Company Registration with Virtual Office in Thailand

 

Are you an entrepreneur or business owner and planning to mark your presence in Thailand? Then we can help you with a very cost-effective idea. Go for company registration and virtual office rental in Thailand. To enhance the ease of company registration, the use of virtual offices is now legal in Thailand. The Department of Business Development, the Revenue Department of Revenue, and the Department of Social Security (SSO) of Thailand acknowledge the Virtual Office.  

However, it was not so a couple of years back and still associates certain ambiguities with it, to bust which, you must hire a reliable corporate law firm in Thailand. Although you can use a virtual office to register your business in Thailand, there are certain conditions that you should know beforehand. Let us help you with some of those points:

• A virtual office is suitable for registering the following business entities:
  • Representative Office in Thailand
  • Branch Office in Thailand
  • LLP and LLC in Thailand (for Startup & Small Business)
• Because regulatory bodies have stricter standards for the Office, there can be limitations on obtaining certain licenses.
• A virtual office address does not meet the address requirement for obtaining a non-immigrant B Visa or Business Visa.

However, you can complete all types of tax registrations using a virtual office address. The process of company registration in Thailand is the same as in general, you must have proper guidance in doing the same. To facilitate a proper understanding of the same, we have outlined the necessary steps below:

Step 1: Think of a meaningful and unique company name

You have to follow the Name Reservation process of the Department of Business Development (DBD) in the Ministry of Commerce. We typically ask our clients for at least two or three company names that we can reserve in the event that the name is already taken or cannot be used.

If your company name is not already reserved, our company registration team will search the Ministry of Commerce database in Thailand on your behalf.

Step 2: Draft, Sign & File the Memorandum of Association (MOA)

A Memorandum of Association (MOA) is a document that indicates the reserved name of the company, the company address, its business objectives, the registered capital, and the names of the promoters or partners. You have to submit these documents to the Department of Business Development (DBD) in the Ministry of Commerce.

Our team of expert corporate law professionals will draft an MOA following the best-updated practices. Henceforth, we will send it your way for review. You can now ask for any necessary adjustments. The Ministry of Commerce will get a copy of this legal document. The list should include all shareholders’ names and contact information. Additionally, it must be able to prove the company’s address, registered and paid-up capital, and the main business activity.

Your company is now officially registered in Thailand after receiving the Ministry of Commerce’s clearance, and you will receive your Company Affidavit, Certificate, List of Shareholders, and Company Articles of Organization.

Step 3: Convene Statutory Meet

After finalizing the share structure of your company, and DBD’s authorization to the Articles of Association and MOA, you have to select a Board of Directors and appoint an Auditor. To conduct all these, you have to convene a Statutory Meet in Thailand.

The Company Directors must submit the application to form the business, along with company registration fees in Thailand. Note that, you must do so within three months from the date of the Statutory meeting.

Step 4: Complete the Tax Registration Process

Like all other nations, it is a mandate for all businesses to do tax registration to operate in Thailand. Within 60 days of formation or the beginning of business operations, companies that are liable to pay Corporate Income Tax (CIT) must receive a Tax ID card and registration number from Thailand Revenue Department.

You must consult with a professional Thai business tax consultant to check your tax eligibility. The tax consultant or firm will also help you obtain your Thai tax ID Card.

There is no requirement to register for VAT if your company’s anticipated annual revenue is less than 1,800,000 Baht. However, you have to submit copies of your company registration documents to the Central Filling Office of the Revenue Department. This is to obtain your Company Tax ID Card.

If your firm does not already own the land outright and you need to register for VAT or receive a VAT Certificate, you must get consent from the landowner where your business is registered.

Step 5: Open a Corporate Bank Account

Our Business Registration package includes entire documentation and all necessary support to open a corporate bank account in Thailand. 

To open and approve your bank account, the bank manager requires the presence of all company directors and signatories. Some banks may demand that the foreign signatories have a valid work permit before approving the bank account.
For seamless and professional support on company registration and obtaining a virtual office in Thailand, contact us. Email us at officer@konradlegal.com and our team will get connected with you within 1 Thai working day!

How Can a Foreigner Start Franchise Business in Thailand?

Franchising is one of the easiest ways for foreigners to invest in a business. You won’t be the first person to open a franchise in Thailand because franchising is not a recent business model there. More than 12,000 franchisees and over 400 franchises are currently present in Thailand. Franchises have gained popularity, though, as a result of the AEC’s introduction because it has been much simpler, more profitable, and more effective to expand inside ASEAN. Thailand still lacks a franchise law, nevertheless.

• What is Franchise Business in Thailand?
• Regulations Governing Franchise Business in Thailand
• Obligations to follow to Start Franchise Business in Thailand
• Benefits for Foreigners to Start Franchise Business in Thailand
• This is What You Must Do!

What is Franchise Business in Thailand?

According to the 2019 notification, a franchise is a business transaction in which one party, called a franchisor, contracts with another party, called a franchisee can – 

• To use the franchisor’s s business method, model, system, procedures, and intellectual property rights (or any business method, intellectual rights, etc) that the franchisor has the right to license
• In a specific time and place
• Where the business operation is under the support and business plan of the franchisor
• The franchisee has an obligation to pay royalties to the franchisor

However, to assure the protection of both the franchisor and the franchisees, a contract must be neutral and benefit both parties. Moreover, the franchise agreement must strike a good balance between the interests of the two parties because they have various matters to take into account.

Therefore, call one of our attorneys if you wish to launch a franchise business in Thailand. Additionally, we provide other services and legal paperwork in addition to registering your business in Thailand promptly.

Regulations Governing Franchise Business in Thailand

First off, a franchisor/franchisee relationship is not subject to any notice or registration requirements under Thai law. Although the relationship between the franchisee and the franchisor is mostly contractual, nonetheless there are certain laws and rules governing them:

• The provisions of the Thai Civil and Commercial Code governing contracts
• The Unfair Contract Terms Act B.E.2540
• Intellectual property laws, in particular, the Trademark Act
• The Trade Secrets Act B.E.2545
• The law on consumer protection and “controlled contracts
• Laws governing the specific commercial activity that is the subject of the franchise, such as the Food Law or the Cosmetics Law
• The law on commercial competition

Additionally, the Notification Regarding the Guidelines for the Consideration of Unfair Trade Practices in Franchise Businesses was released on December 6, 2019, to stop franchisors from implementing excessively onerous and unfair contractual provisions that are thought to potentially hurt franchisees. The notice has been in effect since February 4, 2020.

Obligations for Franchise Business in Thailand

The franchisor is subject to two requirements in the announcement. Disclosure of crucial information about the franchise is mandatory. Therefore, the franchisor must provide the franchisee with material information before signing a franchise agreement, such as information about:

• The royalty and other payments for operating the franchised business
• The business model of the franchise
• Intellectual property rights
• Renewal and termination of the franchise agreement

The franchisor must first grant the franchisee the authority to operate the branch if the franchisor plans to open and run a new branch in the vicinity of the franchisee’s area of operation.

Therefore, we advise that franchisors implement their franchise systems carefully and abide by the notification requirements. Additionally, it is advisable to review the Commission’s rulings and the cases decided by the Thai Supreme Court that established a standard for “unfairness.”

However, the rules forbid the following franchise activities:

• Setting conditions on franchisees’ rights without valid business reasons
• Setting additional conditions after the execution of the contract without good cause
• Prohıbıtıng franchisees from purchasing products or services from manufacturers, distrıbutors, or other service providers without good cause
• Prohibit franchisees from selling perishable products at a discount without good reason
• Prohibit franchisees from selling discounted perishable products without good reason
• Not treatıng all franchisees equally by setting different terms for each franchisee
• Setting inappropriate contract terms for franchisees that are not related to maintaining the franchisor’s reputation, quality, and standards

Violation of the said rules can lead to an administrative fine of up to 10% of yearly sales. On this, the franchisee may file claims for violations under the terms of the franchise agreement with a one-year statute of limitations. Additionally, Section 60 of the Trade Competition Act provides the Commission extensive jurisdiction to prohibit an offender from operating any franchise businesses in Thailand.

Benefits for Foreigners in Franchise Business in Thailand

For an incomıng foreigner just arriving in the country, starting a franchise business in Thailand has many business advantages:

• New entrants are often unfamiliar with the Thai market
• They may not know the local supply chains, rental markets, and potential customers.
• Local franchisees are often more familiar with local supply chains, rental markets, and potential customers
• Spreading the risk

This type of business relationship also has interesting legal advantages:

• Foreigners will not have to deal with Thai restrictions on foreign entrants
• They are not subject to Thai legal restrictions on foreign parties: such as the Foreign Business Act, the Tourism Act, and other local laws, permits, and regulations. This is done by the franchisee, not the franchisor
• Their contract will be concluded under specific local laws such as Thai labor law

The Bottomline

There are regulations, acts, and laws in anything you do in any region of this world. Thailand is not an exception. The advantages that you can get by starting your franchisee business in Thailand are as follows:

• Get the opportunity to be part of the booming ASEAN market
• Tap the entire South-East Asian economy
• Be part of the rapidly growing digital economy of Thailand
• Get immense support from the Royal Thai Government & the Board of Investment, and,
• Have Konrad Legal by your side!

Reach out to us for all types of legal paperwork, legal, accounting, or regulatory guidance and assistance in your venture to start a franchise business in Thailand. Email us at officer@konradlegal.com.