What is the main source of law authorising this entity form?
Regulations of the Office of the Prime Minister B.E. 2529 (1986) and Ministerial Regulation on Service Businesses which are not subject permission required under Foreign Business Act No. 3, B.E. 2560 (2017) (“the Ministerial Regulation”).
Give a brief summary of the entity form:
Does the entity possess separate legal personality?
The foreign company and its representative office are considered to be the same legal entity, with the result that the foreign company is bound to third parties by the acts which its representative office has conducted within the scope of authority granted to it.
Governing document(s)
Before 9 July 2017, which was the effective date of the Ministerial Regulation, a foreign company wishing to set up a representative office to conduct international trading business (please see scope of permissible activities for representative offices below) had to obtain a foreign business license (FBL) from the Department of Business Development (DBD), Ministry of Commerce (MOC).
As of July 9, 2017, MOC has liberalized the setting up of representative offices of foreign juristic persons whereby they are no longer required to obtain a FBL from the MOC. However, a representative office will still be required to apply for a juristic person registration number with the MOC.
Can this type of entity be involved in international transactions and restructurings (e.g. cross border mergers, asset acquisitions, equity acquisitions, etc.)?
No.
Can this type of entity be publicly listed or held?
No.
Can this type of entity be used for a non-profit or charitable organization?
No.
Give a brief summary of the process of incorporation, formation, or organization, including:
(1) Main documents required; (2) Involvement of notary, company register, governmental authorities; (3) Timing (estimate); (4) Main costs, including registration and similar fees (excluding legal fees); (5) Is a description of the anticipated business or purpose of the entity required for incorporation, formation or organization?
The documents required to obtain a juristic person registration number from the MOC are listed below:
- Application form;
- Notarized power of attorney appointing one or more individuals as the manager (“Pujudgarn”) of the representative office;
- Notarized affidavit that has been issued by an authorized person(s) of the head office, certifying the following information:
- Name of the company.
- Date and place of incorporation.
- Corporate registration number.
- Registered address.
- Registered/authorized capital, number of issued shares, and the par value of each share.
- Names and nationalities of the shareholders, and the number of shares held by each of them.
- Names and nationalities of the directors.
- Binding signatory power of the directors.
- Principal activities of the company.
- Copy of the passport of the manager of the representative office, showing his/her visa entry into Thailand;
- Details of the activity to be conducted in Thailand;
- Fiscal year of the representative office;
- Address of the representative office, along with a copy of the location map;
- Notarized copy of the Articles of Association/Bylaws/Incorporation documents showing details of list of directors and shareholders of the head office;
- Notarized copy of the certificate of incorporation of the head office; and
- Copy of the passport of the authorized person(s) of the head office issuing the affidavit.
Under Thai regulations, a representative office’s scope of activities is restricted to five categories only, and is not allowed to generate any profit from its activities within Thailand. These are:
- to seek for the supply source of products or services in Thailand for the head office or affiliated company or the group company;
- to inspect and control the quality and quantity of the goods that the head office or affiliated company or the group company purchased or hired to manufacture in Thailand;
- to advise on various aspects on the goods distributed by the head office or affiliated company or the group company to the distributors or the users in Thailand;
- to disseminate the information about the new goods or services of the head office or affiliated company or the group company; and/or
- to report the business movements in Thailand to the head office or affiliated company or the group company;
Please note that representative offices are not allow to earn income from providing or engaging the above activities. All expenditures incurred by the representative office in connection with the above activities will be borne by the head office. The head office will be the only source of funds.
Please note that the application forms, and all supporting documents, should be signed by the Thailand representative office manager after he/she enters Thailand, so that a copy of his/her visa entry stamp can be presented to the MOC.
Minimum number of incorporators / shareholders and residency requirements
A representative office must have one or more responsible persons appointed as a representative office manager to manage the day-to-day operations of the representative office in Thailand. The manager must be appointed by the head office and can be a foreign or Thai national domiciled in Thailand. However, any foreign manager working in Thailand will be subject to work permit and immigration regulations.
Minimum number of directors (or other applicable officers) and residency requirements
See above.
Minimum share capital, or equivalent, and payment requirements (including opening a bank account)
A representative office will be required to bring into Thailand working capital in foreign currency equivalent to a minimum of at least THB 2 million. However, if the representative office hires a foreign manager or employee, at least THB 3 million in capital is required.
Is the physical presence of incorporators / directors required in the jurisdiction for incorporation, formation or organization?
The head office must appoint one or more responsible person to be a representative office manager in Thailand.
Is a tax identification number, or equivalent, required? If so, how is it obtained?
While a representative office is not subject to taxation in Thailand, it is required to obtain a juristic person registration number from the MOC, and to submit tax returns and audited financial statements to the MOC and the Revenue Department annually.
After the representative office has obtained a juristic person registration number from the MOC, the representative office shall notify the Revenue Department and provide/confirm such juristic person registration number obtained from the MOC with the Revenue Department. The representative office manager is required to apply for a tax identification card from the Revenue Department. The representative office is also required to submit annual income tax returns and the audited financial statement to the competent authorities within five months after its fiscal year has ended. Moreover, each foreign individual employee of the representative office is required to obtain a taxpayer card and pay personal income tax.
What is the title of the applicable company registry?
Department of Business Development, the Ministry of Commerce
What types of information must be filed at the (company) register, and which of them will it be publicly available, e.g.:
Please see above.
What is the title of the executive body and its members? What are their main duties, tasks and responsibilities?
Please see above.
How are the members of the executive body appointed, dismissed and replaced?
The head office may change or replace a responsible person for the representative office at their discretion. A new power of attorney (“POA”) shall be issued and executed by the authorized person of the head office and notarized by a notary public. An application and other supporting documents to change the responsible person shall be filed with the MOC.
Is it possible to appoint corporate directors or must all directors be natural persons?
Not applicable.
Is there a requirement to have non-executive directors? How are they appointed, dismissed and replaced? Do non-executive directors serve on a separate body (two-tier structure) or can a one-tier board (with executive and non-executives) be appointed, or is some alternate structure used?
Not applicable.
What is the title of the body of owners / shareholders / members, and what are the main tasks / responsibilities / powers of that body?
Not applicable.
What are the majority and quorum requirements for decisions by the shareholders? Can they be varied or changed?
Not applicable.
Any special governance regimes (e.g. depending on size, being listed at a stock exchange, or other criteria)?
Not applicable.
What are the periodic accounting obligations incumbent upon the entity? To whom must those accounts be submitted?
Please see above.
Is the entity permitted to determine its own financial year?
Yes.
Is the entity subject to any statutory (external) auditor obligations?
A representative office must have its books and records maintained by a Thai accountant and audited by a registered Thai auditor once a year.
Requirements to appoint other persons (officers, secretary, internal auditor / accountants). If so, what are their functions? Are there any residency requirements?
Please see above.
What is the title designated for 'ownership interests' (e.g. shares, quota, interests, membership)?
Not applicable.
Are different classes of ownership interests possible? If so, what are some examples of different classes?
Not applicable.
What documentation is required for the transfer of ownership interests?
Not applicable.
Are there any additional formal requirements required for the transfer of ownership (notary, approvals, stamping, filings, corporate records)?
Not applicable.
Are there any applicable stamp duties imposed when transferring ownership interests?
Not applicable.
How are shares issued? (including information on payment obligations, registration requirements)
Not applicable.
Further information on equity contributions, e.g., non-cash payments on shares, (share premium) contributions without issuances of shares, can partially paid shares/ownership interests be permitted and what are the restrictions on them?
Not applicable.
Any requirements with respect to share cancellation, share repurchase and other capital reductions
Not applicable.
Any requirements with respect to distributions to shareholders?
Not applicable.
Can the owners or shareholders adopt a restrictive or governing agreement among themselves such as a Shareholders Agreement?
Not applicable.
Which are the typical annual maintenance costs of maintaining the existence and legal good standing of such an entity (excluding legal fees)?
The costs of maintaining the existence and legal good standing of a representative office should be around THB 50,000 to THB 80,000, depending on the amount of activity, and the number of employees of the representative office.
What are the general corporate tax rates? (Specify if there is a national versus local distinction).
The representative office is not subject to Thai tax and the funds, which are sent by the head office and received by the representative office, are not subject to Thai tax as long as the representative office conducts its activity within the scope of the permission.
Summary of any specific matters, e.g. recent or prospective major legal developments
No