Key Takeaways
- A Thai limited company (บริษัทจำกัด) is the most common structure for substantive business operations in Thailand
- Thailand’s Foreign Business Act (FBA) restricts foreign-majority companies from entering certain business categories — reviewing Annexes 1–3 is a critical first step
- The incorporation process itself is relatively straightforward; the substantive challenge lies in determining FBA classification and designing the shareholding structure accordingly
Introduction
Part 2 examined representative offices and branch offices. Part 3 focuses on the Thai limited company (บริษัทจำกัด) — the most widely used structure for companies seeking to conduct substantive business in Thailand — and the Foreign Business Act (FBA) that governs what foreign-majority companies may legally do.
What Is a Thai Limited Company?
Legal Character
A Thai limited company is an independent legal entity incorporated under Thailand’s Civil and Commercial Code. It is broadly equivalent to a Japanese kabushiki kaisha or a UK/US private limited company. Key characteristics include:
- Legal independence: Shareholders’ liability is limited to their capital contribution
- Thai shareholder requirements: In FBA-regulated business categories, Thai nationals must generally hold more than 50% of the shares (unless an FBA exemption such as BOI promotion applies)
- Minimum three shareholders: Thai law requires at least three shareholders at the time of incorporation
Incorporation Process (Overview)
| Step | Description | Approximate Timeframe |
|---|---|---|
| 1. Company name reservation | Check name availability with the DBD | A few days |
| 2. Memorandum of Association | Draft and register MoA (objectives, capital, shareholders) | 1–2 weeks |
| 3. Share subscription and payment | Founding shareholders contribute capital | A few days |
| 4. Registration | File incorporation with DBD | 1–2 weeks |
| 5. Tax and social security registration | Register for CIT with Revenue Department; register with Social Security Office | 1–2 weeks |
| 6. Bank account opening | Open corporate bank account at a Thai bank | Several weeks (bank-dependent) |
Total timeline is generally 2–3 months.
Registered Capital
There is no statutory minimum capital requirement. In practice, THB 1 million or more is a common starting point. Note that work permit requirements for foreign employees often tie to registered paid-up capital — as a general indicator, THB 2 million per foreign work permit holder is commonly referenced, though exact requirements vary by circumstances.
The Foreign Business Act (FBA)
Overview
Thailand’s Foreign Business Act B.E. 2542 (พระราชบัญญัติการประกอบธุรกิจของคนต่างด้าว พ.ศ. 2542) restricts the business activities of foreign nationals and foreign-majority companies (those with more than 50% foreign ownership) in Thailand. It organizes restricted activities into three Annexes.
Annex 1: Absolutely Prohibited Business Categories
Foreign entities are completely prohibited from engaging in these activities, regardless of any license or approval.
| Examples |
|---|
| Newspaper publishing, radio broadcasting, television |
| Rice farming, crop farming, orchard farming, forestry |
| Thai arts, crafts, and traditional skills |
| Trading in Thai antiques or national heritage items |
| Manufacturing of Buddhist religious items (certain types) |
| Land trading |
Annex 2: Restricted — Cabinet Approval Required
Foreign entities may enter these categories only with a Foreign Business License (FBL) and Cabinet-level approval.
| Examples |
|---|
| Businesses related to national safety or security |
| Businesses involving Thai arts, culture, or traditions |
| Businesses with significant impact on natural resources or environment |
Annex 3: Restricted — Foreign Business Committee Approval Required
Annex 3 is the most commercially significant list and covers a broad range of service and trade activities. A Foreign Business License (FBL) from the Foreign Business Committee (within the DBD) is required.
| Annex 3 Category | Examples |
|---|---|
| Professional services | Accounting, legal, architectural, engineering services |
| Advertising | Marketing and PR agency services |
| Retail and wholesale (certain thresholds) | As defined by relevant regulations |
| Hotel business (excluding restaurants) | Accommodation operations |
| Construction (certain types) | Construction that Thai technicians can perform |
| Brokerage and agency services | Agent or broker activities |
FBA Assessment: A Decision Framework
Assessing whether your intended activities are FBA-regulated involves the following considerations:
flowchart TD
A[Identify Business Activities] --> B{Does Annex 1 apply?}
B -- Yes --> C[Entry not permitted]
B -- No --> D{Does Annex 2 apply?}
D -- Yes --> E[FBL + Cabinet approval required]
D -- No --> F{Does Annex 3 apply?}
F -- Yes --> G{Is BOI promotion available?}
G -- Yes --> H[FBA exemption — 100% foreign ownership possible]
G -- No --> I[Obtain FBL or structure with Thai majority shareholders]
F -- No --> J[100% foreign ownership permitted]FBA Exemption Through BOI Promotion
For companies in BOI-promoted categories (manufacturing, high-tech, logistics, medical, digital, etc.), BOI promotion can provide an exemption from FBA Annex 2 and 3 restrictions, enabling 100% foreign ownership. Part 4 of this series covers the BOI regime in detail.
Shareholding Structure Design
Thai Majority Shareholding
In FBA-regulated categories, if foreign ownership exceeds 50%, an FBL is generally required. Many Japanese companies therefore structure their Thai subsidiary with a Thai national or Thai entity holding more than 50% of the shares.
The critical legal point here is that Thai shareholders must be genuine beneficial owners. Using nominee shareholders — Thai individuals who hold shares in name only — is illegal under Thai law and has been subject to increased enforcement. If discovered, the consequences extend to both the company and the shareholders involved.
Genuine Joint Venture Partners
When working with a genuine Thai joint venture partner, a well-drafted Shareholders’ Agreement is important for preserving the foreign investor’s practical control over business operations. This includes provisions on director appointment rights, veto rights over key decisions, and exit mechanisms. Part 5 of this series addresses joint venture structures in more detail.
Summary
A Thai limited company is the standard vehicle for operating a business in Thailand. The incorporation process is not particularly complex; the real work lies in determining whether the intended business falls within FBA-regulated categories and designing the shareholding structure accordingly. BOI promotion (Part 4) and joint venture arrangements (Part 5) are two key tools for managing FBA constraints.
Next in this series — Part 4: “Thailand’s BOI Investment Promotion Regime | How to Access 100% Foreign Ownership and Tax Incentives”
For questions on Thai limited company incorporation or FBA regulations, please feel free to contact us using the form below. Thai law matters are handled in coordination with JTJB International Lawyers’ Thai-qualified attorneys.
This article is for general informational purposes about Thailand’s legal system and does not constitute legal advice under Thai law. For specific matters, please consult a Thai-qualified legal professional. Our firm works in collaboration with JTJB International Lawyers’ Thai-qualified attorneys.