The Main Types of
Business
May May Chan
Chief Executive Officer
of ZICO Insource
The Main Types of Business
May May Chan
Chief Executive Officer
of ZICO Insource
In Thailand there are a few options for establishing a business organization under Thai law. The business organization, i.e., partnerships, limited company, public limited company, branch offices, representative offices, and regional offices.
1) Partnership: in Thailand has divide into 2 types, as following.
1. Ordinary partnership: all partners are jointly and severally liable with the partnership for unlimited liabilities and there are 2 types of this partnership:
- Ordinary (non-registered) partnership which is not a juristic person; and
- Ordinary registered partnership which is a juristic person.
2. Limited partnership: has divided into 2 partners as follows:
- Unlimited liability partner; and
- Limited liability partner
*The ordinary registered partnership and limited partnership are considered separate juristic entities distinct from the individual partners once registered with the Department of Business Development (the “DBD”), Ministry of Commerce (the “MOC”).
2) Limited company
It is the most common business form used in Thailand, because of the liability of the shareholders is limited to the amount of unpaid share value of the company and shareholders are able to establish limited company by their articles of association as long as the contents of the articles do not contradict the public order under Thai laws.
3) Public limited company
The procedure for setting up a public limited company is similar to a limited company. However, it is usually formed in order to list its shares in the Stock Exchange of Thailand (the “SET”).
4) Branch office
An entity registered under foreign law and a branch office is not considered a separate legal entity from its foreign parent company. Thus, the foreign head office would be liable to any obligations of the branch office. The branch office able to engage in business activities as prescribed in the Foreign Business Act, B.E. 2542 (1999) (the “FBA”).
5) Representative office
Is considered the same legal entity as its foreign head office to provide local information and support their respective head office. However, the scope of activities permitted for a representative office is extremely limited, and the offices cannot engage in profit-generating activities. The following business purposes are:
- Procurement of supply sources for goods and services in Thailand for the head office or affiliated/group companies;
- Inspection and control of the quality and volume of goods by the head office or affiliated/group companies or hired by the head office or affiliated/group companies for production in Thailand;
- Consultation on various aspects pertaining to the goods distributed by the head office or affiliated/ group companies to the distributing agent or consumer of goods;
- Dissemination of various information pertaining to new goods or services offered by the head office or affiliated/group company; and
- Reporting business movements in Thailand to the head office or affiliated/group company.
6) Regional Office
Similar to a branch office and a representative office, the regional office is considered the same legal entity as its foreign head office. The regional office’s scope of activities permitted to operate is limited; it cannot engage in profit-generating activities, accept purchase orders, make sales offers, or engage in business negotiations with any person, and must receive subsidies for office expenses only from the head office. The following business purposes are:
Coordination and supervision of operations of branch offices or subsidiary companies situated in the same region on behalf of the head office;
- Consultation and management services;.
- Personnel training and development;
- Financial management;
- Control of marketing and sales promotion planning;.
- Product development; and
- Research and development service.
In Thailand there are a few options for establishing a business organization under Thai law. The business organization, i.e., partnerships, limited company, public limited company, branch offices, representative offices, and regional offices.
1) Partnership: in Thailand has divide into 2 types, as following.
1. Ordinary partnership: all partners are jointly and severally liable with the partnership for unlimited liabilities and there are 2 types of this partnership:
- Ordinary (non-registered) partnership which is not a juristic person; and
- Ordinary registered partnership which is a juristic person.
2. Limited partnership: has divided into 2 partners as follows:
- Unlimited liability partner; and
- Limited liability partner
*The ordinary registered partnership and limited partnership are considered separate juristic entities distinct from the individual partners once registered with the Department of Business Development (the “DBD”), Ministry of Commerce (the “MOC”).
2) Limited company
It is the most common business form used in Thailand, because of the liability of the shareholders is limited to the amount of unpaid share value of the company and shareholders are able to establish limited company by their articles of association as long as the contents of the articles do not contradict the public order under Thai laws.
3) Public limited company
The procedure for setting up a public limited company is similar to a limited company. However, it is usually formed in order to list its shares in the Stock Exchange of Thailand (the “SET”).
4) Branch office
An entity registered under foreign law and a branch office is not considered a separate legal entity from its foreign parent company. Thus, the foreign head office would be liable to any obligations of the branch office. The branch office able to engage in business activities as prescribed in the Foreign Business Act, B.E. 2542 (1999) (the “FBA”).
5) Representative office
Is considered the same legal entity as its foreign head office to provide local information and support their respective head office. However, the scope of activities permitted for a representative office is extremely limited, and the offices cannot engage in profit-generating activities. The following business purposes are:
- Procurement of supply sources for goods and services in Thailand for the head office or affiliated/group companies;
- Inspection and control of the quality and volume of goods by the head office or affiliated/group companies or hired by the head office or affiliated/group companies for production in Thailand;
- Consultation on various aspects pertaining to the goods distributed by the head office or affiliated/ group companies to the distributing agent or consumer of goods;
- Dissemination of various information pertaining to new goods or services offered by the head office or affiliated/group company; and
- Reporting business movements in Thailand to the head office or affiliated/group company.
5) Regional office
Similar to a branch office and a representative office, the regional office is considered the same legal entity as its foreign head office. The regional office’s scope of activities permitted to operate is limited; it cannot engage in profit-generating activities, accept purchase orders, make sales offers, or engage in business negotiations with any person, and must receive subsidies for office expenses only from the head office. The following business purposes are:
Coordination and supervision of operations of branch offices or subsidiary companies situated in the same region on behalf of the head office;
- Consultation and management services;.
- Personnel training and development;
- Financial management;
- Control of marketing and sales promotion planning;.
- Product development; and
- Research and development service.
