What a Private Company Limited Thailand Structure Actually Requires
A private company limited Thailand law recognizes is the most common vehicle for foreign investment here — but it comes with specific shareholder, director, and foreign ownership requirements worth understanding first.A “private company limited” is a “juristic person,” meaning it is a fictional “person” in the sense that the law assigns to it most of the rights and obligations of a natural person under the Civil and Commercial Code. It is the most common vehicle for foreigners to do business and invest in Thailand.
A minimum of three natural persons is required to “promote and form” a private company limited. These “promoters” become the company’s first shareholders, and the company must maintain at least three shareholders at all times. Each share must represent a minimum investment of five Thai Baht, meaning the minimum theoretical share capital of a private company limited is fifteen Thai Baht.
The law requires that a private company limited be managed by one or more “directors.” Directors are not required to be shareholders, but unlike many jurisdictions, Thai law requires that all directors be natural persons. Unless otherwise restricted by laws regulating specific businesses, a director may be a non-Thai and is not required to reside in Thailand.
There are several reasons for this structure’s popularity, but perhaps the main one — shared with similar entities worldwide — is the limitation of investor liability to the amount of capital contributed to the company. This is the origin of the word “limited” (abbreviated “LTD”) in the name.
A private company limited is subject to corporate income tax. It is also required to collect “value added tax” on the goods or services it provides if its initial annual income from the business exceeds THB 1,800,000. In some instances, the company may instead be required to collect a “specific business tax” rather than VAT. The company is also required to withhold tax at various percentages and remit it on behalf of certain services it pays for.
As a general rule, non-Thais may own up to 49% of a company’s share capital and may hold a majority of non-Thai shareholders. However, certain business activities require a lower non-Thai shareholding percentage, along with an equal or majority Thai shareholding. On the other hand, there are notable exceptions that allow for 100% foreign shareholding of a private company limited, particularly for businesses granted promotion by Thailand’s Board of Investment.
Understanding these requirements for a private company limited Thailand foreign investors typically choose is essential before incorporating — particularly the interplay between the 49% foreign shareholding cap and the various exceptions that may allow full foreign ownership depending on the business activity involved.