How to Set Up a Thai-Majority Company in Thailand: Step-by-Step Guide for Foreign Entrepreneurs and Digital Nomads

Starting a business in Thailand as a foreigner can be an exciting venture, especially in thriving sectors like services, food & beverage (F&B), hospitality, or clinics. However, Thailand’s laws impose restrictions on foreign ownership. In many cases, foreign entrepreneurs choose a Thai-majority company setup – meaning Thai nationals hold at least 51% of the shares – to operate as a local company and avoid the need for special foreign business licenses. This guide provides a comprehensive, step-by-step walkthrough of Thailand company registration steps for a Thai-majority company, along with key legal requirements, tips on finding a trustworthy Thai partner, and post-registration essentials for foreign entrepreneurs.

Initial Planning: Thai vs. Foreign Ownership and Legal Basics

Understanding Ownership Restrictions: Under the Foreign Business Act (FBA), any company in which foreigners hold 50% or more of shares is considered a “foreign” company and faces restrictions in certain sectors. By keeping foreign ownership to 49% or less, you can register a Thai-majority company that is treated as a Thai entity and thus bypass most FBA limitations. For example, a Thai-majority company can engage in businesses reserved for Thais (like many service or retail activities) without needing a Foreign Business License. Importantly, this means the Thai partner(s) combined must own at least 51% of the company.

Key Requirements for a Thai-Majority Company: Setting up a Thai limited company (Co., Ltd.) involves meeting certain baseline criteria:

• Shareholders: You need at least 2 shareholders (reduced from 3 under a 2023 legal reform). To maintain Thai majority, at least one of these must be Thai, and the Thai shareholder(s) must together hold 51% or more of the shares. The foreign shareholder(s) can hold up to 49%. (E.g. a typical structure is one foreign owner at 49% and one or more Thai partners collectively at 51%.)

• Thai Partner’s Investment: The Thai shareholder(s) should be genuine investors, not just in name. Authorities often require proof that Thai partners have sufficient funds for their share of capital – for instance, a bank certificate showing the Thai shareholder’s bank balance covers the cost of their shares. This is to ensure they are real partners and not illegal “nominees.”

• Directors: You must appoint at least one director (can be Thai or foreign) to manage the company. Foreign directors are common and allowed, but if a foreigner will act as a director working in Thailand, they’ll eventually need proper visa and work permit (discussed later).

• Registered Address: Every company needs a registered business address in Thailand for incorporation. This must be a real physical address (with the landlord’s consent for its use); virtual offices or P.O. boxes typically won’t suffice, especially if you plan to apply for visas or certain licenses.

• Registered Capital: There is no fixed minimum capital required to register a Thai company – you could theoretically start with a low capital (even 1 baht). However, the capital should be “adequate and reasonable” for the business’s scope. Notably, Thai-majority companies are not subject to the strict minimum capital rules that foreign-majority companies face (those require at least 2 million baht capital for most businesses, or 3 million baht if engaged in FBA-restricted sectors). That said, if you intend to hire foreign staff or have a foreign director who needs a work permit, it’s recommended to register at least ฿2 million in capital per foreign employee to meet immigration/work permit criteria. This amount often must be fully paid up to support visa and work permit applications.

Avoiding Illegal Nominees: It’s crucial to choose your Thai partner carefully. Using a Thai citizen as a mere “nominee” shareholder (someone holding shares on behalf of a foreigner without real investment or control) is illegal and can lead to severe penalties. In recent crackdowns, authorities have investigated many companies suspected of using Thai nominee shareholders to circumvent foreign ownership laws. Both the foreigner and the Thai involved can face fines and even imprisonment if caught in a nominee arrangement. Bottom line: always use genuine Thai business partners who will truly participate in the company. Not only is this lawful, but it also builds a healthier foundation for your business.

Step-by-Step Company Registration Process

Once you have a solid plan and a trustworthy Thai majority partner, you can proceed with the formal company formation. Here are the Thailand company registration steps in order:

1. Reserve a Company Name: Select a unique name for your company and reserve it with the Department of Business Development (DBD). You typically submit 2–3 preferred names (in Thai or transliterated) in case some are taken or disallowed. The name must end with “Limited” (Ltd.) and follow DBD naming guidelines. Approval is quick – usually within 1–3 days – and once approved, the name is locked for your use on all registration documents.

2. File the Memorandum of Association (MOA): Prepare the MOA and register it with the DBD. The MOA is a fundamental document that states the company’s official name, its business objectives, the registered address (province), the intended capital, and the list of promoters/shareholders with their shareholding portions. All initial shareholders (promoters) sign this document. At this stage, you declare the total number of shares and par value; all shares should be subscribed (and at least some capital is usually paid in). Tip: Ensure the business objectives are broad enough to cover all activities you plan to do – you can choose standard clauses provided by the DBD for this.

3. Convene a Statutory Meeting: Once the MOA is filed, hold a statutory meeting of the shareholders. In this meeting, the company’s Articles of Association (the bylaws) may be adopted (though not legally mandatory, many companies have them), the initial Board of Directors is appointed, an auditor is appointed, and the subscribed shares and capital are formally approved. Essentially, this meeting formalizes the company structure and governance. You’ll record minutes of the meeting to submit to the DBD. (Note: You must wait at least 7 days after the MOA before you can register the company, which traditionally ties in with calling this meeting – but in practice, these steps are often done in quick succession.)

4. Register the Company with the DBD: With the MOA and statutory meeting completed, submit the application to officially register the company as a legal entity. This is done at the DBD (Ministry of Commerce) and involves filing all signed documents – MOA, Articles (if any), statutory meeting minutes, list of shareholders, director forms, etc. – and paying the registration fee. Timeline: You must register within 3 months of the statutory meeting, but typically it’s done immediately after the meeting. Once approved (usually within the same day or a few days), the DBD will issue a Company Certificate and a Company Affidavit (which lists the directors, objectives, and other company details). At this point, your company is a legal juristic person.

5. Obtain Tax ID and (If Needed) VAT Registration: After incorporation, the company needs to register with the Revenue Department for tax purposes. All companies must obtain a Tax ID card/number (this is the corporate tax identification for paying corporate income tax) within 60 days of incorporation or start of operations. If your business is likely to have substantial revenue or is in a category where VAT (Value Added Tax) applies, you should also register for VAT. VAT registration is mandatory once your annual revenue exceeds a threshold (currently ฿1.8 million per year) or if you engage in certain businesses that require immediate VAT registration. You must apply for a VAT registration within 30 days of reaching the threshold or starting a VAT-applicable business. After registering, you’ll receive a VAT certificate and number.

6. Open a Corporate Bank Account: With the company documents in hand (certificate, affidavit, company seal, etc.), you can open a corporate bank account in Thailand. Typically, all authorized directors (or at least the one with sole signing authority) should be present at the bank to sign the account opening forms. Banks will require your company registration papers and identification for the directors (passport for foreigners, Thai ID for Thais). Some banks may ask for the foreign director’s work permit or a support letter if the director is foreign – policies vary, but many banks do allow account opening immediately after company registration even before the work permit is issued. Choose a bank and branch that is convenient, and be prepared to detail who will be the authorized signatories on the account. Once the account is open, you can deposit the company’s capital funds and begin financial operations.

Note: If your business activity requires any special licenses or permits, you should initiate those applications as soon as the company is formed (or in some cases, immediately when starting operations). For example, running a restaurant or bar will require food and alcohol licenses, a hotel business needs a hotel license, a clinic must obtain a medical clinic license from the health authorities, and so on. Always check the regulations for your specific industry to ensure you secure any necessary licenses.

Finding a Trustworthy Thai Partner and Crafting Shareholder Agreements

One of the most critical aspects of a Thai-majority company formation is the Thai partner. Since your Thai partner(s) will legally control 51% of the company, it’s essential to find someone trustworthy and aligned with your business goals. Here are some tips and considerations:

• Choosing the Right Thai Shareholder: Look for a Thai partner with whom you have an existing relationship or a strong referral – it could be a business colleague, a friend or family connection, or a Thai professional with a good reputation. The person should ideally bring something to the table beyond just their nationality (e.g. industry knowledge, local network, or skills useful to the business). Perform due diligence: ensure they have the financial capacity to invest their share and the integrity to uphold agreements. Remember, this person (or people) will effectively have a controlling stake, so mutual trust is paramount.

• Clear Shareholder Agreements: To protect the foreign minority owner’s interests, invest in a well-drafted shareholder agreement (in addition to the official registration documents). This private agreement (preferably prepared with the help of a lawyer) can spell out arrangements on management control, profit sharing, and exit options. For instance, you can include clauses requiring that certain major decisions (selling the business, taking on debt, changing the company’s objectives, etc.) get unanimous consent or a supermajority vote, thereby preventing the Thai majority from acting unilaterally without your approval. You might also detail how dividends are distributed (usually in proportion to shares), and set terms for what happens if either party wants to sell their shares or if there’s a dispute. While Thai law will recognize the Thai shareholder as the majority owner on paper, a robust shareholder agreement can provide the foreign investor contractual safeguards and clearly outline each party’s roles and expectations.

• Voting Control Mechanisms: Aside from agreements, some entrepreneurs structure the share classes to retain more control. Thai law allows issuing different classes of shares (ordinary vs. preference shares). In practice, a common approach is to give foreign investors voting-heavy ordinary shares and Thai partners preference shares that may have limited or no voting rights but perhaps preferential dividends. For example, the foreigner might hold 49% of shares as ordinary shares with full voting rights, while Thais hold 51% as preference shares with restricted voting. This way, the foreigner has a stronger say in decisions despite minority equity. Such structures must be set up carefully (and may require expert legal help) to ensure they don’t violate any laws or the spirit of the FBA.

• Steer Clear of “Nominee” Arrangements: As emphasized earlier, do not be tempted to use nominee Thai shareholders who simply lend their name. Not only is it illegal, but it’s also risky – you could lose your business if authorities crack down, and you have no real recourse if a nominee betrays you (since officially they are the owner). Always opt for real partners and maintain transparent finances (each shareholder ideally contributing their share of capital). This will also give your business a more solid footing and credibility with banks, customers, and regulators.

Post-Registration Steps and Ongoing Compliance

Setting up the company is just the beginning. After registration, there are additional steps to get your business fully operational and compliant, especially as a foreign entrepreneur in Thailand:

• Applying for Business Visa (Non-Immigrant “B”) and Work Permit: If you (or other foreign staff) plan to actively work in Thailand, you will need to transition from a tourist or visa-exempt entry to a Non-Immigrant “B” visa, and then obtain a Work Permit. Typically, once your company is registered, you can use the company documents to support a visa application at a Thai embassy/consulate abroad (or sometimes an in-country visa extension if eligible). With a Non-B visa, you can then apply for a work permit through the Ministry of Labour. To successfully get a work permit for a foreign director or employee, the company must meet certain requirements such as having the required registered capital (usually at least 2 million baht per foreigner, as mentioned) and hiring Thai staff (commonly, four Thai employees per foreign work permit is the standard, though some exceptions exist). You will also need a formal job title and employment contract for the foreigner. The process involves several documents – the company affidavit, list of shareholders, tax registrations, office lease, etc., along with personal documents of the foreigner. After submission, a work permit is usually issued within a week or two. Tip: Plan your visa run or application timing such that your company registration is complete and documents are in order when you apply; many digital nomads will do a quick trip to a neighboring country to get the Non-B visa once the company papers are ready.

• Opening the Corporate Bank Account: (If you haven’t done this earlier in the process.) As mentioned, you’ll want to deposit the paid-up capital into the company’s bank account. Having a Thai-majority company can sometimes make banking easier (some banks are more comfortable when there are Thai shareholders or authorized signers, though many will work with purely foreign-managed companies as well). Once the account is active, ensure you keep a clear record of all transactions, as you’ll need good bookkeeping for tax time.

• Accounting and Monthly Compliance: Thai companies are required to maintain accounts and submit regular filings. You’ll need to engage an accountant or accounting service to handle monthly obligations like withholding tax filings (if you have employees or pay contractors), social security contributions (if you have employees on payroll), and VAT filings (monthly, if your company is VAT-registered). Even if your company is not yet active or earning, a monthly nil income tax return may be required. Good accounting is not just a legal formality – it will help you monitor the health of your business.

• Annual Audits and Reports: Every Thai limited company must prepare annual financial statements and have them audited by a certified Thai auditor. An Annual General Meeting (AGM) of shareholders must be held within 4 months of the fiscal year-end to approve the audited financial statements. The approved statements then must be submitted to the DBD (Ministry of Commerce) and the Revenue Department within one month of the AGM. In practice, many companies in Thailand have a December 31 year-end and hold their AGM by April, filing the audited accounts by May. It’s crucial not to skip these filings – late submission can incur fines. Additionally, the company must file an annual corporate income tax return (Form PND50) with the Revenue Department within 150 days of year-end.

• Ongoing Licenses and Renewals: If your business has specific licenses (e.g. a food license, import/export permit, etc.), ensure you renew them as required and remain in compliance with any sector-specific regulations. For example, restaurants must adhere to hygiene and safety regulations, and clinics must follow medical standards and licensing rules.

• Keep Corporate Records Updated: Any changes in the company (new shareholders, changes of directors, address change, etc.) should be officially updated with the DBD. Also, by law, you should update the shareholders list annually and anytime there’s a transfer, submitting it to the DBD within 14 days after the AGM. Keeping everything up-to-date will prevent issues down the line.

By diligently following these post-registration steps, you’ll not only secure your ability to stay and work in Thailand legally, but also set your Thai-majority company on the path to smooth operations.

Final Word

Forming a Thai-majority company in Thailand can be an accessible route for foreign entrepreneurs and digital nomads to start a business in Thailand as a foreigner while complying with local laws. By partnering with reputable Thai shareholders and adhering to the step-by-step process – from name reservation and DBD registration to obtaining tax IDs and necessary licenses – you can establish your company with confidence. Always pay attention to the key requirements (like the 49% foreign ownership cap, minimum two shareholders, and capital needs for visas) and invest time in solid agreements that protect your interests. With the company up and running, securing your visa/work permit and maintaining good standing through proper accounting will be your next priorities. This Thai partner company formation guide has highlighted that with proper planning, legal compliance, and mutual trust, foreign and Thai partners can successfully build a business together. Welcome to doing business in Thailand, and (good luck)!