One of the hardest aspects of being an entrepreneur here is going through the hassles of setting up your business in Thailand. Establishing business ventures in Thailand is very different from Australia because of the many differences in corporate law.
Company registration is a process requiring a lot of tight planning to ensure that your strategy is in line with the myriad rules and regulations dictated by Thai law. Meeting all these requirements can be difficult, so seeking guidance before starting out is paramount to avoiding serious problems down the line.
This is a series of articles revolving around guiding Australians like yourself through the process of setting up and registering a company in Thailand. The first entry of this series will examine the complexities around the Australian TAFTA and formulating a company name.
Thailand-Australia Free Trade Agreement (TAFTA)
The Thailand-Australia Free Trade Agreement (TAFTA) is a formal agreement enabling the creation of Australian-owned companies in Thailand with certain benefits not afforded to most other nations. The TAFTA eases the journey of establishing a company and empowers trade and investment opportunities by:
- Mitigating or removing tariffs and trade barriers between both countries.
- Granting unique incentives to Australian investors to encourage economic activity and contribute to Thailand’s growth.
Companies owned by Australian business owners must still comply with the Foreign Business Act (FBA). As a result, it is recommended that companies under the TAFTA acquire a Foreign Business Certificate (FBC) as it would significantly boost their chances of being approved by the Department of Business Development that falls under the Ministry of Commerce.
However, there are certain conditions to satisfy:
- You can apply for a FBC while under the TAFTA if your business is classified under a specific sector. However, there are only a limited number of sectors available.
- There are only 3 sectors* in which Australians can own 100% of a business’s shares. For the rest, they can have only 60% of the ownership.
- Companies covered by the TAFTA must follow FBA capital restrictions and any restrictions unique to their sector. Otherwise, a minimum capital of 2 million THB is needed.
- You still need to meet eligibility requirements to apply for an FBC under the TAFTA:
- The company has to be either a partnership or a private limited company, established under Thai law.
- The director(s) are of Australian or Thai nationality (only Thai directors are allowed if the firm is a partnership).
- The firm must include over 50% shareholding ownership by Australians and shareholding percentages must match the TAFTA sector requirements.
*Sectors where Australians can own 100% of company shares include:
- Construction of public utilities or transportation (needing special equipment, machinery, technology, or expertise)
- General management consulting for Regional Operating Headquarters (ROH), its associated business, or its foreign branch
- Wholesale and retail services (which accompany the products of a company registered by TAFTA)
Deciding on a name for your company
Having a unique name for your company is necessary for people to identify it. However, when choosing a name for your Thai business, you can’t just pick any name you want.
The name of your company must fulfill certain requirements:
- You must include the label “Limited” at the end of your company’s name.
- Your company’s name must be registered in Thai and English.
- The name of your company must differ from that of a previous partnership or already established business.
- Some terms are prohibited or can only be incorporated under certain circumstances (for instance, the term “Thailand” can only be used if enclosed by brackets).
- You can use the same name across multiple businesses, but you have to be able to distinguish them by adding a descriptive word to it (such as “Holdings Ltd”).
You must register your company’s name with the Department of Business Development. List at least 3 options for names to streamline the process, ranked from most to least desired. After being initially approved, your company name will be reserved and valid for at least 30 days, during which you need to start registering your business.
Seeking assistance
Launching a company in Thailand as an Australian can be a risky endeavor if you’re unfamiliar with Thai business law. To maximize efficiency and reduce your stress, hire Siam Legal International’s Thai corporate law team to ensure your new business is set up correctly and swiftly.
With over 20 years of experience helping Australian and other international clients bring their business plans to life, our dedicated corporate lawyers have the knowledge to effectively guide you through each step of the process. Our expert services and valuable advice ensure you can easily overcome the complexities of Thailand’s business registration process. Contact Siam Legal and reach out to our team today to get started.
Keep on the lookout for our next entry in this series of posts on establishing a business as an Australian in Thailand. It will cover the Memorandum of Association (MOA) as well as the importance of having directors and shareholders and the Thai laws governing them.
