Business Contract Drafting Service in Thailand

 

Are you planning to start a business in Thailand? Be assured that you have to undergo the process of drafting, reviewing, and executing several types of agreements and contracts. It will start from the lease or purchase contract of your business premises. Then there are service providers, vendors, employment, and labor contracts. In the process, you have to ensure that you are drafting a contract strictly under Thai law.

The same goes when you are planning to lease or buy property in Thailand. Be it a freehold or leasehold, a villa or a condominium, contracts will govern the process of your possession of any type of property in Thailand. Therefore, you must have basic knowledge about the process of drafting a contract under Thai law. The attachments, annexures, titles, or structures can be distinctly different from those in your native country. Thai residents are conversant with these protocols, but if you are an international investor, the only thumb rule to safety is to take local Thai legal consultation.

This article outlines the conditions of drafting, reviewing, and validity of a contract under Thai law. Being the basic principles, the information in this article applies to all types of contracts requiring the approval of Thai law.

Definition of “Contract” under Thai Law

Contract law deals with promises, which create both parties’ rights and obligations. To be a valid contract, not only must the parties agree on the essential terms, specific performance, warranties and assignment, force majeure, and contract remedies for instance, but also subject to the validity of the contract, the illegality of the subject matter, fraud in the inducement, and a lack of legal capacity, for instance.

A contract comes into action when two or more parties agree on a specific set of operational or business conditions on paper. However, a contract’s effectiveness and legal validity depend on its adherence to Thai Law. In addition, nowadays contract law deals with electronic data, which is influenced by international model law. All electronic transactions must be taken into account when making one.

Let us help you understand the requisites of drafting a contract under Thai law. Firstly, note that all contracts and agreements in Thailand are under the Civil and Commercial Code of Thailand (CCC). Additionally, there can be more governing laws applicable based on the nature of the business or type of property you are planning to buy in Thailand. 

In the context of law, a contract refers to a legal agreement between two or more parties that establishes, alters, transfers, safeguards, or terminates their rights and responsibilities. It brings about reciprocal legal obligations among the involved parties, as outlined in Section 149 of the Civil and Commercial Code of Thailand (CCC).

Step 1: The free and clear consent of the parties

To prevent a contract from becoming void, the declaration of core intention must be free from errors. For instance, imagine you purchase a Picasso for a high price after consulting with an expert, only to later discover that the painting is not by the renowned master. This mistake is an essential part of your consent to the contract. If you had known this fact at the time of purchase, you would not have agreed to pay such a high price. In this scenario, the mistake regarding a crucial element allows us to consider the contract potentially void.

Step 2: The legal capacity

In Thailand, the minimum age to enter into a contract alone, known as “sui juris,” is twenty years old. This legal threshold determines an individual’s capacity to engage in contractual agreements without the need for a legal representative’s consent. However, age is not the sole criterion.

Adults under legal protection, must have a guardian’s consent to engage in contractual activities. This must be in adherence to Sections 153, 19, and 21 of the Civil and Commercial Code of Thailand.

A notable illustration of this principle involves the sale of real estate. While one spouse’s name may be on the title deed, any transaction involving the sale or creation of a lien on the property requires the other spouse’s written consent. Without this consent, the transaction is invalid, as per Supreme Court Judgement n. 6889/2540. 

Step 3: The objective must be permissible by the law

• A contract must not contradict public order, or good Thai morals, be impossible to execute, or hold legal prohibitions.
• The cause is the reason parties enter into a contract, and the object is the subject matter of the contract.
• Illegal contracts, such as those involving the sale of narcotics, are void.
• If some terms violate public order or morals, the rest of the contract may still be valid.
• Unfair terms, even if understood, may be void to protect vulnerable parties (Unfair Terms and Conditions Act, B.E. 2540).

Step 4: Use compulsory forms

• Section 152 of the Civil and Commercial Code (CCC) specifies mandatory form conditions for certain contracts.
• Contracts such as construction agreements can be verbal, while land purchases and leases must be written, signed, and registered.
• Loan agreements require the borrower’s signature but not additional signatures.
• Since 2001, virtual signatures like emails have been permitted but excluded for specific juristic acts like family and inheritance contracts.
• Non-compliance can result in the contract being void, affecting both parties and third parties depending on their good faith.
• Consequences of failing to adhere to form conditions can vary and may impact the validity of the contract.

Step 5: Prevent the common mistakes

In Thailand, several common mistakes can negatively impact the validity of a contract. These mistakes include:

1: Unclear terms and conditions and interpretation of the parties

The term “lease” is more appropriate than “rental agreement” when the contract period exceeds three years. The parties must adhere to the laws governing leases. Additionally, it must avoid the term “rental” outside of the reference of the Civil and Commercial Code of Thailand (CCC).

However, legal disputes arising from a contract without its registration with the land department need certain considerations. In such cases, the court will consider the parties’ intent, the form of the contract, and the duration of the agreement. In such cases, the tenant or lessor may lose the case if the contract exceeds three years without registration. Note that a lease or rental agreement of more than three years must be written and registered at the Land Department, as per Sections 171 and 538 of the CCC.

2: Conflict of interest in the case of company director(s)

To provide benefits to the director, a Thai company is mandatory. This includes purchasing real estate under the company’s name and subsequently renting it out solely for the director’s use. It’s important to note that the declaration of this benefit is at a value lower than the prevailing market rate. This rule is according to Section 74 of the Civil and Commercial Code of Thailand (CCC).

3: Amended terms and conditions without evidence

The adage “Words fly away, writings remain” emphasizes the significance of written documentation, particularly in a legal setting. The life cycle of a contract involves three key stages: preparation, execution, and termination. Each stage requires meticulous attention and thorough comprehension, regardless of whether the contract is private or administrative.

Drawing from our extensive experience, we have encountered various unique situations. If you have queries regarding Thailand’s contract laws or seek the assistance of a contract lawyer for drafting or reviewing a contract in Thailand, do not hesitate to leverage our knowledge and long-standing experience to safeguard your interests. Email us at officer@konradlegal.com to connect with our contract lawyers specializing in Thai law.

How can Singaporeans Register Business in Thailand?

 

There are various factors that make Thailand and Singapore comfortable for investors of either region to do business in. The bilateral trade treaties make the process of Company Registration in Thailand easy for Singaporean business owners. Furthermore, both these companies complement each other in various sectors, hence, boosting these bilateral ties.

Are you an Investor from Singapore? Then now is the time to register your business in Thailand. Singapore is the leading financial hub in Southeast Asia and a well-liked location for foreign investors to set up regional offices. The second-largest economy in ASEAN and a major producer of exports is Thailand.

Relationship between Thailand and Singapore

Thailand and Singapore share healthy and mutually beneficial economic ties. With an investment of US$11.85 billion, Singapore was the second largest foreign investor in Thailand in 2022 just after China. Singapore holds a total stock of US$24.9 billion in direct investments in Thailand. It is mostly in the real estate, manufacturing, wholesale and retail trade, banking and insurance services, and manufacturing sectors.

Bilateral trade increased by 31.9% over the same period last year. Its value is S$21.6 billion (US$15.7 billion) through the first half of 2023. Gems and jewelry, unwrought gold, refined oil, circuit boards, computer equipment and components, and other industrial goods are among the main Thai exports to Singapore. Computer hardware and components, chemicals, refined oil, circuit boards, jewelry, diamonds, and bullion and gold are the main exports from Singapore to Thailand.

The nature of agreements between the nations clearly reflects that the Thai government is readily embracing Singapore’s top strategies. Most importantly, this is to encourage investment and effective regulation. As the two nations’ relations deepen, Thailand will be better able to transform its economy towards innovation and services. Furthermore, business owners and investors from Singapore with headquarters here will have access to a significant regional economy.

So isn’t this appealing enough? Therefore, both nations are well set to collaborate with each other in mutual development. So, why should you fall back on availing of the benefits? 

Here is the process to do business by Company Registration in Thailand as a Singaporean! 

Company Registration in Thailand for Singaporeans involves a specific process with the following general steps:

• Foreign Business License (FBL) Application: As a Singaporean, you will need to obtain a Foreign Business License in Thailand. This is mandatory to engage in certain business activities. Furthermore, the FBL is mandatory for most types of businesses unless they fall under specific exemptions.
• Business Activities Check: Make sure the business you want to set up is not on Thailand’s restricted or prohibited list. Note that, some businesses are limited to Thai nationals or require special permits.
• Company Name Reservation: Choose a unique company name and reserve it with the Department of Business Development.
• Memorandum of Association (MOA) and Articles of Association (AOA): Prepare the MOA and AOA in Thailand. This must outline the company’s structure, objectives, and rules.
• Shareholders and Directors: Identify the shareholders and appoint directors. As a Singaporean citizen, you can be a shareholder and director of the company.
• Registered Office Address: You’ll need to have a registered office address in Thailand for official communications.
• Submission of Documents: Submit all required documents, including the FBL application, MOA, and AOA, to the Department of Business Development.
• Registration and Tax ID: After approval of your application and documents, you’ll receive a company registration certificate and a tax identification number.
• VAT Registration: Depending on your business activities, you may also need to register for Value Added Tax (VAT) with the Revenue Department.

You should note that there are various bilateral trade treaties between Thailand and Singapore. Availing them will help you ease the process of company registration in Thailand. For any and all types of professional legal help for company registration in Thailand, email us at officer@konradlegal.com. Our team will get back to you within 1 business day.

Registration of Holding Company in Thailand

 

Are you planning for a Holding Company Registration in Thailand? Irrespective of the fact as whether you are a Thai or a foreign business owner, you may proceed with that. But before everything, you must know what is a Thai Holding Company and what are its features and privileges. The purpose of this guide is to comprehensively guide on the same. For further assistance, we are always reachable to help you with the best corporate law and accounting services in Thailand.

A Thai holding company primarily exists to hold and control the shares or assets of other companies. It is applicable to both domestic and foreign companies. A holding company cannot purposefully engage in direct business operations. However, it can manage its investments in other companies, known as subsidiaries. Holding companies are common in Thailand, due to their various benefits and advantages.

Key Features & Functions of a Thai Holding Company 

Ownership and Control

The purpose of a holding company in Thailand is primarily to have ownership and control over other companies. It achieves this by acquiring a significant portion of shares or assets of these subsidiary companies. Acquisition of such shares or assets is the "holding company's investments."

Risk Management

By holding diversified investments in multiple companies, a Thai holding company can evenly distribute its risk. If one subsidiary faces financial difficulties or legal issues, the other companies may remain active. Furthermore, these companies can provide aid to the subsidiary at risk. This provides a buffer against potential losses.

Asset Protection

Holding companies can offer asset protection by separating the ownership of assets from the operational risks. This structure can help shield the holding company's assets from potential liabilities incurred by its subsidiaries.

Tax Planning

In some cases, holding companies can facilitate tax planning strategies. Depending on Thailand's tax laws and the countries in which its subsidiaries operate, a holding company may be able to optimize tax efficiency within legal boundaries.

Consolidation of Financial Statements

A holding company typically prepares consolidated financial statements that include the financial results of all its subsidiaries. This provides a comprehensive view of the overall financial health of the entire group of companies.

Financing and Investment

Holding companies can raise capital through debt or equity financing and then use these funds to invest in new businesses or expand existing ones.

Dividend Income

The holding company can receive dividend income from its subsidiaries, providing a steady stream of revenue.

Governance and Decision-making

The holding company's board of directors exercises control over the group and its subsidiaries. This centralized governance can lead to more effective decision-making and resource allocation across the group.

It's important to note that while holding companies can offer various advantages, there are also legal and regulatory considerations to keep in mind. The establishment and operation of a holding company in Thailand must comply with the country's corporate laws and relevant regulations.

Foreigners may own a holding company in Thailand, provided that there is a genuine Thai partner in the business venture. This local partner will be a shareholder that must invest his own capital. It is prohibited under Thailand's company laws to have a local Thai partner who hasn't invested his own capital and holds company shares owned by somebody else. It is thus important to partner with genuine shareholders to operate your business under this structure. 

Benefits of Holding Company Registration in Thailand

Foreign investors choose to open a Thai Holding Company due to its ability to evolve and expand into new companies. It can be through local and/or foreign subsidiaries irrespective of their connections with their present business activities.

Additionally, setting up a Thai Holding Company helps foreigners avoid difficulties when applying for a listing on the Exchange. Holding companies can acquire subsidiaries that have various firm structures and subsidiaries on the list of the Exchange. Through this, they have better chances of having their stock listings without encountering any problems. 

Eligibility to Start a Holding Company in Thailand

There is no need to find a wealthy Thai investor to set up a holding company in Thailand. All you need is a local person you can trust, who can fork over 51% of the registered capital of 100,000 baht. 

You can set up a second company to hold a majority of the company shares and then offer shares from the operating company. This second company, being an investor, has a substantially lower capital than the operating company as its purpose of existence is to hold the operating company's majority of shares. 

What you need then is a Thai investor who can finance the holding company's capital that is much lower than the 51% of the usual 1 million baht required from regular investors. Applying for a holding company can take five to seven days to complete. 

As a result of this arrangement, both the operating and holding companies will be recognized as Thai companies that will be allowed to be involved in any business activity. This is because 51% of the operating company will be held by the holding company, whilst 49% will be held by foreign owners. This 51% is to be held by the true local investor, whilst 49% is to be held by the foreign owner.

Steps of Holding Company Registration in Thailand 

A holding company falls under the Thai Limited Liability Company (LLC) Category. Although LLCs allow companies to be 100% foreign-owned, holding companies require the majority of the company's shares (at least 51%) to be owned by a Thai national. 

To open a holding company, follow the steps of setting up a Thai Limited Company: 

• Reserve a Company Name 
• File the Memorandum of Association
• Organize a Statutory Meeting
• Holding Company Registration
• Tax Registration (Corporate Income Tax, Value Added Tax, and Withholding Tax)
• Open a Corporate Bank Account 

Get Work Permits and Visas 

All foreign employees and directors must get a work permit before being allowed to do business in the country. The company can be eligible to sponsor one non-immigrant foreign member if they meet the Ministry of Labour and Immigration Bureau requirements.

If you're considering setting up a Thai holding company or incorporating any type of business entity in Thailand, it's advisable to consult with Thai legal and accounting experts who can provide tailored advice based on your specific business goals and circumstances. Therefore, for the best professional results, email us at officer@konradlegal.com.

What Documents are Mandatory to Register a Company in Thailand?

The success of your plan to register a company in Thailand depends on various factors. They can be your investment capacity, the feasibility of your business idea, the level of acceptance by the Thai authorities, etc. But there is another primary requirement that you must be serious enough not to ignore. It is – “Documents Required for Company Registration in Thailand”.

As a leading corporate law and accounting firm in Thailand, we come across many requirements and applications for company registration in Thailand on a regular basis. We often experience that in spite of having all the capabilities to invest and the highest possibilities of achieving success, many individuals and businesses often step back. The reason behind this is they are unable to produce the documents required for company registration in Thailand. 

We don’t want you to fall prey to such a situation. Therefore, through this article, we want to share the list of documents that you must have to register your company in Thailand. Along with the list, we would also help you with some best practices to help you achieve success in your business objectives in Thailand.

General List of Documents for Company Registration in Thailand

Let us update you on the fact that you can register different forms of business in Thailand. It can be an LLP, a Public Limited Company, an Amity Treaty Company, or a BOI-promoted company. Irrespective of the type of business or its structure, there are certain documents that you have to produce in all cases. This section will tell you about the 10 most important documents for company registration in Thailand.

The first step in the process of registering your business in Thailand is to reserve a name for your new company. To start a representative or branch office in Thailand, the name of your existing business can be considered. You must provide 3-4 names to ensure that it does not infringe any copyright. After undergoing this stage, you have to proceed with the company registration involving the following documents:

1. Memorandum of Association (MOA)

This document outlines the company’s objectives, registered capital, shareholders’ details, and other key information.

2. Articles of Association (AOA)

The AOA specifies the internal regulations and rules governing the company’s operations, including the roles and responsibilities of directors and shareholders.

3. Company Affidavit

A signed affidavit by the company’s director(s) confirming compliance with the requirements for company registration.

4. Shareholder’s and/or Directors’ Identification Card and Passport

Identification documents, such as ID cards or passports, of all shareholders along with the identification documents of all directors.

5. Company Name Reservation 

A document confirming the approved company name by the Ministry of Commerce. This is obtained before the actual registration process which we already discussed on.

6. Proof of Registered Address

Documents demonstrating the company’s registered address, such as a lease agreement or title deed.

7. List of Shareholders and/or Directors

A document listing the shareholders’ names, nationalities, addresses, and the number of shares each holds. Additionally, you may need a document providing details of the directors, including their names, nationalities, addresses, and positions.

8. Shareholder Meeting Minutes

Minutes from the meeting, the shareholders agreed to establish the company and appointed directors.

9. Company Registration Application Form 

A completed application form for company registration, including information about the company’s structure and shareholders.

10. Power of Attorney (if applicable)

A document authorizing a representative to act on behalf of the company during the registration process.

These are the documents that you have to attach with a completed application form to the Department of Business Development to register your company in Thailand.

Best Practices: Prepare Documents for Company Registration in Thailand

The Department of Business Development, the Revenue Department, and the Board of Investment are very particular in the documentation stage. There is stringency in this process in all nations whenever you are thinking of registering your business. However, when in Thailand, please follow these practices that can ensure success across all stages of company registration in Thailand.

Identify the Industry

In many cases, the list of documents required for company registration in Thailand depends on the type of industry you want to do business. For example, the list of documents for a manufacturing business can differ from that of a trading business. Therefore, identify the type of industry your business idea is pitching on.

Finalize the Business Structure

Do you want to form a sole proprietorship firm, partnership business, public limited company, or a virtual business in Thailand? Go through your business plan, investment capacity, and market potential research to affirm the type of business structure you really need. The document requirement varies on this ground as well. In case of confusion, you may consult with a corporate law firm in Thailand.

Gain an understanding of the Thai Regulations

Do research on the application procedures and methodologies for company registration in Thailand. By this, you can understand the significance of every document that you have to submit in the process. With this understanding, it will be easy for you to provide the necessary details and proper information. The website of the Department of Business Development of Thailand furnishes all this information. If you are unable to understand, take the help of a professional corporate lawyer in Thailand.     

Get the Best Support on your Side for Thai Company Registration

Whether you are a Thai or a Foreign Investor, you must have a deep understanding of the regulations governing the company registration process in Thailand. Additionally, providing all the documents required for company registration in Thailand is an integral part of these regulations. To get the best support by your side, you must hire a reliable and professional Thai corporate lawyer for the process. To get the best, email us at officer@konradlegal.com and our team of experts will get back to you within one Thai working day.

5 Simple Ways to Manage Time For Entrepreneurs

“Time is really the only capital that any human being has, and the only thing he can’t afford  to lose.”- Thomas A. Edison

Time is the most valuable asset for entrepreneurs. It is like a resource and thus, cannot be wasted. It is important for entrepreneurs to not waste their time and manage it efficiently as this helps them to accomplish their goals and focus on their future. 

Here are 5 ways for entrepreneurs to effectively manage their time:

1. Maintain a Schedule

Always carry a schedule. Make a plan for your entire day. Note down all your activities, appointments throughout the day. This will help you get a clear picture of how much work you can accomplish during an entire day. Also, it will ensure that your time is not wasted. By noting down things, you can measure the productivity for your entire day.

2. Prioritize your work

Make a to-do list and mark out the most important tasks for your day. Point out the items that need immediate attention or which has an immediate deadline. Prioritizing your tasks will help you in effectively dividing the time you spend in each task.

3. Use Technology

Technology can help you manage time effectively. Use mobile apps such as Evernote, Google Doc and Keynote to manage your tasks. Using these apps ensure that you do not have to waste your times sending e-mails or scan documents. You can simply share it with your team members. This will help boost your productivity and save time.

4. Delegate Tasks

You cannot do everything alone. That is why it is important to delegate necessary tasks to your team members. Distributing the tasks ensure that everything is accomplished within the stipulated time without feeling over burdened.

5. Take out time for Brainstorming

Take out time for planning. This is the time when you brainstorm ideas, plan your day and create a blueprint for the future of your company. The more time you spend in planning your activities, the more you will be able to minimize the wastage of time.

If you are an entrepreneur, then these time-management tips will help you in boosting your productivity throughout the day. In case you are interested in doing business in Thailand, and looking for Thailand business registration agents, then get in touch with us. Our legal experts can guide you through each and every step involved in registering your company and ensure a hassle free transition. Call us today at +66 26260277