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The simplest and easiest sort of company for foreigners to form with a small business is a Thai Limited Company. In Thailand, a Limited Company is a company with up to 100 shareholders, who share the same business purpose and is formed with a Capital divided into equal shares.
Getting started
To set up a company, you must first have the memorandum that can be acquired at the registration office. To properly register, you are required to provide the authorities with details of your company and list a minimum of seven shareholders (who can either be Thai or foreign nationals or both). At least seven days after you first approach the department, you can call a shareholder's meeting to reach an agreement on the purpose of your business and set up the company's operational rules.
Having agreed on the purpose of your business, you can then apply for business registration at the same department. If you cannot agree on company rules, you can refer to those stated in the Civil and Commercial Code's partnership and companies section.
Shareholders and Chairperson
A Limited Company's shareholders can be either Thai or foreign nationals or both, but the percentage of shares held by foreign national plays a significant role in determining the nationality of your company, which may impose serious limitations on the company's rights, such as landownership.
If less than 49% of your company's shares are held by foreigners, your company is considered a Thai company. However, if foreign nationals hold more than 49% of the shares, your company is a foreign company.
The significant differences between Thai and foreign companies operating in Thailand lie in their rights to buy and own properties or other businesses. It is therefore important, especially for those in real estate and development businesses, to know and remember that unless your company is Thai, you are restricted in the ability to possess and obtain land and property in this country without an exemption granted by the government.
Foreign companies are also restricted to certain activities and to proceed with certain operations the company will have to apply for permission from the government. In such instances, applications will be considered case by case. They will also face tough scrutiny and strict restrictions on their right to operate and ability to run their business. These companies will be treated in the same way as foreign nationals seeking jobs in Thailand.
If you are registered as a Thai company, you are automatically granted the right to purchase and own properties and other business and will be treated the same way as a Thai citizen.
However, according to new legislation that has recently come into effect, the Land Department's staff are now required to thoroughly investigate your Thai shareholders' sources of income. Thai shareholders in a company wishing to purchase properties in Thailand have to declare their income and provide the authorities with evidence that proves their ability to co-invest with other foreign shareholders in the same company. Only those successful in convincing the authorities are granted the right to purchase and possess land. Companies with approval from the Land Department can then proceed with their applications for land title deeds or other certificates of use and possession.
Rights of Ownership
Usually we are looking for land title deeds giving right of ownership not possession. Here there are basically three title deeds:- Chanote, Nor Sor 3 and Nor Sor 3 Gor. The most sought after titles are the Chanote and the Nor Sor 3 Gor as both these titles have legal documents of Rights of Ownership and can be sub-divided into smaller plots and planning permission and any such legal acts can be carried out immediately on the land. The only difference with the Nor Sor 3 is that although legal documents are issued for the land it has not been accurately surveyed which can lead to problems in verifying actual land area. And if any legal act is to take place on this land it must be published for at least 30 days.
As we have been saying all the way through if it is not clear 100%, seek the advice of a legal professional in this field, as there are also many other issues that are important to consider such as servitude, access and rights of way.
Land Measurement & Survey
Land in Thailand is measured in Rai, Ngan and Talang Wah.
1 Wah= 4 sqm
1 Ngan= 100 Wah or 400 sqm
4 Ngan= 1 Rai or 1600 sqm
In comparison to Western Standards:
2.50 Rai= 1 Acre
6.25 Rai= 1 Hectare
Law firms in Koh Samui
• Bluementhal Richter and Sumet
• Immediate Enerprises and Consultant
• Manit and Associates
• McEvily and Collins
• NSP Laws Firm
• Petcharat Law Firm and Business
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