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Keep your eyes opened when founding a company in Thailand

Better to be well prepared than quickly established

“You want to start a 100 % foreign owned company in Thailand? No problem, takes a day!” These and similarly tempting promises are quickly obtained when seeking legal advice in Thailand.

What is offered here “loosely” and often for a fee of less than 2,000 EUR, however, often ends in disaster for the interested company or the founder. In the end, all that remains is a costly dissolution or restructuring.

Of course, every foreigner in Thailand can found a 100% foreign owned company. However, one must also tell him which business he is then allowed to do with his company. For example, the Foreign Business Act (FBA) prohibits services and trade for companies with a non-Thai majority of shareholders. A work permit for the company owner is also not a matter of course. There are strict conditions for this as well.

So, the question to a lawyer in Thailand should not be; “How long does it take to set up a company and what does it cost? The main question should be: “What do I have to do to make my business in Thailand legal?”

At Sanet Legal Ltd., the German law firm in Bangkok, the interested party first receives a questionnaire in which important questions about his project can be answered in a multiple-choice procedure. This is followed by advice on the correct legal form, the regulations on capital, shareholders and directors and any other necessary applications for approval of the project.

As a result you can be sure that you have chosen the right company structure.

“The legal and business consulting team in Thailand will also be happy to advise you free of charge via Skype for Business or by telephone.”

 

Free Online Consultation

Preparing business decisions in Asia despite travel restrictions

Many companies have suspended business trips to Asia because of the corona virus. Nevertheless, talks to prepare important decisions do not have to wait. Sanet Legal Ltd. and the German consulting group SANET ASEAN ADVISORS therefore offer a free online consultation hour until the end of March 2020 for questions about company formation, sales, investment or procurement in Thailand and ASEAN. Usually this takes place on Thursdays from 08:00 h to 12:00 h CET (Central European Time).

Just send an e-mail to [email protected] with the keyword “ONLINE CONSULTANCY” and your contact details and you will receive a short-term appointment proposal for this consultation.

Be cautious with the “RepOffice” in Thailand

The easy way into illegality
No country in Asia is enthusiastic about Representative Offices (RO). As a non-investment form of activity by foreigners, they are considered to be of little help to the country. In Thailand, too, it is a considerable risk to initiate, organize or otherwise support the parent company in sales transactions with such a Representative office.

Many companies believe that as long as the RO does not conclude any business or contracts of its own, they will not make themselves liable to prosecution. This is a fatal error.

Representative offices are limited to very specific activities. These include, for example, monitoring the Thai economy and sourcing goods from Thailand as well as monitoring their quality. The presentation of new products and services of the parent company is the only permitted in reference to sales.

Accompanying negotiations about orders or accepting and supporting the handling of orders from the parent company is as much the safe way into illegality as would be the direct conclusion of sales transactions.

The consequences are far-reaching: prison sentences and fines for those responsible for the Representative Office and tax treatment as a (prohibited) permanent establishment. This can then make all sales of the parent company to Thailand taxable. A nightmare for financial management at home in Europe will then come true.

Thailand offers various ways to support the parent company in the country with sales or even to obtain a Foreign Business License directly. So why continue along the dangerous path via a representative office?

If you maintain a “RepOffice” in Thailand or are planning a sales representative office, ask Sanet Legal Ltd. at [email protected] for the right way to legally organize your activities in Thailand.