Of the types of company structures in Thailand, the Limited Company is among the most favorable for foreign business owners because of the limited liability on debts and losses of the owners of the company.
The capital of the Limited Company is divided into shares and the liability of the shareholder is limited to the amount he infused.
Under Section 1098 of the Civil and Commercial, the Memorandum of Association of the company must have the following characteristics:
- The unique name of the company must contain the word “Limited” and should be placed at the end of the name.
- The location of the company inside the Kingdom.
- The objects of the company.
- A declaration of the shareholder’s limited liability.
- The amount of share capital that the company proposes to register and its divisions into shares of a fixed amount.
- The promoters’ names, address, occupation and signature. Their number of subscribed shares must also be stated.
Although the liability of the shareholders of the company is limited, the liability of its directors may be unlimited. Such unlimited liability will expire two years after the date of a director’s cessation in holding his office.
Other characteristics a Limited Company may have:
- In case of bankruptcy or death of a shareholder, may register another person as a shareholder provided the dead or bankrupt shareholder’s surrendered his share certificate.
- If allowed by the regulations of the company that a director can own shares, the shares he is holding must be on the name certificate.
- That the company must be managed by a director or directors under the control of the general meeting of shareholders and in accordance to the regulations of the company.
- A shareholder’s general meeting must be held inside 6 months after the date of registration and subsequent ordinary meetings shall be held every 12 months.
Essentially, there are two types of Limited Companies and these are:
- Private Limited Companies
- A company registered under this subtype is governed by the Civil and Commercial Code.
- Requires at least seven shareholders.
- Its constitutive documents include the Memorandum of Association (Articles of Incorporation) and Articles of Association (By-laws).
- If prescribed on the articles of incorporation or articles of association, the directors’ liability can be unlimited. Moreover, they manage the limited company as afforded by the firm’s charter and by-laws.
- The private limited company may be wholly owned by foreign nationals but in company operations reserved for Thai nationals, the alien-owners’ participation is limited up to 49 percent only.
- Registration fee is 5,500 baht per million baht of capital.
- Public Listed Company
- A company registered under this subtype is governed by the Public Company Act.
- Requires at least 15 shareholders.
- The shareholders are not allowed to sell/transfer their shares within the prescribed period of two years.
- The board must have at least five members with Thai nationals comprise at least half of the total.
- Is subject to comply with the prospectus, approval and other requirements, offer shares, debentures and warrants to the public and may apply for its securities be listed at the Stock Exchange of Thailand (SET).
- Private Limited Companies