Setting up a Thai limited company is one of the most common and effective ways for both Thai nationals and foreign investors to conduct business in Thailand. A limited company provides a formal legal structure that separates the company’s liabilities from those of its shareholders, ensuring financial protection and long-term business stability. Understanding the structure, formation process, and legal framework governing Thai limited companies is crucial to ensuring compliance and successful business operations.
This article explores the key structures of a Thai limited company, including its legal foundation, shareholding requirements, management hierarchy, capital structure, and registration procedures under Thai law.
1. Overview of the Thai Limited Company
A Thai limited company (บริษัทจำกัด) is governed primarily by the Civil and Commercial Code (CCC) of Thailand. It is similar in concept to a private limited company in common law jurisdictions. The company is a separate legal entity from its owners, meaning it can own property, enter contracts, and be sued or sue in its own name.
The structure of a limited company is designed to encourage entrepreneurship while protecting shareholders from unlimited liability. Shareholders are only liable to the extent of their unpaid shares, providing financial security and clear ownership rights.
There are two main types of limited companies recognized under Thai law:
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Private Limited Company – most common for small and medium enterprises (SMEs) and foreign-owned businesses.
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Public Limited Company – for larger businesses intending to raise capital from the public or list on the Stock Exchange of Thailand (SET).
This article focuses on private limited companies, as they are the predominant structure for both domestic and foreign investors.
2. Legal Framework and Registration Authority
The registration of a Thai limited company is regulated by the Department of Business Development (DBD) under the Ministry of Commerce (MOC). The key governing laws include:
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Civil and Commercial Code (CCC), Sections 1096–1273 – outlines company formation, structure, and operations.
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Foreign Business Act B.E. 2542 (1999) – governs foreign shareholding limits and restricted business activities.
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Revenue Code of Thailand – covers tax obligations, VAT, and corporate income tax requirements.
All company documents, shareholder information, and corporate changes must be filed with the DBD to maintain legal standing.
3. Shareholding and Capital Structure
A cornerstone of the Thai limited company structure is its shareholding composition and capital allocation. These determine ownership control, voting power, and compliance with Thai business laws.
Minimum Shareholders
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A Thai limited company must have at least two shareholders (previously three before the 2022 amendment).
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Shareholders can be individuals or corporate entities.
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Each shareholder’s liability is limited to the value of their subscribed shares.
Thai vs. Foreign Shareholding
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If foreigners hold 50% or more of the company’s shares, the company is considered a foreign company under the Foreign Business Act (FBA).
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Foreign-majority companies can engage only in business activities not restricted under the FBA, or they must obtain a Foreign Business License (FBL) or qualify under an exemption (such as the U.S.–Thailand Treaty of Amity or BOI promotion).
Registered Capital
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There is no official minimum capital requirement for a Thai-owned company.
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For companies with foreign shareholders, the DBD typically expects THB 2 million per foreign work permit or THB 3 million per restricted business activity.
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At least 25% of registered capital must be paid up at incorporation.
The capital structure ensures transparency and adequate funding for operations while determining the company’s tax and investment profile.
4. Company Management Structure
A Thai limited company’s management hierarchy is relatively straightforward but must adhere to legal and procedural requirements under the CCC.
Directors
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Managed by at least one director, who may be Thai or foreign.
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The director(s) are the company’s authorized representatives, empowered to act on its behalf.
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The director’s authority must be clearly defined in the company’s Articles of Association (AoA) and company affidavit.
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The director’s signature authority (such as “two directors jointly sign with the company seal”) is registered with the DBD.
Shareholders’ Meetings
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The Annual General Meeting (AGM) must be held within four months after the end of the fiscal year.
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Shareholders vote on key issues such as dividends, auditor appointments, or changes to company structure.
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Voting rights are proportional to the number of shares held.
Auditors
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Every Thai company must appoint a certified external auditor annually.
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The auditor reviews financial statements for submission to the DBD and Revenue Department.
This management structure ensures accountability, transparency, and compliance with Thai corporate governance standards.
5. Memorandum of Association (MOA) and Articles of Association (AoA)
The Memorandum of Association (MOA) and Articles of Association (AoA) are foundational documents that define the company’s legal identity and internal governance.
Memorandum of Association (MOA)
The MOA contains essential company details, including:
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Company name (in Thai and English)
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Registered office address
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Business objectives
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Registered capital and share structure
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Names and details of promoters/shareholders
Articles of Association (AoA)
The AoA outlines the rules governing internal operations:
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Procedures for director appointments
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Voting rights and meeting protocols
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Dividend distribution
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Share transfers and restrictions
Both documents must be filed with the DBD during registration. Any amendments require shareholder approval and re-registration.
6. Registration Procedures
Registering a Thai limited company involves several legal and administrative steps:
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Name Reservation – Apply through the DBD’s online system. The name must not conflict with existing registered companies or restricted terms.
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Prepare the MOA – Outline company objectives, registered capital, and promoters.
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Convene the Statutory Meeting – Approve the AoA, appoint directors, and confirm share allotments.
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Company Registration with the DBD – Submit signed documents, shareholder list, director affidavit, and office address. Registration can be completed in 1–3 business days if all documents are in order.
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Tax Registration – Obtain a Tax Identification Number (TIN) and, if applicable, Value Added Tax (VAT) registration.
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Social Security Registration – Required if the company employs staff.
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Obtain Business Licenses (if applicable) – Certain industries (e.g., food, construction, tourism) require additional permits.
Following registration, the company becomes a juridical person under Thai law and can legally commence operations.
7. Corporate Compliance and Reporting
To maintain good legal standing, a Thai limited company must fulfill the following annual obligations:
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Annual Financial Statements – Audited by a certified auditor and filed with the DBD within one month after the AGM.
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Tax Filings – Submit corporate income tax (CIT) and withholding tax returns in accordance with the Revenue Code.
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Social Security Contributions – Monthly contributions for employees must be remitted to the Social Security Office.
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Corporate Changes – Any change in directors, shareholders, or registered capital must be reported to the DBD.
Failure to comply with reporting requirements can result in fines or suspension of business activities.
8. Advantages of a Thai Limited Company Structure
The limited company structure offers several advantages:
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Limited Liability – Shareholders’ personal assets are protected.
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Ease of Transfer – Shares can be transferred (subject to AoA) without dissolving the company.
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Tax Benefits – Access to corporate tax incentives and deductions.
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Professional Image – Enhances business credibility and facilitates contracts with partners and government agencies.
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Access to Work Permits – Enables foreign directors and employees to obtain work permits under company sponsorship.
These benefits make the Thai limited company the preferred structure for most entrepreneurs and investors.
9. Key Considerations for Foreign Investors
Foreign investors must consider several strategic and legal factors before registration:
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Ensure compliance with the Foreign Business Act (FBA) to avoid restricted activities.
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Use legitimate Thai shareholders — nominee shareholders are illegal under Thai law.
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Consider Board of Investment (BOI) incentives for 100% foreign ownership and tax benefits.
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Seek legal and accounting assistance for due diligence, document preparation, and compliance.
Proper structuring from the outset helps avoid legal complications and ensures long-term success.
Conclusion
The structure of a Thai limited company provides a solid, flexible, and legally secure foundation for conducting business in Thailand. By understanding its components — from shareholding and management to registration procedures and compliance — entrepreneurs can confidently establish and operate a company within the Thai legal framework.
For foreign investors, navigating ownership restrictions and compliance requirements requires careful planning and professional guidance. Engaging a qualified Thai lawyer or corporate service provider ensures that your company’s structure aligns with your business objectives and remains compliant with Thai law.
A well-structured Thai limited company not only facilitates smooth operations but also enhances credibility, legal protection, and long-term business growth in Thailand’s dynamic economic environment.