Under Thai Law majority share ownership by foreigners in a Thai company, although not forbidden, is severely restricted . As a result most non-Thais will opt fora majority Thai shareholding (51%) in their company. Exceptions are made for American Nationals (under the Thai American Treaty of Amity) or businesses withBOI (Board of Investment) privileges (mostly manufacturing plants) in which case 100% foreign ownership is allowed subject to certain conditions. The Thaimajority shareholder(s) does, however, not necessarily have to be a director or have any signatory rights for that matter. A non-Thai may in theory engage inbusiness in the form of a single proprietorship, limited company, limited partnership, a joint venture, a branch of a foreign corporation, a representative office ora regional office. Practically speaking however, as explained in the following paragraphs, only the last five options are worth considering.

Partnership

The three types of partnership in Thailand differ principally in the liability attached to each.

An unregistered ordinary partnership has partners who are jointly liable, without any limitation on the partnership's total obligations. A new partner becomesliable for all obligations incurred by the partnership before or after his association with the partnership. This type of partnership is not a legal entity and is subjectto taxation as if it were an individual.

A registered ordinary partnership is a juridical entity having a separate and distinct personality from each of the partners by virtue of its registration with theCommercial Registrar. A registered ordinary partnership is treated as a corporate entity for tax purposes. A limited partnership is one in which there are one ormore partners whose individual liabilities are limited to their respective contributions and one or more partners jointly liable without any limitation on all theobligations of the partnership. A limited partnership is taxed as a corporate entity.

Private limited company

The Thai private limited company is basically similar to what is commonly referred to as a corporation. In Thailand a corporation must have at least threeshareholders. In theory any companymay be wholly owned by aliens (as Thai law calls all foreigners). However, in those business activities reserved for Thaisnationals (the other 99.99%), an alien’s participation is generally limited to 49%. However, this obstacle is routinely circumvented by the use of Thai nomineeswho sign blank share transfer certificates at the start-up of the company (usually for a small fee).

The liability of shareholders is limited to the amount of their contribution to the capital. The liability of the directors, however, can be unlimited if so stipulated inthe articles of incorporation.

Although there is no required minimum level of capitalization, the private limited company’s capital must be sufficient to accomplish its objectives. All of theshares must be subscribed to and at least 25% of the subscribed shares (authorized capital) must be paid up. Shares must have a minimum value of 5 Baht,there must be a minimum of three shareholders and the issuance of non-voting stock, common or preferred, is not allowed.

A public limited company with an authorized capital of 2 billion Baht may, after five years, be turned into a public limited company by offering shares to the public.

Joint Venture

A joint venture may be described in accordance with general practice as a group of persons (natural and/or juristic) entering into an agreement in order tocarry on a business together. It has not yet been recognized as a legal entity under the Civil and Commercial Code but is nevertheless taxable as a corporationunder the Revenue Code.

Branch of a foreign corporation

A company incorporated under foreign laws may establish a branch office to do business in Thailand. It is important, however, to clarify beforehand whatconstitutes income subject to Thai tax as the Revenue Department may consider revenues directly earned by the foreign head office from sources withinThailand as subject to Thai tax. Working capital must be 5 million Baht and brought into the country. The branch is permitted to operate as such for a periodof five years.

Representative or Regional office of a foreign corporate

A foreign entity may establish a representative office in Thailand to engage in limited non-revenue-earning activities such as research, marketing etc. Workingcapital must be 5 million Baht and brought into the country. The representative office is permitted to operate as such for a period of five years.