Apart from being one of the South-east Asia's most sought after tourist spots, Thailand, acknowledged as the 'Land of Smile,' has been attracting business men, investors, and western traders even from centuries to conduct innovative businesses here. In Thailand, primarily three types of business organizations can be formed such as sole proprietorship firms, partnership firms, limited companies, and joint ventures. In this article, further discussed is regarding the nature of each of these categories of business.
Sole Proprietorship Firms - This type of business is perhaps the simplest as well as the most common type of business conducted in the country. As the name indicates, this type of business is run by a single individual. A sole proprietor could conduct a business either under his own name or under a trade name. Among the benefits of starting sole proprietorship firms are easy to start as well as manage, limited operating expense, minimized legal tangles, minimized financial risk, and tax advantages.
Partnership Firms - In the country, three types of partnership firms could be set up, such as,
- Registered Ordinary Partnership - In this case, the partnership is regarded as a legal entity, which is separate as well as distinct from the individual partners
- Unregistered Ordinary Partnership - In contrast to registered ordinary partnerships, in this type of partnerships, each of the partners is jointly as well as wholly liable for all of the partnership's obligations
- Limited Partnerships - In Thailand, all of the limited partnership firms must be registered. One of the features of this type of business is that liability of individual partner is limited to the amount of capital that has been contributed to the business
Joint Venture - In the case of joint venture business firms, a group of persons, either natural or juristic, enter into an agreement in order to conduct a business together. Al though this type of business set ups are not recognized as a legal entity as per the Civil and Commercial Code, its incomes are subject to corporate taxation under the Revenue Code. This in turn categorizes it as a single entity.
Limited Companies - In Thailand, there are three types of limited companies such as private limited companies, public limited companies, and limited partnership companies.
- Private Limited Company - This type of limited company is much popular among the foreign investors. The laws as well as procedures in connection with the setting up of a private company are governed by the Civil and Commercial Code, the Revenue Code, and the Accounts Act.
Setting up of a private limited company in the country include certain procedures such as reservation of corporate name, which must not be identical to other corporate firms' names; filing of a Memorandum of Association with the Business Development Office, covering the name of seven promoters, capital information, and requirements; convening a statutory meeting; registration of company; and obtaining a income tax identity card as well as number from the Revenue Department within 60 days of the incorporation of the company.
- Public Limited Company - In order to set up a public limited company, there must be at least 15 promoters. The procedures with regard to setting up of the company are governed by the Public Company Act. Likewise, public could be invited to subscribe shares only as specified by the Securities Exchange Act B.E. 2535.
- Limited Partnership Company - This primarily includes two categories such as partners with limited liability and partners with unlimited liability. In the case of partners with limited liability, the liability of partners, as the name indicates, is restricted to the amount that he has invested in the business. On contrary, in the case of partners with unlimited liability, the partners are liable for every obligation of the partnership.
Let it be any type of business, certain things are to be taken into consideration prior to starting a business. First of all, determine your business goals. The next step is to choose a business that goes with your business requirements.
Further, a host of law firms are in the scenario to render you a plethora of services to deal with the legal procedures with regard to the formation of a business firm in Thailand. Among the services they offer in connection with starting of a business are company registrations, compliance as well as company administration, foreign business registrations, and general corporate consulting.
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