Owning shares in a Thai company as a foreigner is, as in most countries, possible. However, it is normally not possible to own 100 percent of the company. The majority of the shares must be held by Thai citizens. Only recently, it was common that foreigners established Thai companies in order to acquire land.

A Thai company must have a minimum of seven shareholders. This means that if you are the only foreigner in a Thai company, the number of Thai shareholders must be six or more. Concerning the shares, only 49 percent can be owned by foreigners. This is, however, not the case when it comes to the voting rights. The reason is that the Thai law allows dividing the shares into ordinary and preferred shares. Normally the preferred shares have only one-tenth of the voting right of the ordinary shares. This system is not unique for Thailand — this is how it works in most parts of the world. It is through the system of ordinary and preferred shares that many multi-national companies can control their Thai subsidiaries, even though these companies are formally Thai. The implication is that the Thai ownership in these cases has been reduced to something of a nominee role. Thaksin, Thailand’s former prime minister, has been accused for having used such a company set-up in Kularb Kaew that sold Shin Corp to Singaporean Temasek Holding. It is against this background that the Thai military regime has proposed changes to the Foreign Business Act (read more here).

A significant number of companies in Thailand have foreign shareholders, but very few are fully owned by foreigners. This is a natural outcome of the above-mentioned Foreign Business Act, which prescribes that virtually all business areas in Thailand shall be reserved for Thai companies only. A company is deemed Thai in case the majority of the shares are owned by Thais. However, there are a few exceptions where permission to foreign ownership has been granted — mainly in the export and manufacturing sectors. The strict legislation on foreigners’ possibilities to make business in Thailand is the toughest throughout the ASEAN region (read more about the ASEAN cooperation here).

Only recently, it was quite common for foreigners to start a company in Thailand in order to acquire land and own it through the company. This was a way of getting around the legislation where foreigners are not allowed to own land in Thailand. Earlier practise, however, made clear that foreigners could only own 39 percent of the shares if the company was to acquire land. There is a large number of Thai companies with foreign co-owners where the only real activity is to own a property. Since the military coup in September 2006, the growth rate of such new companies has been significantly reduced. Against the proposed changes to the Foreign Business Act, this model — in order to undertake investments in Thailand — is no longer recommended (read more under Investing in Thailand).

If you are considering establishing a company in Thailand, some good advice is to contact an experienced and serious lawyer before you make the final decision. The fees for setting up a Thai company (the most common form is Co., Ltd.) start somewhere around 20,000 baht, but normally ends up around 50,000 baht or more. For a foreigner to work in the company, it is required that the company apply for a work permit. One condition is that the company has at least two million baht in registered and paid up share capital. A work permit is valid for one year, after which it has to be renewed. The work permit is linked to a Non-B visa (see further here).

Should you be interested in knowing more about how to set up a Thai company, please visit the homepages of the Department for Business Development and the Thai Revenue Department at www.dbd.go.th and www.rd.go.th, respectively. For further instructions, you can also contact us under Contact.