Representative, Branch & Regional Office Registration
To open a representative office seems like the right choice for you. That’s good. However, there are certain conditions that apply to Thai representative offices which require a Foreign Business License. It is important to clarify beforehand what constitutes income and subject to Thai taxes. To fully understand the conditions which pertain to a Representative Office in Thailand, contact any of our Thai lawyers or any of our foreign lawyers to provide you with guidance when considering opening a representative office in Thailand.
The Foreign Business Act prescribes a range of business, commercial, and industrial activities that may not be carried out by “foreigners” unless a relevant license has been obtained or an exemption applies.
This includes Thai-registered companies where half or more of the capital is held by non-Thai individuals, foreign-registered companies, or Thai-registered companies that are themselves majority foreign-owned.
There is no general prohibition against foreigners carrying out business in Thailand. However, foreigners cannot engage in the following:
- Newspaper publishing, radio or television broadcasting
- Rice farming, arable farming, or orchard farming
- Rearing livestock
- Forestry and the processing of wood from forests (naturally grown)
- Fishery, only in relation to marine life in Thai waters and the specific economic zone
- Extraction of Thai medicinal herbs
- Trading and auctioning of Thai antiques or antiques which are of historical value to the country
- Manufacture or casting of Buddha images and alms bowls
- Trade in real property
Type of Company in Thailand
- Registered Ordinary or Limited Partnership.
- Representative Office, Regional Office, or Branch Office.
- Limited Company.
Unlike a Thai partnership, in a limited partnership, one partner’s liability is limited while the other partner’s liability is unlimited.
Limited partnerships MUST be registered, unlike a Thai partnership.
A Representative Office has limitations on activities, as outlined below:
- Reporting on business movement in Thailand.
- Providing advice related to products that are being sold to distributors or customers
- Sourcing goods and services in Thailand
- Inspecting and controlling the quality and quantity of goods purchased or ordered to be manufactured in Thailand
- Introducing information regarding new products or services
The structure is what separates regional offices and their branch counterparts. The regional office will conduct its business in Thailand on behalf of its head office based outside of the Thai kingdom.
A regional office is limited to performing seven specific activities, all of which fall under list three of the Foreign Business Act ‘FBA Act 1999’, the aforementioned activities are listed below.
- Communicating, coordinating, and directing, on behalf of the head office
- The operation of branches and affiliates which are located in the region
- Providing services in consulting and management
- Training and personnel development
- Financial management
- Marketing control and sales promotion planning
- Product development
- Services in research and development
Also worth noting, a foreign company must have at least one active branch office or affiliate in Asia. Regional offices are also restricted from earning income, purchasing, selling, and negotiating while based on Thai soil.
Unlike the Representative Office and Regional Office, Branch Offices under Thai law are not limited to “non-trading” activities. They are allowed to earn income.
The Branch Office’s liabilities arising from the action of the business in Thailand will not be limited to Thailand but extend to the head office overseas.
Under Thai law, the branch office is also governed by the FBA Act. If one of the branch office’s activities falls under the FBA Act, it will require a Foreign Business License (FBL) to conduct activities in Thailand.
Two options are available depending on your circumstances:
1. Private OR closely held (company that has only a limited number of shareholders)
A private limited company is formed through a process that leads to the registration of a Memorandum of Association (Articles of Incorporation) and Articles of Association (By-laws), as its constitutive documents.
2. Public Company
A minimum of 15 promoters is required for the formation and registration of the memorandum of association of a public limited company, and the promoters must hold their shares for a minimum of two years before they can be transferred.
The Board of Directors of a public limited company must have a minimum of five members; at least half of them Thai nationals. The registration fee for a public limited company.is roughly 2,000 Baht per million baht of capital.