Thailand continues to strengthen its position as one of Southeast Asia’s leading destinations for foreign investment, offering a strategic geographic location, developed infrastructure, a skilled workforce, and access to regional and global markets. As a result, the country remains an attractive jurisdiction for entrepreneurs and companies seeking to establish manufacturing, technology, trading, tourism, and service-oriented businesses.

‍

At the same time, company formation in Thailand presents a number of legal and regulatory considerations that differ significantly from those in many Western jurisdictions. While foreign investors can establish and operate businesses in Thailand, certain sectors remain subject to ownership restrictions under the Foreign Business Act (FBA), and the availability of 100% foreign ownership depends on the nature of the proposed activities and the applicable regulatory framework.

‍

Choosing the appropriate business structure is, therefore, a critical step in the incorporation process. Investors must carefully evaluate available legal entities, foreign ownership limitations, licensing requirements, corporate governance obligations, and potential investment incentives before entering the Thai market.

‍

What legal forms can be used to establish a local company in Thailand?

‍

Thailand's legal system provides several business structures, which are primarily governed by:

‍

• The Civil and Commercial Code of Thailand (CCC), which regulates private law matters, including the establishment and operation of companies and partnerships;
• The Public Limited Companies Act B.E. 2535 (1992), which governs public limited companies;
• regulations and administrative requirements issued by the Department of Business Development (DBD) under the Ministry of Commerce.

‍

Business entities in Thailand can generally be divided into two main categories:

‍

1. Companies;
2. Partnerships.

‍

For foreign investors, the most commonly used business vehicle is the Private Limited Company (Co., Ltd.).

‍

1. Private Limited Company (Co., Ltd.)

‍

It is a separate legal entity whose share capital is divided into shares, and shareholders' liability is limited to the amount of their capital contributions. This structure is widely used by foreign investors due to its limited liability protection, flexible governance framework, and relatively straightforward incorporation process.

‍

The incorporation of a Thai Private Limited Company generally involves the following steps:

‍

1. Reserving a company name with the Department of Business Development (DBD).
2. Preparing and filing the Memorandum of Association.
3. Appointing directors and determining the company's registered office.
4. Establishing the shareholding structure.
5. Registering the company with the DBD.
6. Obtaining a Tax Identification Number (Tax ID).
7. Registering for Value Added Tax (VAT), where required.
8. Opening a corporate bank account.

‍

As of 2026, a Thai Private Limited Company requires a minimum of two shareholders, who may be either individuals or legal entities.

‍

All incorporation documents must be filed in Thai, and the company name must also be registered in Thai script.

‍

Provided that all documentation is properly prepared, incorporation can usually be completed within several business days to a few weeks, depending on the ownership structure and whether additional licenses or approvals are required.

‍

Where a foreign director or employee intends to work in Thailand, the relevant visa and work permit requirements must also be satisfied.

‍

2. Public Limited Company (PLC)

‍

It is a corporate entity governed by the Public Limited Companies Act B.E. 2535 (1992). Unlike a Private Limited Company, a PLC may offer its shares to the public and raise capital through public offerings and, where applicable, listing on the Stock Exchange of Thailand (SET).

‍

Key characteristics include:

‍

• separate legal personality;
• shareholders’ liability limited to the value of their shares;
• a minimum of 15 promoters;
• at least 5 directors;
• At least half of the directors must reside in Thailand;
• The ability to raise capital from the public.

‍

This structure is typically used by large businesses, financial institutions, and companies planning to access public capital markets.

‍

3. Registered Ordinary Partnership

‍

It is a partnership that acquires legal personality upon registration with the relevant authorities. The partners jointly operate the business and bear joint and unlimited liability for all obligations of the partnership.

‍

Key characteristics include:

‍

• separate legal personality upon registration;
• minimum of two partners;
• no statutory minimum capital requirement;
• unlimited liability of all partners;
• relatively simple management structure.

‍

In practice, this form is primarily used by small local businesses and professional practices.

‍

4. Limited Partnership (LP)

‍

It is one of the most common partnership structures available under Thai law.

‍

This structure consists of two categories of partners:

‍

• General Partners, who manage the business and bear unlimited liability;
• Limited Partners, whose liability is limited to the amount of their contributions and who do not participate in management.

‍

Key characteristics include:

‍

• separate legal personality upon registration;
• at least one General Partner and one Limited Partner;
• no statutory minimum capital requirement;
• clear distinction between management and investment roles.

‍

This structure may be suitable for family-owned businesses, joint ventures, and certain investment projects.

‍

5. Branch Office

‍

It is an extension of a foreign company and does not constitute a separate legal entity under Thai law. The branch operates on behalf of the foreign parent company and may engage in business activities within the scope authorised by the parent entity.

‍

Key characteristics include:

‍

• not a separate legal entity;
• full liability remains with the foreign parent company;
• permitted to conduct revenue-generating business activities in Thailand;
• Certain activities may require a Foreign Business License (FBL).

‍

Branch Offices are commonly used by international companies that wish to conduct business in Thailand without establishing a separate subsidiary.

6. Representative Office

‍

It is a non-trading presence of a foreign company in Thailand and is prohibited from generating income within the country. Its activities are limited to supporting and coordinating functions on behalf of the foreign parent company.

‍

A Representative Office may generally engage in:

‍

• market research and analysis;
• sourcing products and suppliers;
• quality control and inspection activities;
• information gathering and reporting;
• coordination between the parent company and local business partners.

‍

Key characteristics include:

‍

• not a separate legal entity;
• prohibited from earning revenue in Thailand;
• fully funded by the foreign parent company;
• suitable for market-entry preparation and business development activities.

‍

A Representative Office is often used by foreign companies seeking to explore the Thai market before commencing full-scale commercial operations.

‍

Foreign ownership restrictions under the Foreign Business Act (FBA)

‍

One of the key legal considerations for foreign investors establishing a business in Thailand is compliance with the Foreign Business Act B.E. 2542 (1999) (the "FBA"). The Act regulates foreign participation in certain business sectors and restricts foreign ownership in activities considered important to Thailand’s national interests, economy, culture, natural resources, or public welfare.

‍

As a general rule, foreign investors are permitted to establish and operate businesses in Thailand. However, certain activities are either prohibited or subject to licensing requirements.

‍

What is considered a foreign company?

‍

Under the FBA, a company is generally considered a foreign company if it is incorporated outside Thailand or is incorporated in Thailand but 50% or more of its shares are owned by foreign individuals or foreign legal entities.

‍

As a result, a company incorporated in Thailand may still be treated as a foreign company for regulatory purposes if foreign investors hold a majority ownership interest.

‍

Restricted business activities

‍

The FBA divides restricted business activities into three categories, commonly referred to as List 1, List 2, and List 3. The level of restriction varies by category.

‍

List 1: Businesses strictly prohibited to foreigners

‍

Foreign investors are generally prohibited from engaging in activities listed under

‍

List 1. These activities include, among others:

‍

• newspaper publishing and broadcasting businesses;
• rice farming and agriculture involving certain protected crops;
• livestock farming;
• forestry and timber processing from natural forests;
• fishing in Thai territorial waters;
• extraction of Thai medicinal herbs;
• trading and auctioning of Thai antiques and historical artefacts.

‍

Foreign participation in these sectors is generally not permitted.

‍

List 2: Businesses affecting national security, culture, and natural resources

‍

Activities under List 2 are considered sensitive because they may affect national security, cultural heritage, traditional industries, or natural resources.

‍

Examples include:

‍

• domestic transportation;
• production and sale of firearms and military equipment;
• businesses involving Thai arts, culture, handicrafts, and traditional products;
• activities related to natural resources and environmental protection.

‍

Foreign participation may be permitted only with special governmental approval and subject to specific ownership conditions.

‍

List 3: Businesses in which Thai nationals are not yet considered ready to compete

‍

List 3 contains the most restricted activities and is particularly relevant to foreign investors.

‍

Examples include:

‍

• accounting services;
• legal services;
• architecture and engineering services;
• advertising businesses;
• retail and wholesale activities below specified investment thresholds;
• hotels (excluding hotel management services);
• construction services in certain circumstances;
• food and beverage businesses;
• various service-based activities.

‍

Foreign investors may engage in these businesses only if the required approvals are obtained.

‍

Where a proposed business activity falls within List 2 or List 3, a foreign investor may need to obtain a Foreign Business License (FBL) before commencing operations. Applications are reviewed by the Department of Business Development (DBD) and relevant governmental authorities.

‍

When considering an application, authorities may take into account factors such as:

‍

• benefits to the Thai economy;
• technology transfer;
• local employment opportunities;
• investment value;
• contribution to national development objectives.

‍

The licensing process can take several months, and approval is granted on a case-by-case basis.

‍

Exceptions to FBA restrictions.

‍

Certain foreign investors may benefit from exemptions or special regimes that permit majority or full foreign ownership.

‍

Common examples include:

‍

• Companies promoted by the Thailand Board of Investment (BOI);
• businesses operating within designated special economic zones;
• Companies benefiting from international treaties, such as the US–Thailand Treaty of Amity;
• businesses granted specific exemptions under sector-specific legislation.

‍

These mechanisms can significantly reduce ownership restrictions and, in some cases, allow 100% foreign ownership.

‍

Authorities may investigate shareholder structures and request evidence regarding:

‍

• source of funds used to acquire shares;
• beneficial ownership arrangements;
• voting rights;
• shareholder financing arrangements.

‍

Companies found to be using nominee structures may face regulatory sanctions and enforcement actions.

‍

Penalties for non-compliance

‍

Violations of the Foreign Business Act may result in serious consequences, including:

‍

• administrative sanctions;
• suspension or termination of business operations;
• fines imposed on the company and responsible individuals;
• imprisonment for certain offences;
• orders requiring the restructuring of the company's ownership arrangements.

‍

Accordingly, foreign investors should carefully assess whether their intended business activities fall within the scope of the FBA before establishing operations in Thailand.

‍

Conclusion

‍

Establishing a business in Thailand requires careful consideration of the legal framework governing foreign ownership and business activities.

‍

While a Private Limited Company (Co., Ltd.) remains the preferred corporate vehicle for most investors, the choice of business structure should always be aligned with the intended activities, ownership model, and long-term commercial objectives. In particular, foreign investors should assess at an early stage whether their proposed activities fall within the scope of the Foreign Business Act (FBA) and whether additional approvals, licenses, or investment incentives may be required.

‍

In practice, the most successful market-entry strategies are those that combine proper corporate structuring with a clear understanding of regulatory requirements. Mechanisms such as BOI promotion, Foreign Business Licenses, and other available exemptions may significantly expand the possibilities for foreign participation and, in certain cases, allow 100% foreign ownership.

‍

Before incorporating a company, investors are strongly advised to conduct a legal assessment of the proposed business model, ownership structure, licensing requirements, tax implications, and immigration considerations. Taking these factors into account from the outset can help avoid regulatory complications, reduce compliance risks, and create a solid foundation for sustainable business operations in Thailand.

‍

Connect with TUCC

‍

Stay updated with the latest market insights, legal guides, and networking opportunities within the Thai-Ukrainian business corridor.

‍

Website: thaiukraine.org

‍

Email: info@thaiukraine.org

‍

LinkedIn: Thai-Ukrainian Chamber of Commerce

‍