Process of Changing Director of a Company in Thailand

 

The leadership structure of companies can evolve as they grow and scale their operations. The addition or removal of a director may become essential during this process. There can be various other reasons that may seek this change. There is a specific procedure to change or remove a company director in Thailand.

This article provides a detailed explanation of this process and the necessary steps to be taken.

General Conditions to Change the Director of a Company

Several factors necessitate the change of directors in a Thai Limited Company, including:

• Resignation or departure of a director
• Death of a director
• Bankruptcy or mental incompetence of a director
• Appointment of a new director
• Removal of a director from their position
• Retirement of a director
• Rotation of a director during the Annual General Meeting

Eligibility to be a Company Director in Thailand

Before you change or remove a company director, you should have someone who can take his/her responsibility as a successor. To execute this process, the first information that you must have is the candidature eligibility. To serve as a director in Thailand, individuals must meet specific qualifications:

• They must be at least twenty-one years old so that they can sign the application and its supporting documentation.
• They must possess mental competence and not be declared bankrupt.
• Residency status is not a requirement; both residents and non-residents are eligible.

What to do before Changing Company Director in Thailand?

Once you have checked and verified that your candidate to be the new director of the company matches the eligibility pointers, you will have to proceed with the following steps. 

In case of a Director’s departure, the company must convene either a Board of Directors meeting or a Shareholders’ meeting. The agenda depends on the company’s circumstances and any stipulations outlined in the Thai Commercial Code or the Articles of Association.

According to the Thai Commercial Code, during each annual general meeting of shareholders, one-third of the directors are required to resign rotationally. However, directors who resign can be re-appointed to their positions. Additionally, new replacement directors can be appointed during this shareholders’ meeting.

During a shareholders’ meeting, the shareholders have the authority to remove a director from their position before the conclusion of their term. Only a resolution approved at the shareholders’ meeting can result in the director’s removal from their position.

In the absence of specific mention in the Articles of Association, granting the Board of Directors the authority to resolve changes in a director’s authority, a resolution must be passed during a Shareholders’ meeting. This resolution requires the approval of a majority of the shareholders’ votes to be deemed valid and effective.

Process to Change Company Director in Thailand

Convene A Board of Directors Meeting

The Board of Directors is responsible for convening a shareholders’ meeting to pass a resolution to alter the company’s director or the director’s authority.

If the company’s Articles of Association state that the Board of Directors has the authority to modify the director’s authority, no shareholder meeting resolution is required for such a change.

The notice to convene a Board of Directors meeting shall adhere to the company’s Articles of Association rather than any specific legal requirements.

Organize A Shareholders’ Meeting

Under the corporate guidelines, companies must provide adequate notice for shareholders’ meetings. This notice must be published in a local newspaper no more than seven days before the scheduled meeting date.

Additionally, registered mail is required to notify shareholders listed in the shareholder registry. The notice will be deemed received upon sending the registered post to the shareholder’s listed address. This process must be completed seven days before the meeting.

Shareholders’ meetings can only be held if at least one-quarter of the company’s shareholders are present.

Unless otherwise specified in the company’s Articles of Association, notice to call for the shareholders’ meeting shall be sent to the shareholders at least seven days before the meeting.

Complete Legalities with the Departing Director

Upon approval of the director change by the shareholders and/or the Board of Directors meeting, the necessary forms will be prepared. The departing director and the authorized director(s) of the company must sign these documents. It’s important to note that the director must be physically present in Thailand during the signing process.

Update the change at the Department of Business Development

Upon completing and signing the forms, they need to be filed at the Department of Business Development. Within 24 hours of submission, the company must update its company affidavit to reflect personnel changes.

Within 14 days of the change, the authorized ‘former’ director must submit the following documents to the Department of Business Development:

• A copy of the resolution that was passed
• Application forms for changing the director and/or the authority of the director
• Signed copies of the ID cards/passports of both the old and new directors

Documents for Changing a Company Director in Thailand

To change a director in a Thai Limited Company, the following documents are needed:

• Copies of the new and old directors’ passports and addresses
• Approval letters from government agencies for strictly regulated businesses
• A death certificate in case of a deceased director
• A court order in case of company rehabilitation

Additional Information:

In Thailand, according to the law, directors who intend to resign from their positions must submit a formal resignation letter to their company. The resignation takes effect on the date that the company receives the letter. Resigning directors have the additional option to notify the Registrar of their resignation within 14 days of stepping down.

The written resignation letter must include a declaration by the director expressing their intent to end their directorship and be signed by the director.

Through a resolution passed at a shareholders meeting, a director can be removed from their position. If the director refuses to voluntarily resign, a shareholders resolution will be necessary to remove them from their position.

The Bottom Line

A Director is one of the crucial pillars of a company. Various core and ancillary responsibilities depend solely on the decision of the departmental or managing director. Therefore, while changing a Director, you should be very cautious about maintaining the legalities properly.
In the case of a resignation, the process is smooth, but, otherwise, there can be issues to resolve which you will need the assistance of a corporate law firm in Thailand. To discuss with us about your company today, email us your concern to change company director in Thailand at officer@konradlegal.com.

Personal Income Tax on Foreign-Sourced Income in Thailand

 

Is foreign-sourced income getting credited to your Thai bank Account? Then you need to check whether it is taxable or not. Effective January 1, 2024, the Revenue Department of Thailand has implemented substantial revisions to the taxation of income derived abroad and imported into the country. These tax adjustments hold noteworthy consequences for individuals residing in Thailand. Read this article as it will help you reassess your tax on foreign income in Thailand.

Declaration of Foreign-sourced Income for Taxation

The Revenue Department’s recent directive, Notification 161/2566, specifically targets individual taxpayers who spend at least 180 days in Thailand during a calendar year (tax year). If you meet this criterion and bring foreign income into Thailand, you must declare it for taxation purposes. Whether the foreign income was earned in the same tax year or a different one, it’s considered income subject to taxation when brought into the country.

This new criterion replaces the previous directive, No. 0802/696, on May 1, 1987, which exempted foreign income brought into Thailand from being re-declared.

Sources of Income that will be "Taxable"

As per the newly implemented taxation regulation, income generated from sources outside Thailand is subject to taxation. This includes earnings from duties performed overseas, businesses operating abroad, or assets held outside the country.

Specific examples of such income sources include wages earned from work performed in foreign countries, profits obtained from the sale of assets overseas, dividends received from foreign stocks, interest earned from foreign sources, and royalties originating from abroad.

Order of Revenue Department of Thailand

On November 20, 2023, the Thai Tax Authority clarified the provisions of Revenue Department Order No. 161/2566.  Specifically, Revenue Department Order No. 162/2566 states that the changes made by Order 161/2566 do not apply to income received before January 1, 2024. In other words, the pre-existing rules continue to apply to income earned before this date.

Effective from January 1, 2024, this order governs foreign-source income assessment at the domicile of the income earner. The change applies starting from the 2024 tax year onwards. The previous principle continues to apply to income earned from foreign sources before the 2024 tax year. According to the Revenue Code, such income must be repatriated to Thailand in the same tax year it is earned. Furthermore, individuals are not liable for personal income tax on this income.

From January 1, 2024, individuals will be liable to pay tax on income earned before 2024. They should be able to demonstrate that it was transferred to Thailand after the effective date. This modification results from a new clarification regarding the taxation of foreign income.

Relief for Tax Treaties

The significance of tax treaties established between Thailand and other nations must be considered. These treaties may provide exemptions or reduced tax rates applicable to foreign income. Businesses and individuals should thoroughly examine the relevance of such treaties within the context of their unique circumstances.

Key Considerations for Foreign Businesses

In light of the newly implemented tax regulations, businesses need to take into account the following critical considerations:

• Increased compliance burden: To comply with tax regulations, businesses must maintain accurate records and prepare thorough tax reports for employees earning income overseas upon their transfer to Thailand.
• Tax implications for expats: Individuals living in Thailand for over 180 days must take notice of this recently enacted regulation and incorporate it into their financial plans accordingly.
• Review global mobility programs: In light of the recent changes in Thailand’s tax laws regarding foreign income, companies with global mobility programs that include tax equalization for assignees should consider revising their policies accordingly.

The Bottom line

Thailand’s new taxation criteria for foreign-sourced income bring about a significant change for individuals residing in the country for more than 180 days a year. Previously exempt, foreign income brought into Thailand is now subject to taxation regardless of the timing of its acquisition. This development necessitates diligent tax planning and meticulous bookkeeping for foreign individuals and businesses in Thailand.

This change may impose additional compliance burdens. However, it is crucial to consider that tax treaties with other countries may offer exemptions or reduced tax rates. It is advisable for businesses with employees earning income abroad and for expatriates living in Thailand to explore these possibilities to mitigate their tax liabilities. Companies with global mobility programs may also need to review and adjust their policies in light of the new tax treatment.
To assess and pay tax on your foreign income in Thailand, seek guidance from a qualified Thai tax advisor. Please email us at officer@konradlegal.com to connect with our team of qualified Thai Corporate and Personal Tax Accountants in Thailand.

Register LLP in Thailand

 

To start a business in Thailand, business owners have two partnership options. An ordinary partnership involves two or more individuals sharing unrestricted responsibility. A limited partnership, on the other hand, consists of at least two people but provides limited liability to the limited partner, whereas the general partner has unlimited liability. Using the second concept, you can register a LLP in Thailand. It will be a Limited Liability Partnership firm in Thailand.

Understanding the intricacies of forming a limited partnership in Thailand can be challenging for business owners. Konrad Legal is here to offer assistance. Our legal team can assist with the preparation and submission of the necessary documentation on your behalf, ensuring a smooth process. Additionally, we can provide clarity on how liability is distributed within a limited partnership structure, helping you make informed decisions about your business.

Benefits of a Thai Limited Liability Partnership (LLP)

The allure of benefits draws many individuals to establish a limited liability partnership firm in Thailand.

Among the partners, the ordinary partner gains the most significant advantage due to limited liability. The ordinary partner is only held accountable for the amount of capital they invested. For instance, a limited partner who contributes 1 million Baht to the business may only lose that specific sum, even if the partnership incurs additional expenses, thereby limiting the extent of their potential losses.

In Thailand, a limited partnership provides entrepreneurs with operational flexibility. The Thai government permits limited partnerships to engage in various activities without limitations. Businesses can operate in various industries, although they may require licenses based on the scope of their operations. If necessary, Konrad Legal can assist you in acquiring the necessary licenses.

Additionally, existing partners have the authority to decide whether or not to admit new partners into the business. Unanimous approval from all partners is required before a new partner can be integrated into the business.

Furthermore, this partnership enables foreign ownership of up to 49 percent without the need for a foreign business license. This makes it convenient for foreigners seeking to establish businesses in Thailand to collaborate with nationals. It is noteworthy that if a foreign shareholder holds more than 49 percent of the business, they must obtain a foreign business license in Thailand to obtain which, we have dedicated services to help you.

Drawbacks of an LLP in Thailand

Unfortunately, there are also some drawbacks to consider before starting a limited partnership in Thailand.

First, the general partner has unlimited liability for the debts and obligations of the partnership. Assume that both partners invest 1 million Baht into the business. The limited partner is only liable for that amount, but the general partner’s liability is not limited, and can lose much more money. This puts the general partner at greater risk when operating the business.

Some also view business management as a drawback when operating a limited partnership in Thailand. The general partner has full control of the day-to-day operations. The limited partner cannot assume control of the daily operations without upgrading to a general partner.

Also, unlike an ordinary partnership, partners must file paperwork to set up a limited partnership. In addition, they must go through steps to dissolve the partnership. While many view this as an obstacle, we make the process of documentation and paperwork easy for the partners. The legal team can even help dissolve the partnership if needed.

Legal Requirements for LLP in Thailand

There are certain requirements in place for setting up a limited partnership in Thailand.

First, if the general partner is a foreigner, they will need a work permit or a non-immigrant business for business or work purposes. A foreign business license is also necessary if a foreign partner invests more than 49 percent into the business.

Thailand’s government requires 2 million Baht in capital to start the business. The partners do not need to contribute equally.

Timeline for Setting Up a Limited Partnership in Thailand

It takes approximately one week to set up a limited partnership in Thailand if you proceed correctly. This is the reason our clients choose us to ensure that the entire process goes smoothly and you can start your business fast.

To begin the process, the partners must complete and apply for registration to the Department of Business Development. Along with the application, the partners must settle the applicable fees.

The application can be cumbersome sometimes. It must include data and information related to the partners and the business as a whole comprising the objectives and nature of the same. 

If you’re ready to set up a limited partnership, contact Konrad Legal today by emailing us at officer@konradlegal.com. You will receive a quote and then can move ahead with us in the process of registering your limited liability partnership in Thailand.

BOI Thailand Benefits to Realtors for Affordable Housing

 

The Board of Investment of Thailand has now focused on the housing options for low-income Thais. This approach is to enable and encourage housing developers or agencies to deliver housing facilities at affordable rates in the market.

Announced on March 15, 2024, the key points of this scheme are as follows:

• Developers seeking tax privileges from the Board of Investment (BOI) must have plans to build townhouses, single-detached houses, and condominiums worth 1.5 million THB or less.

• Each townhouse or detached property must have a floor area of at least 70 square meters, while condominium units must have a minimum floor space of 24 square meters.

• To qualify for the tax privileges, property developers must also obtain endorsement from the Government Housing Bank (GHB).

• Developers interested in this promotion must submit their applications to the BOI before the end of the following year (2025).

What are the Benefits?

To stimulate the creation of affordable housing for low-income households, the Board of Investment (BOI) provides lucrative tax incentives to qualified real estate development projects.

These projects are exempt from corporate tax for up to three years, covering 100% of investment costs excluding working capital and land acquisition. These exemptions apply to investments in roads, public amenities, and public use spaces within the development's scope.

In response to the demand for affordable housing options, the Bank of Thailand's (BOI) tax incentives for developing housing for low-income Thai citizens, coupled with the government's measures to expand the price range eligible for reduced transfer and mortgage fees, aim to address this critical need. These initiatives not only benefit homebuyers and real estate developers but also have broader economic implications. By stimulating various sectors and promoting economic growth, they contribute to the overall well-being of the Thai economy.

With the government's commitment to providing accessible housing solutions, the Thai real estate market is poised for positive growth. These measures create opportunities for low-income individuals to secure affordable housing, while simultaneously supporting property developers in addressing this crucial societal need.

Not all Projects are eligible for this BOI Promotion!

To qualify for the BOI Thailand promotion, at least 80% of the project's residences must comply with the usable area and price criteria. The minimum usable area is 24 square meters for condominium units and 70 square meters for townhouses and detached houses. Furthermore, the residences can be sold solely to private individuals, and the sale price for each condominium unit or house (inclusive of land price) should not exceed THB 1.5 million.

Additionally, the projects must comply with the following:

• Have a car park, CCTV throughout the project, a 24-hour security guard, cleaning staff, a common area, and other facilities in appropriate proportions.
• Obtain BOI approval of the building plan and layout.
• Hold a permit for the construction of a building under building control laws and other relevant regulations.
• Obtain approval from the Government Housing Bank before applying the BOI.

Companies must submit applications for promotion to the BOI by the end of 2025, as per the official notification. New low-income residential projects promoted by the BOI will receive a corporate income tax exemption for the same duration as A4-promoted activities (usually three years).

Only the construction costs associated with roads, other facilities, or public utilities commonly used within the project will be considered when calculating corporate income tax exemptions. Construction costs for residences, houses, buildings, or commercial structures, regardless of whether they are intended for lease or sale, are not included.

How can we help?

The BOI formulates the schemes and we help individuals and businesses adhere to the eligibility and process parameters flawlessly. In this effort, we can help you with:

• Company Registration in Thailand - you need a company before applying for BOI Promotions
• Project Feasibility Study for BOI Promotions
• Documentation Support for BOI Application
• Setting up your Accounting and Tax Systems

All you need to do is email us your requirements at officer@konradlegal.com for our team to know you and your project. Henceforth, it is on us to enable your business to avail of BOI Promotions in Thailand.

BOI Thailand Benefits for Regional Operating Headquarters in Thailand

Talking about Board of Investment privileges, it is known to most of us that almost all types of business structures, be it LLPs, LLCs, Sole Proprietorships (only Thai ownership), etc. can be eligible for the same provided their business deals with the BOI eligible activities. But what if you are planning to expand your business in Thailand - you can register your Regional Operating Headquarters in Thailand and enjoy seamless BOI privileges.

To boost business activity in Thailand, the Thai government has introduced the Regional Operating Headquarters (ROH) scheme. This instrument offers incentives to investors who set up a regional headquarters in the country and provide "qualifying services" to branches or affiliated companies both within and beyond Thailand's borders.

Regional Operating Headquarters (ROH)

In 2002, the Revenue Department introduced the first set of ROH incentives, which included both tax and non-tax incentives, with the primary goal of attracting more investment in Thailand. Some of the tax incentives offered by the Revenue Department include:

• Corporate income tax reduction from 30% to 10% is offered on net profit stemming from offshore branches and associated companies.
• Dividends received from both domestic and foreign subsidiaries of ROH are exempt from taxation.
• Withholding tax exemption is granted for dividends paid out from ROH to foreign companies that do not conduct business in Thailand.
• A reduced personal income tax rate of 15% applies to the salaries of expatriates working with ROH, instead of the progressive tax rate ranging from 5% to 37%.
• An initial allowance of 25% on buildings is provided upon acquisition.

Board of Investment Option

Investors who seek non-tax incentives should apply directly to the Board of Investment (BOI). Here are the incentives that applicants may receive from BOI:

• Permission for foreign investors to own land.
• Permission to bring in foreign specialists and technicians.
• Facilitation of work permits and visas

In 2010, the Thai government revisited strategies to enhance Thailand's competitiveness in the regional market. The government aimed to provide fresh incentives to attract foreign investment and create a more favorable environment for businesses

Incentives from the Board of Investment

For a Regional Operating Headquarters (ROH) to qualify for BOI incentives, it must meet the following criteria:

• The Thai Revenue Department must confirm the business entity as ROH.
• It must be a juristic company or partnership incorporated under Thai law.
• It must have a paid-up capitalization of not less than 10 million baht.
• It must provide services to its branches or companies in at least 3 countries.
• It must earn half of its income from qualifying services provided to its branches or associated companies outside Thailand.

Definition of Services

“Qualifying Services” are the services that must be in line with the business of the ROHs to be eligible for the BOI Incentives in Thailand. The list of such activities that make these ROH eligible under the Investment Promotion Act of BOI Thailand is as follows:

• Organizational administration and management business planning
• Sourcing of raw materials, parts, and finished products
• Research and development activities
• Technical support
• Marketing and sales promotion
• Regional human resources training and development
• Business advisory services ( financial management, marketing, accounting, etc.)
• Investment feasibility studies and economic and investment analysis
• Credit management and control
• Other services shall be approved by the BOI on a case-by-case basis.

For any inquiries you may have, don't hesitate to contact our dedicated corporate Thai lawyers. Our legal experts are always ready to assist you and provide valuable legal guidance. Email us at officer@konradlegal.com to book a session of free email consultation.