Starting a Thai Company

[jimmybee74]

Aussie. I know that motorcycle rental is a "Thai" thing, but I also know other people who are doing it legally.

I guess I would not be getting a work permit simply based on "renting motorcycles", but more as a "general manager/web developer" for said company.

[williamgeorgeallen]

Aussie. I know that motorcycle rental is a "Thai" thing, but I also know other people who are doing it legally.

I guess I would not be getting a work permit simply based on "renting motorcycles", but more as a "general manager/web developer" for said company.

you will need to have alot of motorbikes to cover the cost of running a business with a foreign work permit. i am not trying to be a negative nancy but what you are trying to do is almost impossible. remember to have a business you need to buy/rent a property and keep it staffed with 4 thais. ontop of that you will not be able to talk to your customers or touch the motorbikes or it will be perceived you are working and taking a job away from a thai national. if you are in competition with a thai then forget it. a foreigner i know was renting out bikes in competition with one of his ex employees. the ex employee just told the cops what he was doing and the cops turned up with some flat bed trucks and confiscated his bikes. people think businesses in thailand are easy, unless they have had one.

i would say the elite visa is a far better option for anyone under 50 to stay in thailand. far simpler and cheaper than having a business. if you cant afford the elite visa which works out at only 100 000thb (about 3 000 USD) per year then go home and come back when you do.

Edited May 7, 2016 by williamgeorgeallen

[seancbk]

Aussie. I know that motorcycle rental is a "Thai" thing, but I also know other people who are doing it legally.

I guess I would not be getting a work permit simply based on "renting motorcycles", but more as a "general manager/web developer" for said company.

you will need to have alot of motorbikes to cover the cost of running a business with a foreign work permit. i am not trying to be a negative nancy but what you are trying to do is almost impossible. remember to have a business you need to buy/rent a property and keep it staffed with 4 thais. ontop of that you will not be able to talk to your customers or touch the motorbikes or it will be perceived you are working and taking a job away from a thai national. if you are in competition with a thai then forget it. a foreigner i know was renting out bikes in competition with one of his ex employees. the ex employee just told the cops what he was doing and the cops turned up with some flat bed trucks and confiscated his bikes. people think businesses in thailand are easy, unless they have had one.

i would say the elite visa is a far better option for anyone under 50 to stay in thailand. far simpler and cheaper than having a business. if you cant afford the elite visa which works out at only 100 000thb (about 3 000 USD) per year then go home and come back when you do.

The only problem with that is a Thai Elite Visa does not allow you to work and earn money.

How many people under 50 can afford to stop working with a minimum of say 30 million baht in the bank? (assume they are 45 and will live to 80 years that means they need cash to cover the next 35 years, personally I'd need a lot more than 30 million)

[williamgeorgeallen]

Aussie. I know that motorcycle rental is a "Thai" thing, but I also know other people who are doing it legally.

I guess I would not be getting a work permit simply based on "renting motorcycles", but more as a "general manager/web developer" for said company.

you will need to have alot of motorbikes to cover the cost of running a business with a foreign work permit. i am not trying to be a negative nancy but what you are trying to do is almost impossible. remember to have a business you need to buy/rent a property and keep it staffed with 4 thais. ontop of that you will not be able to talk to your customers or touch the motorbikes or it will be perceived you are working and taking a job away from a thai national. if you are in competition with a thai then forget it. a foreigner i know was renting out bikes in competition with one of his ex employees. the ex employee just told the cops what he was doing and the cops turned up with some flat bed trucks and confiscated his bikes. people think businesses in thailand are easy, unless they have had one.

i would say the elite visa is a far better option for anyone under 50 to stay in thailand. far simpler and cheaper than having a business. if you cant afford the elite visa which works out at only 100 000thb (about 3 000 USD) per year then go home and come back when you do.

The only problem with that is a Thai Elite Visa does not allow you to work and earn money.

How many people under 50 can afford to stop working with a minimum of say 30 million baht in the bank? (assume they are 45 and will live to 80 years that means they need cash to cover the next 35 years, personally I'd need a lot more than 30 million)

i am your average joe shmo. i am 42. i worked the last 20 years. i have my house and one rental property paid off back home. i can easily live on that income. if i did it i doubt i am the only one. i have a business here but it only really give me enough income to cover my kids and their mum. i see people under 50 trying to start businesses to get visas to stay in thailand. pointless. again if you cant afford an elite visa and you are under 50 then there is no point being here.

[pacosvillage]

This reply is mainly for us U.S. Citizens.

Any opening of a business in Thailand may or may not be fraught with pitfalls, and graft. And how you do it will be tough regardless of situation.

But, Americans should check with the local embassy about capitalizing on the Amity Treaty, and first step is to know if the Treaty is still in force and not under focus of PM and his people for cancellation. If that turns out to confirm treaty is still applicable for us, then there is a process in US Embassy and in Thai government to apply for Treaty applicability verification, and company creation plan. More info than that should come from official source, not me, but start thinking on that question if you want to open business in Thailand.

Amity, in a loose translation give U.S. business people ( from the little I know not offerred to most other countries, but because US allows THais to open and fully own and run a company in US, it gives a quid pro quo) the ability to open a company and own 100% of shares and decision making ownership. You still need the overpriced lawyers and accountants in your business, and you commit to a quota of employee positions based on some trigger (maybe revenue or something like that). But you don't get stuck with having to marry to have a wife partner. Again, get the fact and clear on what the treaty provides, then react, but sniff it out.

Treaty article in wikipedia: https://en.wikipedia.org/wiki/Treaty_of_Amity_and_Economic_Relations_%28Thailand%E2%80%93United_States%29

Edited May 8, 2016 by pacosvillage

[fletchsmile]

i would advise to anyone to avoid starting a company in thailand. having said that i have one. i am a 49% share holder, my lawyer is 25% and the mother of our 2 kids is 26%. my company does not have alot of assets and the mother from my kids has a vested interest in keeping the company running as she gets her monthly sallary from it. the lawyer gets quite a bit of work from doing the books etc so hopefully they wont make problems. again, i would strongly advise you dont start a company in thailand. also you should be budgeting for a minimum of 150K thb per year for your work permit and visa. that is a bare minimum, and does not take into account additional payments to the police or immigration.

While your company remains small with modest profits the lawyer owning 25% doesn't seem a major issue, and this sort of arrangement can seem quite beneficial to you as well as the lawyer/accountant, particularly in early days.

The risk with it though is that if you grow your business and it becomes larger and successful, and acquires real value. Then you'll find a strong chance that the nice lawyer/ accountant expects a lot more. Giving someone a 25%-49% share of a THB 2 mn business doesn't seem a big deal at the time and looked at by many as simply a cost of doing business. When that same business becomes worth THB 20mn or THB 200mn etc it's a different ball game.

Of course if you've no plans to do that or are just using it for work permit/ convenience / small profits it's fine.

I'd prefer having the share ownership structure reflecting real contributions to the company. If all the lawyer/accountant does is a bit of advice here and there, and prepare the books, then just contract them to do that and pay them for it accordingly. No need to give them a sizeable element of shares.

[fletchsmile]

OP, here is the simple explanation to your question:

1.

It takes 3 persons as shareholders to open a Thai company limited. Thai nationals – which can be one person only – need to own 51 percent of the shares. Preferred shares are allowed – i.e. one preferred share gives the holder 10 votes, whilst an ordinary share allow one vore only – however, if the preferred shares give a foreigner control over the company, it's not the intention of the Law, but (to my knowledge) not yet tried at Court.

2.

A shareholder, or a non shareholder, can be member of Bord of Directors and sign for the company, unlimited or with limitations. A member of the board do not need a Work Permit, as long as the board member don't perform any active work. Signing an annual statement (or the like) is not considered work, but signing for example bank papers is work.

3.

To obtain one Work Permit for an alien (farang/foreigner) the company limited need a shareholder capital of minimum 2 million baht. Furthermore (in most cases) 4 Thai employed for each foreign worker, and often one full year annual statement. You will need to consult a lawyer to specify your need in the actual case, as it will depend of company activity and demand for workers with special qualifications.

4.

In principle a foreigner can never obtain full control over a Thai company limited, unless you are American citizen, then you will fall under the Thai-American Amity Treaty. You can read more here.

Above 1 to 3 has been done before.

FYI, I'm shareholder for more than 10 years, with 49 percent of the shares in a Thai company limited.

Wish you good luck with your plans...

Like your post.

Just on the first point though: For the preferred shares I'd prefer to do it the other way round. Give the preferred shares limited voting rates and a fixed (but reasonable) dividend payment. Say one vote for every 10 shares or even non-voting preference shares. These are owned by the Thai party. You as the foreigner keep the ordinary shares and entitlement to variable dividend based on profits. The dividend on shares is the other important part to consider in addition to ownership/control

The Thai shareholder legitimately has invested in shares which pay a fixed dividend at a decent rate, which can be demonstrated to be a commercial transaction.

You have control, and entitlement to the majority of profits if it starts making real money. Your shares as ordinary shares have normal voting rights.

As you highlight giving yourself special/extra rights might be seen as deliberately circumventing the spirit of the law. This way round your rights are normal. The Thai shareholder has reduced rights but it is a legitimate arms length transaction so they get a good fixed rate dividend to compensate.

Effectively gives the same ownership control, but if as you say it's ever challenged I think this is easier to defend, and both classes of share make sense commercially for their owners.

[williamgeorgeallen]

i would advise to anyone to avoid starting a company in thailand. having said that i have one. i am a 49% share holder, my lawyer is 25% and the mother of our 2 kids is 26%. my company does not have alot of assets and the mother from my kids has a vested interest in keeping the company running as she gets her monthly sallary from it. the lawyer gets quite a bit of work from doing the books etc so hopefully they wont make problems. again, i would strongly advise you dont start a company in thailand. also you should be budgeting for a minimum of 150K thb per year for your work permit and visa. that is a bare minimum, and does not take into account additional payments to the police or immigration.

While your company remains small with modest profits the lawyer owning 25% doesn't seem a major issue, and this sort of arrangement can seem quite beneficial to you as well as the lawyer/accountant, particularly in early days.

The risk with it though is that if you grow your business and it becomes larger and successful, and acquires real value. Then you'll find a strong chance that the nice lawyer/ accountant expects a lot more. Giving someone a 25%-49% share of a THB 2 mn business doesn't seem a big deal at the time and looked at by many as simply a cost of doing business. When that same business becomes worth THB 20mn or THB 200mn etc it's a different ball game.

Of course if you've no plans to do that or are just using it for work permit/ convenience / small profits it's fine.

I'd prefer having the share ownership structure reflecting real contributions to the company. If all the lawyer/accountant does is a bit of advice here and there, and prepare the books, then just contract them to do that and pay them for it accordingly. No need to give them a sizeable element of shares.

there is a common trend in these discussions that you should not give any share to your lawyer or anyone else who does not contribute anything to your company. by law you have to allocate 51% of share to thai nationals. so who do you allocate theses shares to? i would always say never allocate these shares to any thai you are emotionally involved with, e.i. your girlfriend. dont mix business with pleasure, what little pleasure you get from having a thai girlfriend is just going to be ruined with arguments over money. i broke this rule when i had my 2 half thai kids as their mum gets about half of the income from the business and it is in her interests to keep it running as it is now. i will probably used the other half of the money the business makes to school my kids here until i move back to nz. has worked for the last few years but it may backfire at some point, not the end of the world as i do not rely on my business for my living expenses.

now the next point i want to make is just because you put shares in someones name does not mean they necessarily get paid any share of the profits. my lawyer who is also my accountant get plenty of business from doing accounting/book keeping visas etc to keep things going the way they are.

the next point i want to make is it does not really matter whos name the shares are in as most businesses simply do not make enough to cover the large amount of expenses involved in running a company with a foreign work permit.

start a business here as a hobby buy dont rely on it for income. if you need income go back and work in the west where there are fewer hassles and it is more profitable. after a few years of running a business here you will most likely be sick of it. on the bright side at least you will have a wealth of advice to dispense to other thai visa members on why trying to make money in thailand will probably just make you hate the place.

[kovaltech]

I normally do not post anything on TV but I can't stand it anymore ... You definitely can start a business in Thailand and own 100% percent of it even as a non-American! I suggest you talk to a lawyer instead of asking on a forum such as this one...

ok, you lured me in....

No, you can't

[kovaltech]

what if my wife opens a company on 100% her name, or my friends do...

getting the staff, pay by the books and give me a decent salary ?

With wp of course... as i am the "expert"

Same time i play the bank... loan them the money and get a fair intrest rate...

Possible or not ?

[syke1912]

How is a board member not performing work, thus not needing a work permit?

Board members have the most important job in a corporation and are surely considered workig..

[noodle]

No, It is not that simple. The Thai's will have control over the Company and can do as they wish.

You need shareholder protection. To achieve this find a reputable lawyer.

Strictly the use of Thai's as nominees is illegal, and a hot topic right now with the DBD.

'find a reputable lawyer'

What you actually want is an honest and competent lawyer.

Let me know if you find one. I've used 5 and it hasn't happened yet.