How to set up a company

. Lawyer Pattaya, Thailand. Set up a new company or close an old one is a very delicate matter. The importance of a competent lawyer in Thailand to properly set up a company with a clear translation in your language is fundamental.
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CORPORATE LAW SECTION 

How to properly set up a company
How to close (liquidate) a company

 Company Formation

  Setting up a new company in Thailand is a very delicate matter. Our law firm highly specialised in company-set up in full respect of the law, offering maximum guarantees to our clients.

We set up commercial companies to safely manage your business and companies entitled to own land and houses.
 The Social Lawyers Co. Ltd.

 
 
 
What you should know before establishing a new company ltd. 
From an article of Dr. Carlo Filippo Ciambrelli
 
Yes you have read well "Her Highness" because that is what  "She", the Company Ltd, actually  is: an absolute majesty and a virtual wife for any foreigner (and not only) that intends to start a business or to invest in Thailand.

 Continuous reading from setting up a new company

...We will follow you step by step from A to Z and at very competitive prices. 
How to safely by land and houses in a company-name mantaining full control of it.
Company audit and regularity contol.
Modifications and changes of share-holders, director, company's statute,  
Company litigations.

Continuous reading from the Virtual Wife

...She can in fact legally permit you to live, to work, to have a regular income, to get a long term visa (even if you are younger then 50 with no wife in flesh and bones, or children and you are not a student), to buy land and houses etc. etc.
In other words she has an incredible power. I dare say that she is a person, (even though just a "legal person" to be precise) with a magic wand.
As any "person" She has a birth-day (the day of registration), a head (the director/directors) arms and legs (the share-holders), a heart (the social capital) and a soul (the constitution act).
 
Here a few examples of what Her Highness the Co.Ltd can legally do for you: get into business, buy almost any kind of goods including land and houses, sign contracts, open bank accounts, import and export, apply to obtain licences, just to mention a few.
 
But, unfortunately, there is always a "but"; in fact, just as any person, she can be a "good" person or a "bad" person or, if you prefer a rightful and indulgent highness or a bad tempered tyrant.
It depends only on you.
 
In fact, even though, in mere theory, anybody can establish a new company, in no fields of the law, the assistance of an expert of absolute trust, competence and experience could be more important, no matter the reason why you want to establish it.
The very moment you start a new company, you are practically marrying a foreigner who speaks a language you might not understand and the future of your business, your land or your house, will very much be in her hands. Problems might not come immediately, or so it seems, but I would like to remind everybody that the DSI (Department of Special Investigations) is deeply looking into any possible irregularities and, in some cases, the consequences can be very harsh and painful.
 
Here is what you should absolutely be aware of: 
- The Company Director. With a few limits  is the real boss. He will decide and dispose, sign checks, close contracts, substitute share holders etc. He takes, of course, full responsibility for his acts in front of the majority of the share holders, but in case of misdoing or mistakes it could be far too late to repair the damages. The Pattaya Provincial Court daily time-board shows as the majority of court litigations usually taking place between private citizens and companies.
- The Shareholders. As it is well known, a foreigner can (for now at least, a new law might be approved soon) own no more the 49% of the total shares.
It goes alone that, as in any "company" or party the "quality" of your partners will make a great difference. Being extra careful in choosing them and seeking the previous advise of an expert is imperative.
- The Responsibility. A Company Ltd.  by definition will be responsible only with its capital in case of legit operations. Nevertheless it should be well noted that in case of infringements of the law, the directors will be responsible with all their assets, leaving alone the fact that the responsibility for crimes is always "ad personam", personally belonging to the doer. 
- Heritage. In case of decease your inherits can be the beneficiaries of the shares regularly registered in your own name only. Again it's obvious how important is to choose the right ones.
-  the social capital corresponding to the investment of any shareholders should be regularly deposited in their bank accounts. 
To establish a company with more then 4.999.999 baht, bank statements, showing that all shareholders have the related funds, are strictly necessary and requested by the administrative authorities.
-Work permit.  To obtain a work permit the minimal capital is of 2.000.000 baht per every foreigner, plus four Thai employees.
Only a Thai director or co-director or an other foreigner already in possession of a regular work permit can apply for a new one.
 
After all this you might start wondering if starting a private personal business with Her Highness the Company is really a good idea.
Well, in my humble opinion it is in most circumstances, provided that you proceed with extreme consciousness and most important with the help and advise of a trustful expert. In no field like in this, Do-it-yourself or using an improvised help just to initially  safe a few bath  might be a greater mistake than marying in most cases to a real bad "wife" and transforming the pleasure of living, working, doing business or simply buying a house in Thailand in a true nightmare. 
 
 
 
COMPANY SET UP B.O.I REGISTRATION
 
 
Before considering to register a company with the B.O.I. (Board of Investment) you should consider, together with the benefits, the several "disadvantages" which may include:
a complicated setup process, the need for comprehensive, accurate accounting, numerous BOI investigations and... read more

- Complicated Setup process

To apply for a BOI registration can take more than six months despite the optimistic "promises" of several law firms due to the enormous quantity of required documents, the bureaucracy involved, and several visits to the BOI quarters.
The extra work, time, and resources will imply that Thai law firms and attorneys are obliged to charge more to apply for a BOI registration than they would do for a regular company limited registration in Thailand.

- Investigations

The Revenue Department carefully examines a company promoted by the BOI to ascertain that you're applying your tax incentives solely to the fields of your business that are related to the BOI promotion.
A wrong answer to even only one of the investigation questions could entail misunderstanding and a court trial. In such a case, you would need to use a lawyer in Thailand to assist you in proving that you are not responsible for any misdoing.
To avert this from occurring, you should:
Understand the details of your BOI promotion
Be sure your business is operating legitimately on the light of the BOI promotion
Use only an accountant with of proven experience with BOI promoted companies

- Bookkeeping

The benefits that you may acquire from the BOI apply exclusively to specific areas of interest inside your company, not the whole company.
This involves severe complications with your company's accounting. The auditor shall describe and distinct income and expenses amongst the part of your company that's fostered by the BOI and the part that's not.
Furthermore, the B.O.I. will ask for fiscal statements every three months, six months, one year, and two years, depending on your promotion duration. The auditor shall answer a lengthy list of accounting and tax-related topics, carefully and in particular.
This entails that you shall pay a higher cost for accounting-services compared to the fees and expenses that you would pay running a non-BOI registered and promoted company.
You would need to hire a licensed Thai accountant proficient in reporting finances for BOI supported companies.


- Applying for B.O.I. registration

Applying for BOI registration could take more than six months with the help of an expert lawyer in Thailand.
In theory, you could apply yourself if you are accustomed to the Thai legal system, you read and write Thai, and you can wait for a long time(!)

- Filing the Applications

You must fill out the specific applications (forms) for your company's business classification. You can get the necessary forms from the BOI's headquarters in Bangkok.
You must answer questions on your company's status, the shareholders, a detailed investment plan, product expansion, targeted customers, technology shift, and likewise.
The BOI also demands the following information:
the total amount of the registered capital and a detailed specific plan on how you will manage the finance in your enterprise.
They will also demand information concerning the details of your project, the type of software or machinery you are planning to use, and the whole process involved.
You shall provide the number of Thai and foreign employees you will hire and their annual salaries; in some cases, the BOI suggests a minimum wage for key personnel per year and a training plan for Thai employees, specifying preparation courses and a method for technology transfer, features of the control team, including their abilities and skills.
You must specify the expected income and costs of your business for the first three years of operation.

You must specify the expected income and costs of your business for the first three years of operation.

Knowledge transfer is a crucial point for the B.O.I. Therefore you need to write on the applications of how you intend to transfer knowledge to your Thai employees.
Three questions to remember:
Three essential topics to remember and consider:
1) What teaching methods is your company going to practice?
2) Which technologies is your company going to teach to your Thai employees?
3) What will the timeframe be for your company to transfer such knowledge to the Thai employees?

Any inaccuracy in properly filling the application-forms will entail the obligation to return to the BOI several times, re-submit the forms, or even have your application rejected.
 
- Questioning BOI Phase

Once the forms have been completed and submitted, you are required to contact the BOI authorities within ten working days. The Authorities will then set an appointment for an interview with you.
Formality is of great essence. Therefore, you should be formally dressed for all the interviews made.
All interviews are mostly done with a single BOI officer (who will be the one in charge of your case); however, in some cases, more than 1 BOI officer may be present.
The purpose of these interviews is to give a chance for the BOI officer to ask you questions regarding the specifications of your company and to clarify all the details that were unclear in your application form.
Once you have completed the first interview, a second one may be requested. The second interview will be several times much more intimidating as there may be a chance that a government officer (not part of the BOI) who works in the same field as your proposed business present. To give you an example, should you apply the BOI for a software or e-commerce business category, you may be requested to have an interview with the representatives of Thailand’s Digital Economy Agency that is working under Thailand’s Ministry of Digital Economy and Society.


- Approval BOI Phase

Once all the initial requested interviews are complete, the BOI officer in charge of your case will examine your application form in accordance with the companies investment capital. Should the officer feel that there are corrections or amendments to be made, he or she will contact you to clarify the details and specifications. Once the BOI officer in charge believes that the application form is ready, he or she will have it submitted for evaluation. Please note that this procedure is for companies with less than 80 million Thai Baht capital.
For companies that hold 80 million to 750 million baht capital, a sub-committee will handle your case.
For companies that hold more than 750 million baht capital, the BOI’s board of directors and sub-committee will handle your case directly.
Once the application form has been submitted, the BOI will require a period of 40 to 90 days before providing a response whether to approve or reject your application. If your application has been approved, the BOI will let you know when you can start operating your business under BOI.
Should your application be rejected, your will most likely have to make major amendments to your business plan. Once adjusted, you will have to reapply for BOI that meets the BOI’s criteria.


 - Getting Accepted with BOI

Once the BOI approved your application form, you will be required to visit the BOI headquarters and request for the approved documents, including the promotion acceptance form.
The promotion acceptance form shall then be submitted within 1 month. If you do not submit it within the time frame specified, you will most likely lose your BOI promotion.


- Registering Your Company With BOI

Once you have been given the green light to proceed with your business under BOI, you shall then register a company with the Department of Business Development (DBD).
If you have already registered a company prior to the approval of the BOI promotion, you shall then use that registered company.


Applying for Visas and Work Permits Under BOI

Once you have registered your company with the DBD, you may apply for work permits or visas at the One-Stop Service Center for Visas and Work Permits which is located at Chamchuri Square.


- Getting Your BOI Certificate

The last procedure for acquiring your BOI promotion, after having registered a company and submitting your promotion acceptance form, you shall register for a company account. Such registration may be done through the BOI’s e-investment platform.

- Utility/Manpower Requirements Form BOI

The BOI will give you a period of 6 six months to register a company and submitting the promotion certificate and various documents. After submitting the above-mentioned documentation, the BOI will issue your certificate within 10 working days. Should you not be able to register your company within the given period of time, you may request an extension of up to 4 months. Such extension time will be deduced by the BOI authorities.


- Application Fees BOI

There are no direct government fees for BOI’s application. However, you may have to pay for the time consumption and resources spent.


- Keeping Your Investment Promotion Active BOI

Your obligations and responsibilities do not end once you have acquired the BOI promotion. You must meet all the requirements and obey all the restrictions listed on your investment promotion certificate. Such requirements are based on the type of business. Should you fail to comply with the listed requirements and restrictions, the BOI may terminate your promotion.


- Submitting Your Permission to Operate (BOI)

Once you have acquired the investment promotion, after three years you are required to submit the following to the BOI:
1. Permission for Operation form
2. Company affidavit
3. Financial documents
4. List of company shareholders

It is necessary to submit the above-mentioned documents as the BOI will need it to ascertain that you are operating your business in accordance to the agreed plan, including the amount of investment that is stated in the investment promotion certificate. During this process, the BOI may dispatch inspectors to your company’s office. Should you encounter any issues that may prevent you from submitting the Permission for Operation form, the BOI may extend the deadline.


- Benefits of BOI Promoted Businesses

All exclusive benefits acquired from the BOI for workers, lands, machinery, raw materials, and taxes, may be applied only for your BOI promoted business.
You are restricted from selling, renting, or transferring machinery and properties owned by your company with BOI promotion, unless otherwise approved by the BOI themselves. In the case of using these benefits for your other businesses that have not acquired the BOI promotion, there will be a possibility that your investment promotion certificate is terminated permanently.


- Foreign Employees Under BOI

One of the great benefits of acquiring the BOI promotion is to not be limited to how many foreign employees you may employ. Of course, the number of employees shall always be in accordance to the size and need of your company.
You must also prepare documents explaining why your company needs each of the foreign employees.
Before employing a foreigner for your BOI promoted company, you must request for an approval from the BOI by using the E-Expert system. Moreover, foreign employees must educate and transfer their knowledge to the Thai employees (Technology Transfer).
For every foreigner employed, you must provide a document specifying all the details on how your foreign employee will transfer his knowledge to your Thai employees.
This process accounts for when your foreign employees must renew their visas too.
When requesting for approval to employ a foreigner, you must include within the documents the purpose and time frame of “transferring technology”. Once approved, you will receive a letter of approval by the BOI. With this letter, there should be no issues in your employee’s application. Should the BOI reject your request, you may continue re-submitting (no limit).
“Important remark”; acquiring a BOI promotion does not give your company the authority to hire only foreign employees as the purpose of the BOI is to transfer foreign knowledge and technology to Thai nationals. Therefore, the number of Thai employees employed shall be reasonable.


- Dismissing and Loss of Foreign Employees Under BOI

Should you dismiss or encounter a situation where a foreign employee resigns, you must notify the BOI within 15 days. This process can be done through BOI’s e-Expert system.


- Financial Report Under BOI

From the date of receiving your BOI promotion certificate, you must make a financial report to the BOI every 6 months, 12 months, and 24 months. Moreover, every 31st of July, you shall file annual financial reports. It is very important to find a good accountant who has experience with BOI promoted companies. You may hire a non-experienced accountant, but should he make any mistakes within the financial reports, you may be penalized by the BOI.


 - Updating Company Information Under BOI

You must inform the BOI of the following practices:
1. Change of office location
2. Change of company address
3. Change of the company’s list of shareholders
4. Closing your BOI promoted company (business)
All updates shall be made directly at the Board of Investment headquarter. 

Note: should you close your business temporarily for more than 2 months, a BOI approval is needed.


- Termination of Investment Promotions (BOI)

Should you terminate your BOI promotion, you must inform the BOI of such intention. Should you terminate your BOI promotion before receiving Permission for Operation, you will be required to refund all exempted tax and import duties (including interest) to the government. You may also be liable to various fines.
If you already have received the Permission for Operation, you shall pay only for import duties for imported machinery.
Note: Once terminated, your tax and non-tax incentives provided by the BOI promotion will be cancelled immediately, and you may no longer be exempted from import tax. Impeachment of Company Director – Procedure (Exctract)

The BOI (Board of Investment) Regulations Thailand
B.O.I. is a promotional policy created in 1954 when the government declared its Industrial Promotion Act.

 

Further on...

The government subsidizes and promotes incentives for foreign businesses, to open and operate in the Kingdom of Thailand.
With the Board of Investment law, the government guarantees not to hinder or nationalize foreign companies. Thailand has been the first country in Asia, offering such an opportunity for foreign investments.
The Headquarters of the Investment Board is a
department of the Prime Minister's Office.
The primary duties and responsibilities
are the promotion of investment.

The State shall not nationalize the
activities of the individual being promoted.

A new operation in competition with the promoted
individual shall not be conducted by the State.

The selling of goods or services of the same nature or identical to those
created or assembled by a promoted individual shall not be monopolized by the State.

The State shall not check the price of the products or commodities of the promoted activity,
nor shall the promoted individual be allowed to export the products or commodities of the promoted activit

 

HOW TO CHANGE THE DIRECTOR OF A THAI COMPANY LTD. WITHOUT HIS/HER CONSENT
(Director Impeachment)


Section 1173 1. Minimum 1/5 of shareholders (20%) must send a request (registered mail) to the Director indicating the reasons. The Director shall set up EGM of  the shareholders  within 30 days.
Section 1174 2. After 30 days, should the Director fail in setting up the meeting the share holders can call for a EGM them self with ads of  call  for EGM in local newspapers twice and send registered mails to every share holders present in the Share Holders List minimum 7 days before the meeting.
Section 1182  5. Vote. Open Vote (show hand): 1 person 1 vote. Secret Vote: 1 Share 1 vote point.
Section 1188  6. The shareholders can be represented by proxy to join the meeting and to vote.  (Minimum two meetings).
DBD(Department of Business Development) will send a letter to the old Director to inform him/her about the vote and the changes. The old director might oppose within 30 days.
Only after an appropriate examination or luck of any oppositions the director can be changed.
 
In few words here the real minimum time necessary to close the impeachment:  30 days first letter sent +7+7 days - call for EGM meeting by shareholders +14 days from the first meeting to the 2nd meeting +30 days for DBD’s consideration time.
In total at least 88 days


HOW TO REGISTER A NEW COMPANY IN HONG KONG
Given that persons who land in Hong Kong as visitors are normally not allowed to establish or join in any business during their stay in Hong Kong, IRD will require businesses with non-resident sole proprietor or partners to provide further information (see Sample Questions) with a view to ensuring that the particulars, including the date of commencement, stated in the relevant application form are correct. Please note that any person who submits false information shall be guilty of an offence and liable to a fine of $5,000 and to imprisonment for 1 year under the Business Registration Ordinance.
 
How to Register 
•    To register a business, you have to:
◦                     complete a prescribed application form
◦                     pay the business registration fee & levy; and
◦                     produce your proof of identity.
•    Levy is collected for the Protection of Wages on Insolvency Fund.

 

abour Department.