There are multiple steps to setting up a company in Thailand as an Australian. In the previous entry in the “Setting up a Company in Thailand” series, we explored the importance of complying with the Thailand-Australia Free Trade Agreement (TAFTA) and what’s needed from you to form a strong business title.
Once you’ve decided on a name for your proposed business, you will have to move on to the next stage of the journey, which involves assigning some important roles and drafting a Memorandum of Association (MOA).
The most important roles in your company
Three important company positions must be filled during the initial registration phase, which are promoters, directors, and shareholders.
Promoters (initial shareholders)
The first positions to be filled are the company’s primary shareholders. At this initial stage, they are known as the promoters. These shareholders not only own a stake of the company, but are also responsible for conceptualizing, establishing, and registering the business.
- Promoters must be in possession of at least 1 share but are given the freedom to transfer their shares to either third parties or any currently existing shareholders.
- They also are responsible for paying any of the expenses needed to register a company.
- At least 2 initial shareholders are required for a limited liability company, but 15 are needed if the company is classified as a public limited one.
Once the company has been fully registered, all the documents have been prepared, and the business is fully operational, the promoters transfer control over the company to the directors.
Directors
At least one director is needed so the organization can function. They are responsible for running and overseeing the company so its policies, strategies, and business activities are all in line with Thai business regulations. Directors can be Thai, Australian, or a foreigner of another nationality.
There are certain guidelines to follow when appointing someone to be a director:
- The individual has to be at least 20 years of age
- Directors cannot have been deemed to be mentally incompetent
- Directors cannot be currently bankrupt
Shareholders
Thai and Australian nationals (as well as foreigners of other nationalities) are permitted to be shareholders and manage a certain amount of shares. The number of shares available depends on what type of company is being set up.
- If a Thai company: Foreign shareholders are only allowed ownership over 49% of the company’s shares and the rest must be held by Thai shareholders. Thai companies are worth setting up for their ability to perform any kind of business activity.
- If a foreign company: Foreign investors are permitted to own up to 100% of the company’s shares. If you are establishing a foreign company, you must also apply for a Foreign Business Licence or register your new business with the Thailand Board of Investment (BOI), which involves a long and complicated process.
Preparing a Memorandum of Association (MOA)
A Memorandum of Association (MOA) is a document drafted and prepared by the company’s promoters during its registration phase. This legal document outlines the structure and objectives that your company is founded upon, providing details around the reasoning behind your business’s existence and what sort of activities it is responsible for. The document includes:
- The official name of the company
- The address of the company’s main headquarters
- The central objectives of the company
- All the business activities to be undertaken by the company
- The number and value of shares that the company will be holding
- The company’s share capital
To apply for and file a Memorandum of Association, you also need to gather and submit several documents. What you need depends on whether your company is classified as a public limited or a limited liability company.
For Public Limited Companies
- The name, address, and established objectives of the company.
- The amount and value of the current registered share capital of your company.
- The names, birth dates, nationalities, and addresses of all promoters for the company, including the number of shares harnessed by each initial shareholder.
- Evidence that the company’s purpose is to provide shares for sale to the general public.
For Limited Liability Companies
- The name, address, and established objectives of the company.
- The identification information (name, address, and age) of two witnesses overseeing the creation of the MOA.
- Proof that the company’s share capital has been divided into equal-valued shares.
- The name, address, age, and occupation of the company’s shareholders, and number of shares that have been allocated for acquisition purposes.
To prepare a Memorandum of Association, you must gather all required documentation and lodge an application with the Department of Business Development (DBD). This also involves paying a 200 THB stamp fee and a registration fee, the amount of which also depends on the company’s type:
- For Limited Liability Companies: The registration fee costs 50 THB for each 100,000 THB of registered capital. The lowest payable fee is 500 THB and the highest is 25,000 THB.
- For Public Limited Companies: The registration fee costs 1,000 THB per 1 million THB of registered capital. There is no minimum threshold and the highest payable is 25,000 THB.
After filing a Memorandum of Association with the DBD for a foreign company, you also need to provide information surrounding the names, addresses, and occupations (nationality is not required if hosting a limited liability company) of the company’s directors.
Seeking Assistance
Registering and setting up a company in Thailand is very different from launching one in Australia and there are many rules here that are confusing.
To streamline and simplify this process, consult Siam Legal International’s Thai corporate law team to ensure you have the 3 essential roles and the statutory meeting covered. Our dedicated business lawyers have over 20 years of experience aiding Australians and other foreign clients in overcoming challenges faced during the company establishment process.
We have the expertise to guide you through crafting an MOA and provide concrete advice on how to find the ideal directors, shareholders, and promoters for your company. Contact Siam Legal and reach out to our team today to get started.
Our next entry in this series will focus on organizing a statutory meeting and writing up the Articles of Association (AOA), as well as how to set up a General Meeting of Shareholders.
