There are multiple commercial operations under different business structures in Thailand. In Thai Commercial Business Organization, there are three types of business structures – partnership, company (public or private), or a joint venture.
There are two types of partnerships in Thailand - an ordinary partnership or a limited partnership.
An ordinary partnership can be registered or unregistered. In an ordinary partnership, the partners are jointly and wholly liable for the liabilities of the partnership. An unregistered partnership is not a juristic person and the income flows to the partners as individuals. A registered partnership is a juristic person and is taxed as a corporate entity.
A limited partnership must be registered with the government. There must be one partner who is fully liable for the obligations of the company. The limited partner is only liable to the amount of capital that the limited partner contributed to the partnership.
There are two types of companies in Thailand – a Public Limited Company and a Private Limited Company.
A Public Limited Company is a form of limited liability company that is regulated by the Public Limited Companies Act. A Public Limited Company can be publicly offered and traded in stock markets. In addition, the company can issue bonds or other securities to the general public.
A Private Limited Company is governed by the Civil and Commercial Code. As a limited company, the shareholder’s liability is limited to their capital contribution while the liability of the company directors can be unlimited. A private limited company cannot publicly offer shares or issues bonds or other securities to the public. A Private Limited Company is the most often used form of business structure by foreign nationals in Thailand.
A Joint Venture is a private agreement between two or more parties for a profit making endeavor. As a private agreement, Joint Ventures are not required to be registered with the government.
A joint venture can be unincorporated where each party maintains their own separate legal status. If the joint venture is unincorporated, all of the parties must have the proper licenses and registration to participate in their part of the endeavor.
A joint venture can also be incorporated as a separate entity that is separate and distinct from the joining parties. The separate entity will register and obtain their own licenses to complete the endeavor. The incorporated joint venture is usually in the form of a registered partnership or limited company.
There are benefits and risks in each of these business structures. Information on the various types of business structures is simplified in this article. In order to properly assess which business structure is appropriate for a specific type of business operation, it is necessary to review the particulars of the parties. Prior to beginning the process of forming a business structure, consult an experienced Thai corporate attorney.
