What you should know about setting up a new Thai company today

Should do

• Do make sure you know who your co-shareholders, both foreign and Thai. are. If you are considering operating a business in Thailand, make sure you set up the company with shareholders directly vested in the company
• Do make sure you capitalise the company correctly and that a true transaction record is produced showing payment of the share capital by all shareholders.
• Do ensure the initial capital of the company is deposited to a company established bank account shortly after the company is set up with a declaration of all share capital being paid up in full. 
• Do issue to all shareholders of the company a valid, director-signed and stamped, share certificate. 
• Do ensure a properly maintained and updated shareholders’ book is kept with the company documents at all times. The shareholder book should reflect the history of shareholders and capitalisation of the company and include information on each shareholder’s notification address and the number of shares each holds. It is also required to be updated when share transfers or new allotments of shares are issued.
• Do ensure that all shareholders have an opportunity to read and understand the company’s articles of association, and make one available for inspection by shareholders upon written request. 
• Do strongly consider entering into joint venture agreements between all shareholders as this will set forth the corporate governance provisions of the company, and also set out any terms and restrictions relating to share sales and transfers. 
• Do ensure that proper shareholder meetings are noticed and held in accordance with the laws (which is at least one time within the first six months of incorporation, and at least one time per annum following the first meeting) and that formal minutes are kept at all meetings of shareholders.
• Do ensure the company obtains good accounting advice and representatives. 

Shouldn’t do

• Do not simply select a company capitalisation based on arbitrary values. The capital of the company should be reflective of matters such as the number of work permits to be issued to foreigners and the value of the assets to be acquired at incorporation. 
• Do not set up a new Thai company with shareholders that are not genuine shareholders and venture partners. All shareholders should have a genuine stake in the company. Do not produce pre-signed blank share transfer forms that are intended to somehow transfer shares of a shareholder at some point in the future. These documents are arguably void at best, and completely illegal at worst (in the case of nominees.) 
• Do not set up a foreign-owned company, that is a Thai company with more than 49% of the share capital held by foreign persons or companies, without the proper foreign business licensing. 
• Do not go into business with shareholders you have never met or do not know.

Obviously the above list is not meant to be exhaustive. There are many other considerations when setting up Thai companies, and people should always 
consider the applicable regulations with relvant advisors. But these points should at least cover the important basics at start-up in order to keep a business above the water in Thailand from the outset.

By Robert Krupica, Senior Partner of Hughes Krupica.
Hughes Krupica is a law firm which specialises in Real Estate; Construction; Hospitality; Corporate; Commercial; Personal Injury; Dispute Resolution; and Litigation, operating in Bangkok and Phuket, servicing clients in relation to their business activities in Thailand and in other regions of Asia.
www.hugheskrupica.com