State Street Bank and Trust, Nortrust Nominees and Chase Nominees. All four entities represent leading international financial institutions holding shares on behalf of anonymous foreign clients.

Nominees serve several purposes. For one, nominees allow the actual investors to hide their identity from public scrutiny. Institutional and individual investors alike often take pains to mask their interest in a public company due to market sensitivities. While not necessarily keeping with the principles of good corporate governance and transparency, nominees do help investors maintain a degree of secrecy from competitors regarding their investment strategy. Nominees also serve a more questionable purpose, by helping companies and individuals skirt tax and foreign shareholding laws.

The Foreign Business Act lists dozens of professions banned or restricted to foreigners for three broad reasons: national security, in the case of agriculture and mass media; the need to protect traditional Thai art, culture and handicrafts, such as in the production of Thai musical instruments; or industries where Thais simply cannot compete with foreigners, such as accounting, law, architecture and engineering.

Foreign shareholding restrictions are an anachronism in today's globalised economy. Yes, most countries maintain limits on foreign shareholding in key industries. But the fact is that limits do more harm to consumers than good, as restricted competition shelters domestic producers from market pressures to improve their products, services and prices. Protectionist policies all too often are politically motivated to protect domestic special interest groups, rather than based on sound economics.

Proponents of foreign investment restrictions argue that there is a real need to ensure that so-called sensitive industries, such as telecommunications, financial services or energy, are held in local hands in the interests of economic and national security. But the nationality of a company's shareholders offers no guarantee of a company's competence or commitment to customers and country. Independent regulators also exist to ensure that business operators comply with labour, environment and consumer protection rules. Allowing nominees to continue to operate unchecked only perpetuates the fiction that Thailand's outdated laws remain relevant. It would better serve the public if we strengthen the hand of regulators, liberalise our markets and revamp our laws to reflect the realities of today's world.

----------------------------------------------------

No matter what, we have contingency plans to deal with what ever goal post is thrown at foreign investors to protect their minor shareholdings if they do not qualify under Amity, BOI, and Foreign Business License such as amending the by-laws, where the stamp/seal of the company is located and is required for any signing of the documents. You in other words as a foreigner can give control to Thai management, but can have some type of reverse control, by requiring anything happens in the company, must require the foreigner shareholders vote as well.

To be frank, it is much easier and better for Thailand just to revamp the laws and open trade up. Because some investors no matter how much they love Thailand will invest elsewhere if you make it so complicated.

www.sunbeltasiagroup.com

Thanks for all the info

Would there be any restrictions if i was to conduct my business in the UK but to make payments in a Thai bank account. Obviously for vat and tax benefits.

I would also consider my work here but i'm not to sure if there is a call for it yet. I specialise in Smart Home Technology providing intelligent lighting, audio, cinema and cctv etc.

Thanks

[Sunbelt Asia]

Would there be any restrictions if i was to conduct my business in the UK but to make payments in a Thai bank account. Obviously for vat and tax benefits.

I would also consider my work here but i'm not to sure if there is a call for it yet. I specialise in Smart Home Technology providing intelligent lighting, audio, cinema and cctv etc.

Thanks

Are you talking about setting up the company in the Uk and having clients make payments to Thailand? I don't think the Uk government would be happy with that. They like the Vat and tax I understand.

www.sunbeltasiagroup.com

[mouse]

Thank you Sunbelt Asia fo a very informative post. I recently sent an email to your office which did not get a repsonse to as yet, however could you tell us more anout the Amity treaty as I am an Amreicna and this interests me greatly.

[lingyai]

Thank you Sunbelt Asia fo a very informative post. I recently sent an email to your office which did not get a repsonse to as yet, however could you tell us more anout the Amity treaty as I am an Amreicna and this interests me greatly.

See this post for more info on the Amnity treaty:

http://www.thaivisa.com/forum/index.php?showtopic=79891

[Sunbelt Asia]

Thank you Sunbelt Asia fo a very informative post. I recently sent an email to your office which did not get a repsonse to as yet, however could you tell us more anout the Amity treaty as I am an Amreicna and this interests me greatly.

Sorry. Which e-mail was that? Can you please resend to [email protected]

If you are a US Citizen, you can own a Thai company 100% under the US Treaty of Amity.

Working hand in hand with the US commercial department, Sunbelt will handle the complete application process for you. We are extremely experienced in setting up companies under the Amity Treaty. In fact, it has been said “Sunbelt has performed more amity set-ups than all other firms in Thailand combined. “

WHAT IS THE TREATY AND WHOM DOES IT BENEFIT?

The Treaty of Amity and Economic Relations between the United States of America and the Kingdom of Thailand was signed on May 29, 1966. This treaty allows U.S. citizens and businesses to establish a company or branch office in Thailand. Under the treaty, is permitted to do almost anything a Thai company does.

The major benefits of the Treaty are that it allows American companies to own a majority of the shares of its company, branch office located in Thailand and to receive national treatment. That is, they may engage in business on the same basis as Thais, and are exempted from most of the restrictions on foreign investment imposed by the Alien Business Decree of 1972. In return, Thais are extended reciprocal rights to invest in the U.S. and Thai businesspersons are eligible to receive U.S. visas as "treaty traders" and "treaty investors".

Under the Treaty, there are six broad exceptions. This means if the US investors are to engage in any of the following activities, National Treatment principles do not apply, and the US-held company is subject to the rules stated in the Foreign Business Act: engaging in the business of inland communications; inland transportation; fiduciary functions; banking involving depository functions; engaging in domestic trade in indigenous agricultural products; and exploiting land or other natural resources( includes holding any interest in real estate.)

On August 20th 2009 all US-owned companies operating in Thailand under the Treaty are required to comply with the same minimum registered capital rules as other foreign-held companies which generally will be 3 million Baht.

WHO IS ELIGIBLE TO RECEIVE RIGHTS UNDER THE TREATY?

To receive protection under the Treaty, the applying person(s) or business organization must be registered and established as an American sole proprietorship, partnership, representative office, branch office, joint venture, or limited company.

For a person wishing to receive protection under the Treaty as a sole proprietorship, he or she must be an U.S. citizen either by birth or naturalization.

For an applying business organization wishing to receive protection under the Treaty as a partnership, branch office, joint venture, or limited company, a majority of the shareholders and directors must be U.S. citizens either by birth or naturalization.

For an applying U.S. company that is a subsidiary to a larger, parent company, the parent or holding company also must have U.S. citizen majority ownership and management.

For an applying U.S. company wishing to invest directly in a Thai company to obtain a majority of the Thai company's shares, the majority of the owners and stockholders of both the applying company and the company to be incorporated must be (or will be, as in the case of the company to be incorporated) U.S. citizens either by birth or naturalization.

The majority of the business’s board of directors must be US or Thai individuals.

Please allow at least four to five weeks to complete the entire process. It usually takes less than one week for certification from the Commercial Service office, but registration by the Thai government can take anywhere from a few weeks to a few months.

• Because of the WTO memorandum, the Amity treaty may be stopped by the Thai government. It is currently being extended every 90 days and the next date up for renewal is September 5th 2006.

• If the treaty is terminated, it will not recognize National Treatment status of new applicants going forward.

• Some feel this termination when and if it occurs, may even apply to US-held companies previously registered under the Treaty. However as over 20 billion dollars is invested in Thailand under the Treaty, in our opinion, this option would not be chosen as the Thai economy would weaken considerably if this money exited and Thai jobs were lost.

• When the investor gets approval under the Amity Treaty it is a Business Certificate allowing him the same rights as a Thai owning a business. This Certificate is much easier to obtain than a Foreign Business License.

• We strongly advocate registering TODAY under the Treaty if you ever thought about investing in a business in Thailand.

www.sunbeltasiagroup.com