Legal Insights

Incorporation of the Company Foreign Shareholders and Registration for Social Security in Thailand

Incorporation of the Company in Thailand with Foreign Shareholders: A Legal Perspective 

With regards to the shareholding structure of the Thai Company, the foreigner is restricted from holding the shares more than 49 percent of the total shares of the Thai Company. Therefore, shareholding structure of the Thai Company should be at least 51 percent of total shares of the Thai Company held by Thai shareholders and at 49 percent of the total shares of the Thai Company held by foreign shareholder to be able to operate the business in Thailand.

The process of incorporation of a company in Thailand with foreign shareholders are classified into two principal shareholding structures as follows:

  1. Shareholding Structures

1.1 Foreign Shareholding Not Exceeding 49% 

In this structure, the proportion of shares held by foreigner in a company shall not exceed 49% percent of the total shares of the company is considered as a Thai legal entity which eligible to operate the business in Thailand.

1.2 Foreign Shareholding of 51% or More 

In case of foreign shareholders hold the shares of 51 percent of the total shares of the company or more, the company is considered as a foreign legal entity which not eligible to operate the business in Thailand unless obtaining a Foreign Business License (FBL), Foreign Business Certificate (FBC) from the Department of Business Development of Thailand (DBD) or the Investment Promotion Certificate from the Board of Investment of Thailand (BOI), shall meet the requirements as follows:

    • Foreign Business License (FBL): This license allows foreign investors to hold 51 percent or more of the total shares of the company to conduct the business in Thailand.
    • Investment Promotion Certificate (BOI): the Company granted investment promotion certificate from the Board of Investment of Thailand is entitled to receive various tax incentives or tax exemption based on its promoted business category.
    • Foreign Business Certificate (FBC): Under treaties or agreements which Thailand is a party, the company is eligible to apply for Foreign Business Certificate before conducting its business in Thailand. For instance, the Treaty of Amity aims to provide significant advantages for US investors both corporations and individuals to operate the business in Thailand which allows American shareholders to hold 100 percent of the total shares of the company. 

This article serves as a guideline for foreign investors who interested in investment or incorporation of the company in Thailand highlighting the importance of legal frameworks for successful business ventures in Thailand to ensure that the company’s operations are applicable to the laws of Thailand.

 

Thailand Social Security for Foreign Employees

Foreigners who legally work in Thailand are eligible to register with the Social Security Office (SSO) and will be granted the same benefits as insured Thai nationals.

The process of applying for social security for foreign employees

    1. The application must be submitted to SSO within 30 days after starting work with the evidence of the work permit.
    2. In case the employer has not yet registered with the SSO, the employer must submit the application form SP.SS.1-01 to SSO.
    3. Once registered, notification of personal insurance must be made via submitting the application form SP.SS.1-03 to SSO along with the following documents:
      – Photocopy of Passport or Certificate of Identity
      – Work Permit
      – Photocopy of  Privilege Entry Visa (Smart Visa)
    4. Once submitted, the employer is obliged to submit the application form SSO.1-10 and make a payment of social security to SSO within the 15 days of the following month.

7 Benefits of Social Security Fund in Thailand

    1. Sickness: The insured persons must have contributed for at least 3 months within the last 15 months, they then will receive medical care free of charge at the registered hospital and cash benefit 50 percent of wages maximum 90 days each time and not exceeding 180 days per year.
    2. Maternity: The insured persons must have contributed for at least 5 months within the last 15 months, they then will receive THB 13,000 cash for each delivery and cash benefits 50 percent of wages for 90 days.
    3. Invalidity: The insured persons must have contributed for at least 3 months within the last 15 months, they can reimburse medical fee up to THB 2,000 per month and receive cash benefits 50 percent of wages for the whole life.
    4. Death: Death benefit, or funeral grant, is payable upon the death of an insured person who had contributed for not less than 1 month within 6 months before death. The amount of THB 40,000 of the funeral grant shall be paid to the person who arranged the funeral along with grant fund for survivor.
    5. Child allowance: The insured persons must have contributed for at least 12 months within 36 months, they then will receive cash benefits for THB 600 per month per child for legitimate child under 6 years old with a maximum of 3 children.
    6. Old – age benefits
      • Old Age pension
        If the insured persons are required to pay contributions for not less than 180 months irrespective of whether the period is consecutive and reach the age of 55 years, they will receive 20 percent of average wage of the last 60 months and plus additional 1.5 percent for each 12 months of contributions above 180 months.
      • Old Age Lump sum
        – In case the insured persons have paid contributions for less than 12 months, they will receive old-age lump sum at the age of 55 equal to the total amount of contributions that they have paid into the fund.
        – If the insured persons have paid contributions for more than 12 months, the old-age lump sum shall be paid equal to the contributions made by both insured person and employer plus interests at the rate set up by SSO.
    7. Unemployment: The insured persons must have contributed for not less than 6 months within 15 months. In the event that laid off, insured persons will receive 50 percent of wages for more than 180 days within 1 year and those who voluntarily resign their jobs will receive 30 percent of wages for not more than 90 days and the cumulative days of receiving benefits should not more than 180 days within 1 calendar year under the condition that the insured persons must register with the government Employment Office. In case of inevitable event such as natural disaster causing the cessation of enterprises, unemployment benefit will be provided based on the rate prescribed by the Ministerial Regulation.