AC Lindbergh Company Limited
Setting up a company
Registering a Company
Promoters
Company promoters are responsible for registering the company with the Ministry of Commerce (MOC). The promoters must be individuals (not juristic persons) who are 20 years of age or older, and they must be available to sign documentation during the registration process. There must be a minimum of 3 promoters for a private limited company and at least 15 promoters for a public limited company.
Each of the promoters is required to hold a minimum of one share upon the company's registration. However, they are generally free to transfer those shares to existing shareholders or third parties, thereafter, if they wish. Promoters' potential legal liability is generally limited to the par value of the shares they will hold after registration is completed. The promoters are also responsible for paying expenses associated with the company's registration. After registration, however, the company may choose to reimburse the promoters for those expenses.
Timing
Registration of the company occurs at the MOC and can be accomplished on the same day as the registration of the memorandum of association provided that:
(1) All registered shares have been subscribed for;
(2) A statutory meeting is held to transact the business with the presence of all promoters and subscribers, and all promoters and subscribers have approved the transacted business;
(3) The promoters have handed over the business to the directors; and
(4) The payment of at least 25% of the total shares has been paid by the shareholders.
If the company falls under the definition of "foreign" (as defined in the Foreign Business Act (FBA)), it will normally be required to obtain Cabinet approval or a Foreign Business License prior to commencing operations.
Applying for and obtaining the company's tax ID card and VAT certificate (if required) takes place after registration with the MOC and can normally be accomplished within seven to 10 days of the date of providing all required information and documents to the Revenue Department.
Filings
All documents associated with the company's registration must be submitted to the registrar of the Department of Business Development of the MOC; or, if the company's office is to be located outside of Bangkok, they must be submitted to the filing office of the province where the office will be located.
All documents associated with the registration of the company's tax ID card and VAT certificate must be submitted to the Central Filing Office of the Revenue Department in Bangkok; or, if the company's office is to be located outside of Bangkok, documents must be submitted to the Revenue Office of the province where the office will be located.
Registering Process
1. Corporate Name Reservation
The first step of the company registration process is name reservation. To reserve a name, one of the promoters is required to submit a signed Name Reservation Form to the Department of Business Development of the MOC.
The promoter is required to supply the requested company name together with two alternative names. The registrar will then examine the application in order to ensure that:
a. No similar company names have previously been reserved; and
b. The names do not violate any ministerial rules.
If the applicant's intended name is in conflict with either of the above, that name will be rejected and the registrar will consider the alternative names submitted. This process can normally be completed within two to three days. If all three names submitted are rejected, the applicant will be required to re-submit the form with three new names.
The registrar has considerable discretion with regard to the matter of company names. Many times, the first name or even the first two names are rejected for violating one of the two rules stated above. Once the name is approved, the corporate name reservation is valid for 30 days, with no extensions.
2. Filing a Memorandum of Association
After the name reservation has been approved, the company's Memorandum of Association (MOA) must then be submitted. The MOA must include the name of the company, the province where the company will be located, the company's business objectives, the capital to be registered, and the names of the promoters. The capital information must include the number of shares and their par value. At the formation step, the authorized capital, although partly paid, must all be issued.
Although there are no minimum capital requirements, the amount of capital should be respectable and adequate for the intended business operation. However, if the company falls under the definition of a foreign company, the following rules apply:
a. If the company engages in activities specified in the FBA, its minimum registered capital would be the greater of 25% of the company's average per year expenses for its first three years of operation and 3 million baht (exceptions apply) fully (100%) paid up.
b. If the company does not engage in activities specified in the FBA, its minimum registered capital would be 2 million baht fully (100%) paid up. If the company is to employ foreigners, other minimum registered capital requirements may also apply.
3. Convening a Statutory Meeting
Once the share structure has been defined, a statutory meeting is called, during which the articles of incorporation and bylaws are approved, the Board of Directors is elected, and an auditor is appointed. A minimum of 25% of the par value of each subscribed share must be paid for.
4. Registration
Within three months of the date of the statutory meeting, the directors must submit the application to establish the company. During the registration process, the promoters will be required to supply the name, license number, and remuneration of the auditor the company is planning to hire.
5. Registering for Tax Documents
Companies liable for income tax must obtain a tax ID card and number from the Revenue Department within 60 days of incorporation or the start of operations. Companies that have turnover in excess of 1.2 million baht must also register for VAT with the Revenue Department within 30 days of the date the annual turnover exceeded that threshold.
Books of Accounts and Statutory Records
Companies must keep books and follow accounting procedures as specified in the Civil and Commercial Code, the Revenue Code, and the Accounts Act. Documents may be prepared in any language, provided that a Thai translation is attached. All accounting entries should be written in ink, typewritten, or printed. Specifically, Section 12 of the Accounts Act of 2000 provides rules on how accounts should be maintained:
"In keeping accounts, the person with the duty to keep accounts must hand over the documents required for making accounting entries to the bookkeeper correctly and completely, in order that the accounts so kept may show the results of operations, financial position according to facts and accounting standards."
Accounting Period
A newly established company should close accounts within 12 months of its registration. Thereafter, the accounts should be closed every 12 months. If a company wishes to change its accounting period, it must obtain written approval from the Director-General of the Revenue Department.
Accounting Principles
In general, the basic accounting principles practiced in the United States are accepted in Thailand, as are accounting methods and conventions sanctioned by law. The Institute of Certified Accountants and Auditors of Thailand is the authoritative group promoting the application of generally accepted accounting principles.
Any accounting method adopted by a company must be used consistently and may be changed only with approval of the Revenue Department. Certain accounting practices of note include:
Depreciation: The Revenue Code permits the use of varying depreciation rates according to the nature of the asset, which has the effect of depreciating the asset over a period that may be shorter than its estimated useful life. These maximum depreciation rates are not mandatory. A company may use a lower rate that approximates the estimated useful life of the asset. If a lower rate is used in the books of the accounts, the same rate must be used in the income tax return.
Accounting for Pension Plans: Contributions to a pension or provident fund are not deductible for tax purposes unless they are actually paid out to the employees, or if the fund is approved by the Revenue Department and managed by a licensed fund manager.
Consolidation: Local companies with either foreign or local subsidiaries are not required to consolidate their financial statements for tax and other government reporting purposes, except for listed companies, which must submit consolidated financial statements to the Securities and Exchange Commission of Thailand .
Statutory Reserve: A statutory reserve of at least 5% of annual net profit arising from the business must be appropriated by the company at each distribution of dividends until the reserve reaches at least 10% of the company's authorized capital.
Stock Dividends: Stock dividends are taxable as ordinary dividends and may be declared only if there is an approved increase in authorized capital. The law requires the authorized capital to be subscribed in full by the shareholders.
Financial Reporting and Auditing Requirement
Reporting Requirements
All juristic companies, partnerships, branches of foreign companies, and joint ventures are required to prepare a financial statement for each accounting period. The financial statement must be audited by and subjected to the opinion of a certified auditor, with the exception of the financial statement of a registered partnership established under Thai law, whose total capital, assets, and income are not more than that prescribed in Ministerial Regulations. The performance record is to be certified by the company auditor, approved by shareholders, and filed with the Commercial Registration Department of the MOC and with the Revenue Department of the Ministry of Finance (MOF) within 150 days of the end of the fiscal year.
Auditing Requirements and Standards
Audited financial statements of juristic entities (i.e. a limited company, registered partnership, branch, representative office, regional office of a foreign corporation, or joint venture) must be certified by an authorized auditor and be submitted to the Revenue Department and to the Commercial Registrar for each accounting year.
However, for a registered partnership with registered capital of less than five million baht, total revenue of no more than 30 million baht, and total assets of no more than 30 million baht, financial statements need only be submitted to the Revenue Department and not to the Commercial Registrar.
Auditing practices conforming to international standards are, for the most part, recognized and practiced by authorized auditors in Thailand.
Obtaining Tax Identification Card
Section 3 Under cim of the Revenue Code provides that a taxpayer or a payer of income shall obtain and use a taxpayer identification number (TIN).
A taxpayer identification number is issued by the Revenue Department and comprises 10 digits.
However, a taxpayer who is an individual or a payer of income who is an individual is not required to apply for a TIN if he has and uses a personal identification number (PIN) in accordance with the civilian registration law. He can use his PIN instead of TIN for tax return filing purposes.
A person shall submit the following supporting documentation along with the application form for a new TIN card:
For Form L.P. 10.1 (individual)
- Photocopy of alien certificate/ passport/ PIN card/ government officer identification card.
- Photocopy of house registration book of taxpayer/estate administrator
- Photocopy of Court order appointing estate administrator
- For Form L.P. 10.2 (body of persons)
- Photocopy of alien certificate/ passport/ PIN card of each person
- Photocopy of house registration book of the place of business
- Photocopy of contract or memorandum in establishing a body of persons or non-juristic ordinary partnership
For Form L.P. 10.3 (juristic person)
- Photocopy of house registration book of the place of business of the head office
- Photocopy of certificate of incorporation
- Photocopy of certificate of incorporation
- Photocopy of
- Certificate of the carrying on of business in Thailand
- Photocopy of contract of joint venture
- Photocopy of contract appointing employee or agent in Thailand
- Photocopy of PIN card/ alien certificate/ passport of the authorized managing director/ managing partner of employee or agent in Thailand
- Photocopy of document allowing use of place (where another person's place is used as place of business)
- Photocopy of TIN card of the authorized person/employee/agent in Thailand
L.P. 10.4 (payer of income)
- Photocopy of Alien certificate/ passport/ PIN card of the authorized person
- Photocopy of House registration book of the office
- Photocopy of Certificate of incorporation/ license of school establishment
- Photocopy of evidence of change in name or address of the juristic person
Source: Board of Investment of Thailand
Social Security Registration
REGISTRATION OF NEW PLACE OF BUSINESS
Documents to be attached together with the filing of the Application for the Registration of Employer Form
In the case of registration of the juristic person (must use the annexes for every defined clause.)
1. A copy or a photocopy of the Certificate of Incorporation of the Juristic Person together with its corporate objects.
2. A copy or a photocopy of the Value Added Tax (VAT) Certificate (Form Phor.Por. 10); or a copy or a photocopy of the Specific Business Tax Certificate (Form Phor. Chor. 20); or a copy or a photocopy of the License to Operate Factory Business (Ror.Ngor. 4).
3. Sketch map of the location of the place of business.
4. The Power of Attorney (particularly the granting of authority to others to act on one’s behalf which requires the duty stamp to be affixed pursuant to the Revenue Code)
In the case of one single owner: (Must use annexes for every defined clause)
1. A copy or photocopy of the Citizenship Identity Card (For a foreign national, use the passport or the Alien Identity Card).
2. A copy or a photocopy of the House Registration.
3. A copy or a photocopy of the Commercial Registration or a license to operate a business, which is issued under other law in which the name and address are clearly specified.
4. A copy of the Taxpayer Identification Card or a copy or a photocopy of the License to Operate a Factory Business (Ror Ngor. 4) or a copy or a photocopy of the Value Added Tax Registration (Phor. Por. 20) or a copy or a photocopy of Specific Business Registration (Phor.Thor. 20).
5. A sketch map of the place of business.
The Power of Attorney (particularly the granting of authority to others to act on one’s behalf which requires the duty stamp to be affixed pursuant to the Revenue Code.)
The Objectives of the Establishment of Social Security Fund
To create assurance and security in making a living for the people by sharing mutual benefits; by being jointly responsible for society by means of savings and sacrifice for the common good according to the main principle of encouraging the people to help one another and help themselves and family in time of lack of income; decline in income or an increase in expense without creating a burden to others and society. The social security is one of the measures to build up security in life.
Source: www.sso.go.th