The Foreign Business Act has some mandatory requirements that need to be satisfied for obtaining a Foreign Business License for setting up a 100% foreign-owned company in Thailand. This process may take a lot of time. However, foreign companies who want to perform market research and assist in exploring new opportunities or partners, usually, opt for establishing a Representative Office in Thailand before setting up a permanent Thai company.
The Civil and Commercial Code in Thailand permits foreign companies to establish their Representative Office in Thailand. A Representative Office is only an extension or a subsidiary of your parent company or head office, hence, it can only exercise activities as described below. However, a Representative Office is subjected to fulfilling fewer conditions as compared to other foreign companies in Thailand. One of the major difference between a Representative Office and a Thai company is that the Representative Offices cannot invoice within Thailand, consequently, they will not pay any income tax making tax reporting and accounting obligations lenient.
The Representative Office has the right to hire native staff under contracts, offer office premises at lease, open a local bank account to pay for the expenditures incurred and receive remittance from the head office. A Representative Office must appoint a "principle manager" to look after the operational activities of the office in Thailand. The head office appoints the manager, either foreign or a Thai national, directly for the Representative Office. A foreign national can be appointed as a manager if the foreign national is a resident in Thailand and fulfills the requirements of working in Thailand legally.
The head office will need to produce company registration documents including certificate of registration, financial statements, passports of the company shareholders and articles of association. These documents must be certified by a notary public where the head office is based. Additionally, all the application forms required should be in Thai version approved by the Ministry of Commerce and should be duly signed by the appointed representative manager. In the event that a foreign manager is appointed, the application form must be duly signed in-person in Thailand. Consequently, once the documentation process is done, the registration and representative license will be completed and issued within 15-20 business days.
The closure of a Representative Office is simple and effortless as compared to the closing process of a company. Once a Representative Company has accomplished its objectives, it can be closed within 60 days.
In case of a Representative Office closure, it will not be required to follow the normal closing process for a company as it is the same legal entity as its office.
Our dedicated team of experienced commercial lawyers will assist you with the professional setup of your Representative Office in Thailand. Contact us today!