Starting a business in Thailand

Sep is so far

Hummm

Hello miss

My name is tom. Im a local thai who speaks thai and english fluently. May be there might be something i can do to help or we can work something out. Anyway drop me an email and we'll discuss.

Your regards,

Tom
[email protected]

Before you start anything, you need to decide if you are the sole owner or partnership.

If partnership, locals or foreign and how many partners.

For sure you need a reliable local staff who can act as a go between you and locals. This helps in communication when you can't speak thai.

A trust worthy local who can help you to source products and negotiate best price and terms for you. Managing your operating cost is very important. Most important is no corruption when making purchases.

If you clear this hurdle then comes registration of company as well as looking for ideal location to operate your business. Both run parallel.

Wish you the best and blessings.

Buying a Business in Thailand



What Businesses area available to buy in Thailand?

There are a broad range of businesses available to buy at any one time through-out Thailand – probably over 10,000 in Bangkok alone.  Typically, they include Restaurants and Cafes, Night-Clubs, Pubs and Bars, Hotels, Guesthouses and Hostels, Laundries, Salon's, Massage Shops and Spas, and Travel Agencies.  They can be as diverse though, as Language Training Schools, Cooking Schools, Motor Bike Rental Shops, Retail shops (furniture, clothing, sporting gear, etc), Dive Shops, Food Vans, Printing Businesses, Translation Services, Online Businesses, and much more.



Who Can Buy a Business in Thailand?

In short, anyone!  It doesn't matter if you are a Thai national or a foreigner.  It doesn't even matter if you are visiting Thailand on a Tourist Visa, or are studying in Thailand on an Education Visa.



How Do I Buy a Business in Thailand?

Businesses are generally developed and operated from LEASEHOLD premises, others are operated from FREEHOLD premises.

Common in both cases however, is that there is a value and price associated with buying ‘the business' and then, a rental situation (in the case of Leasehold), or a value and price for the Freehold property.

Businesses Operated from Leasehold Premises (most common with small and startup businesses)

A person (anyone) develops an idea and has some capital to invest.  They Lease a shop-house (for example) and they fit it out at their own expense.  They buy furniture, stock, equipment, other assets, employ staff, market and advertise the business and develop a clientele.  Assuming they do a good job, they make profit.  This is what is known as ‘the business'.  When the owner of this business wants to sell, they will offer it for sale, either privately or through an agent like Asian Business Brokers.  Because (in this example) the business is being operated from a leased premises, as a buyer, you will buy the business, AND enter into either the remaining tenure of the previous owners lease agreement, or begin a new lease agreement with the Landlord.

When you buy businesses like this as a personal investor, you will generally only be required to show your Thai ID Card and House Certificate (if you are a Thai national) or your Passport (if you are not a Thai national), and the Landlord will require copies  – much the same as when you lease an apartment or condominium in Thailand.

You can also buy businesses like this through a company structure, in which case, you will need to produce your Company Registration and allow the Landlord to copy it.


Businesses Operated from Freehold Premises (most common with larger businesses)

A person (anyone) develops an idea and has some capital to invest.  They buy an existing freehold property, or buy freehold land and develop it.  They improve the land for use, or use the existing improvements.  They buy furniture, stock, equipment, other assets, employ staff, market and advertise the business and develop a clientele.  Assuming they do a good job, they make profit.  Assuming they invest wisely, they will make a capital gain on their freehold purchase/improvements, when it becomes time to sell.  When the owner of this business wants to sell, they will offer it for sale, either privately or through an agent like Asian Business Brokers.  Assuming they are offering if for freehold sale (and not just selling the business and leasing the property – as described previously), you will buy both the business and the ownership of the land (as improved).  There will be no requirement for you to pay rent.

When you buy businesses like this, you will either need to buy it as a Thai national, or under a Thai registered company.  If you are not a Thai national, you can incorporate a Thai registered company (the legal form of the company can be sole proprietorship, an ordinary partnership - registered or not, a limited partnership, a representative office, a regional office, a branch office, a joint venture, or a limited company), but this article does not deal with this topic, other than to say that the limited company option is the common form.  For more information about company setup, special privileges to American citizens under the ‘Treaty of Amity and Economic Relations', and company law, please seek assistance from a reputable law firm in Thailand.



Can I work in a Business that I Buy?

If you are a Thai national, of course you can!  If you are not a Thai national, the answer is strictly no (regardless of whether you are operating from leasehold or freehold premises) unless you have a valid Working Permit for the business you wish to work in.  There is nothing wrong with you buying the businesses below (investing in them), but under Thai Law BE2522, foreigners are prohibited to engage in any of the following types of work in Thailand, so it is unlikely that a working permit will be issued for:

•    Manual work;
•    Work in agriculture, animal husbandry, forestry or fishing excluding specialized work in each particular branch or farm supervision;
•    Bricklaying, carpentry or other construction works;
•    Woodcarving;
•    Driving a mechanically propelled carrier or driving a non-mechanically propelled vehicle, excluding international aircraft piloting;
•    Shop attending;
•    Auction;
•    Supervising, auditing or giving services in accounting excluding internal auditing on occasions;
•    Cutting or polishing jewelry;
•    Haircutting, hairdressing or beauty treatment;
•    Cloth weaving by hand;
•    Weaving of mats or making products from reeds, rattan, hemp, straw or bamboo;
•    Making of Sa paper by hand;
•    Lacquer ware making;
•    Making of Thai musical instruments;
•    Nielloware making;
•    Making of products from gold, silver or gold-copper alloy;
•    Bronze ware making;
•    Making of Thai dolls;
•    Making of mattresses or quilt blankets;
•    Alms bowl casting;
•    Making of silk products by hand;
•    Casting of Buddha images;
•    Knife making;
•    Making of paper or cloth umbrellas;
•    Shoemaking;
•    Hat making;
•    Brokerage or agency excluding brokerage or agency in international trade business;
•    Engineering work in a civil engineering branch concerning designing and calculation, organization, research, planning, testing, construction supervision or advising excluding specialized work;
•    Architectural work concerning designing, drawing of plans, estimating, construction directing or advising;
•    Garment making;
•    Pottery or ceramic ware making;
•    Cigarette making by hand;
•    Guide or conducting sightseeing tours;
•    Street vending;
•    Typesetting of Thai characters by hand;
•    Drawing and twisting silk thread by hand;
•    Office or secretarial work;
•    Legal or lawsuit services.
(Source: Alien Occupational Control Division, Department of Employment Ministry of Labor and Social Welfare)


Should I do Due Diligence before Buying?

Of course you should!  The question is how much should you do?  For smaller businesses where the value (asking price) is low, and if you are not investing your life savings into the project (the financial exposure is not high), then the amount of due diligence you do will probably be minor and will include things like:

•    Checking that the Owner is actually the Owner,
•    Checking the Financial Records,
•    Reading the Lease Contract in the case of businesses operating in Leasehold premises,  and
•    Visit the business at different times and different dates to gauge the ‘clientele'.



How Much Should I Pay for a Business in Thailand?

There are many ways of valuing businesses and freehold land with improvements (regardless of what country they are in).  The valuation of businesses is discussed in more detail in another article produced by Asian Business Brokers.  Generally speaking however, the business will be worth what it can generate for you in money over a period of time.  You need to consider the following:

•    If you want to inspect financial records, you can ask, but there is no guarantee that what you receive from the owner will be accurate (for many reasons).
•    If you intend to buy a ‘bar' for example, and convert it to a ‘restaurant', or buy a ‘Thai restaurant' and convert it to an ‘Italian restaurant', then looking at the owner's financial records is somewhat irrelevant.


Tips

If you are considering buying a business for your newly-found ‘love of your life', be cautious about what they (or their family) tell you.  This is not being judgmental about your new partner, but It is entirely probable they don't know about what you are asking or don't understand what you are asking, therefore you will invariably be given the wrong answer.  Remember, people have different motivations for doing different things, and there will probably be a language issue barrier, and Thai's sometimes use this to explain why they make mistakes or appear to not know something.  Seek assistance from Lawyers who speak your language and who are based in Thailand.

Buy a business through a broker.  It is common in Thailand for Thais to buy businesses privately and not through broking firms or agents.  There are however, many examples of Thai's ripping off unsuspecting foreigners and even other foreigners ripping off other foreigners.  You can avoid this from happening to you, by dealing through an experienced and reputable broking firm like Asian Business Brokers.

Buying and operating a successful business in Thailand is not dissimilar to operating successful businesses elsewhere in the world.  They generally require a lot of time and effort.  If you are an inexperienced business person, or have not worked with Thais before, it may not be easy for you to be as successful as you would like.



Standard Disclaimer

Information provided in this article is correct at the time of writing, but may change as new laws and legislation are enacted.  The author accepts no responsibility for …

(Moderated: no free ads please + register in the business directory)

Thank you so much for being so kind and giving me this information!

Thank you so much, I will keep your contact. I guess, the question is., I can start a fast food place in Bangkok, what would be the first step? do i need to register a company first?

I am a thai citizen living in Thailand,

[Moderated by EB Team: For security reasons please do not give over personal contact infos on the forum ]

May be i can assist you with something.

Tom

Hello Tom

We would appreciate your help and tips on the forum here itself rather than proceeding on email.

Thank you

Kenjee
Expat.com Team

No.  Setting up a company in most cases is not required.  We have over 80 businesses for sale and rent in Thailand, and (unless your personal situation requires it), nearly all DO NOT require a company to be set up.  There can be valid reasons for setting up a company and it may even be more beneficial to you to do so, but it IS NOT (in most instances) a requirement.

The safest and most successful would be to investigate buying into an international franchise because all the hard part about corporate identity and reputation has already been done for you.

Well In my situation, I am trying to start a fanchicse, I would like to start by openning two locations in BKK. I believe the locations are very important to a successful start...Under these circumestaances tell me if there is a way??

Thanks,

To Asian business,,, can you explain that how some body on tourist visa can buy a business without having a company, is its possible and later can he change it to another business, ty

Please read my post of 22 January, I think I explained it adequately there.

3. Types of Business Organizations
Thailand recognizes three types of business organizations: partnerships, limited companies and joint ventures.

3.1 Partnerships
According to the Civil and Commercial Code (CCC), partnerships can be divided into 2 types:
(1) Ordinary Partnerships
(2) Limited Partnerships

3.1.1 Ordinary Partnership
In an ordinary partnership, all the partners are jointly and wholly liable for all obligations of the partnership. An ordinary partnership may or may not register as a juristic person. Therefore, an ordinary partnership can be divided into 2 types:
(1) Non-registered Ordinary Partnership - has no status as a juristic person and is treated, for tax purposes, as an individual.
(2) Registered Ordinary Partnership - is registered with the Commercial Registrar as a juristic person and is taxed as a corporate entity.

3.1.2 Limited Partnership
Limited partnerships can take two forms:
(1)One or more partners whose individual liability is limited to the amount of capital contributed to the partnership, or
(2) One or more partners who are jointly and unlimitedly liable for all the obligations of the partnership.
Limited partnerships must be registered and are taxed as a corporate entity.

3.1.3 Partnership Registration
When two or more people agree to invest in one of the aforementioned types of partnership, the appointed managing partner is responsible for registering the partnership with the commercial registration office of the province that the head office of the partnership is located in.
A limited partnership must be only managed by a partner with unlimited liability.
The fee for registering a partnership is 1,000 baht for every 100,000 baht of registered capital. The minimum fee is 1,000 baht and the maximum fee is 5,000 baht.

3.2 Limited Companies
There are two types of limited companies: private limited companies and public limited companies. The first is governed by the Civil and Commercial Code and the second is governed by the Public Limited Company Act.

3.2.1 Private Limited Companies
Private Limited Companies in Thailand have basic characteristics similar to those of Western corporations. A private limited company is formed through a process that leads to the registration of a Memorandum of Association (Articles of Incorporation) and Articles of Association (By-laws) as its constitutive documents.
Shareholders enjoy limited liability, i.e. limited to the remaining unpaid amount, if any, of the par value of their shares. The liability of the directors, however, may be unlimited if stipulated as such in the company's MOA.
Limited companies are managed by a board of directors in accordance with the company's charter and by-laws. All shares must be subscribed to, and at least 25% of the subscribed shares must be paid up. Both common and preferred shares of stock may be issued, but all shares must have voting rights. Thai law prohibits the issuance of shares with a par value of less than five baht. Treasury shares are prohibited.
A minimum of three shareholders is required at all times. Under certain conditions, a private limited company may be wholly owned by foreigners. However, in those activities reserved for Thai nationals, foreigner participation is generally allowed up to a maximum of 49%. The registration fee for a private limited company is 5,500 baht per million baht of capital.
The 49% limit in certain reserved businesses can be exceeded or exempted if a Foreign Business License is granted. If the desired business is unique, does not compete with Thai businesses, or involves dealings among members of an affiliated company, the chance of approval is more probable. Conditions, such as minimum capital, transfer of technology and reporting requirements, may be attached to Foreign Business License

3.2.2 Public Limited Companies
Subject to compliance with the prospectus, approval, and other requirements, public limited companies registered in Thailand may offer shares, debentures, and warrants to the public and may apply to have their securities listed on the Stock Exchange of Thailand (SET).
Public limited companies are governed by the Public Limited Company Act B.E. 2535 (A.D. 1992), as amended by Public Limited Company Act No. 2 B.E. 2544 (A.D. 2001) and Public Limited Company Act No. 3 B.E. 2551 (A.D. 2008). The rules and regulations concerning the procedure of offering shares to the public is governed by the Securities and Exchange Act B.E. 2535 (A.D. 1992) and the amendments thereto, under the control of the Securities and Exchange Commission (SEC). All companies wishing to list their shares on the SET must obtain the approval of and file disclosure documents with the SEC, and then obtain SET approval to list their shares.
For public limited companies, there is no restriction on the transfer of shares (except to satisfy statutory or policy ceilings on foreign ownership); director's proxies are not allowed; circular board resolutions are not allowed; directors are elected by cumulative voting (unless the MOA provides otherwise); at least 50% of the directors must reside in Thailand; and board meetings must be held at least once every three months. Directors' liabilities are substantially increased.
A minimum of 15 promoters is required for the formation and registration of a public limited company, and the promoters must hold their shares for a minimum of two years before they can be transferred. The Board of Directors must have a minimum of five members, at least half of whom are Thai nationals. Shares must have a face value of at least five baht each and be fully paid up.
Restrictions on share transfers are unlawful, with the exception of those protecting the rights and benefits of the company as allowed by law and those maintaining the Thai/foreigner shareholder ratio. Debentures may only be issued with the approval of three quarters of the voting shareholders. The registration fee is 2,000 baht per million baht of registered capital.
The qualifications for independent directors of listed companies and securities companies that have initial public offerings was amended in April 2009, as follows:
1. At least one-third of the board's complement should be independent directors, and in any case, the number should not be fewer than three. This will apply for listed companies Companies' annual general shareholders' meetings from the year 2010 onwards. In the case of an IPO, the requirement for independent directors has to be complied with from 1 July 2008 onwards.
2. The independent director must not have any business or professional relationship with the head office, subsidiaries, associates, or jurist person in his own interest, whether directly or indirectly, as outlined in the Thai Securities and Exchange Commission Circular No. Kor Lor Tor Kor (Wor) 11/2552 Re: the Amendment of the Regulation regarding the independent director.

3.2.3 Scrutinization of Thai Shareholders in Limited Companies
In 2006, the Commercial Registrar prescribed new rules for the registration of both public and private limited companies. The rules require that sources of investment by Thai nationals in the following two categories of new companies be scrutinized:
(1) A company in which foreigners hold between 40% and 50% of the shares.
(2) A company in which foreigners hold less than 40% of the shares but a foreigner is a director with the power to bind the company.
All Thai shareholders must disclose the source of their funds to the MOC.
An application for the incorporation of a limited company must now be accompanied by at least one of the following documents evidencing the source of funds of each Thai shareholder:
*    Copies of deposit passbooks or bank statements disclosing transactions over the past 6 months
*    A letter issued by a bank certifying the financial position of the shareholder
*    Copies of other documents evidencing the source of funds (i.e. loan documentation)
In addition, the MOC has issued internal guidelines in support of the rules, which set out the following matters:
* The amounts shown in the documents of each Thai shareholder evidencing the source of funds must equal or exceed the amount of funds invested by that Thai shareholder.
* The rules do not apply if a foreign national(s) has joint authority with a Thai national(s) to act on behalf of the limited company.
"    Copies of deposit passbooks or bank statements disclosing transactions that are less than six months old may be submitted to the MOC provided that entries on at least one day identify a balance that is equal to or exceeds the funds invested by the relevant shareholder.
Thai shareholders must provide evidence of their sources of funds regardless of the value of their shares.

3.3 Other Forms of Corporate Presence
Branches of Foreign Companies
Foreign companies may carry out certain business in Thailand through a branch office. Branch offices are required to maintain accounts only relating to the branch in Thailand.
There is no special requirement for foreign companies to register their branches in order to do business in Thailand. However, most business activities fall within the scope of one or more laws or regulations that require special registration (e.g., VAT registration, taxpayer identification card, Commercial Registration Certificate, Alien Business License, etc.), either before or after the commencement of activities. Therefore, foreign business establishments must follow generally accepted procedures.
It should be borne in mind that the branch is part of the parent company and therefore the parent retains legal liability for contracts, and for tortious acts done. For tax purposes, a branch is considered a permanent establishment, and its revenue is subject to Thai tax. It is important to clarify beforehand what constitutes income that is subject to Thai tax because the Revenue Department may consider revenue directly earned by the foreign head office from sources within Thailand to be subject to Thai tax.
A condition for approval of a Foreign Business License for a branch of a foreign corporation is that minimum capital amounting to no less than five million baht be brought into Thailand within four years of start-up. The branch may be allowed to operate for a period of five years, unless a shorter period is applied for. Extension of the original duration of the license to operate may be granted, provided that the working capital to be brought into Thailand requirement is met.
Representative Offices of Foreign Companies
A representative office is defined as an office in Thailand of a foreign company engaged in the business of international trading. A representative office in Thailand cannot engage in any profit-seeking or profit-making enterprise. The scope of activities of a representative office must be limited to approved activities, or significant Thai tax liabilities can arise. The risk of exceeding the scope of activities is that the income of the parent or affiliated companies may be deemed earned in Thailand and subject to taxation.
If the representative office engages in other activities for which permission is not granted, such as buying or selling goods on behalf of the head office, it will be regarded as doing business in Thailand and may be subject to Thai taxation on all income received from Thailand. Also, the representative office may not act on behalf of third persons. Any such business or income-earning activities could amount to a violation of the conditions of the license to establish and operate a representative office, which in turn could result in revocation of that license.
A representative office which undertakes one or more of the approved activities in Thailand without rendering any service to any other person, and which refrains from prohibited activities, is not subject to Thai taxation. Such a representative office is understood to be receiving a subsidy from the head office to meet its expenses in Thailand. Gross receipts or revenues received by a representative office from the head office are not characterized as revenue to be included in the computation of juristic person income tax.
Even though they are not subject to taxation in Thailand, all representative offices are still required to obtain a Corporate Tax Identification number and submit income tax returns and audited financial statements to the Revenue Department. They are also required to submit the same to the Department of Business Development.

Hello cthierrymk

Could you please name the source when you copy articles before posting it on the forum here please?

Thank you

Kenjee
Expat.com Team