According to the Civil and Commercial Code (CCC), partnerships can be divided into 2 types:

(1) Ordinary Partnerships

(2) Limited Partnerships

Ordinary Partnership

In an ordinary partnership, all the partners are jointly and wholly liable for all obligations of the partnership. An ordinary partnership may or may not register as a juristic person. Therefore, an ordinary partnership can be divided into 2 types:

(1) Non-registered Ordinary Partnership - has no status as a juristic person and is treated, for tax purposes, as an individual.

(2) Registered Ordinary Partnership - is registered with the Commercial Registrar as a juristic person and is taxed as a corporate entity.

Limited Partnership

In a limited partnership, there are:

(1) One or more partners whose individual liability is limited to the amount of capital contributed to the partnership, or

(2) One or more partners who are jointly and wholly unlimitedly liable for all the obligations of the partnership. Limited partnerships must be registered and are taxed as a corporate entity.

Partnership Registration

When two or more people agree to invest in one of the aforementioned types of partnership, the appointed managing partner is responsible for registering the partnership with the commercial registration office of the province that the head office of the partnership is located in. A limited partnership may only be managed by a partner with unlimited liability.

There are two types of limited companies: private limited companies and public limited companies. The first is governed by the Civil and Commercial Code and the second is governed by the Public Limited Company Act.

Private Limited Companies

Private Limited Companies in Thailand have basic characteristics similar to those of Western corporations. A private limited company is formed through a process that leads to the registration of a Memorandum of Association (Articles of Incorporation) and Articles of Association (By-laws) as its constitutive documents.

Shareholders enjoy limited liability, i.e. limited to the remaining unpaid amount, if any, of the par value of their shares. The liability of the directors, however, may be unlimited if stipulated as such in the company's MOA.

Limited companies are managed by a board of directors in accordance with the company's charter and by-laws. Both common and preferred shares of stock may be issued, but all shares must have voting rights. Thai law prohibits the issuance of shares with a par value of less than five baht. Treasury shares are prohibited.

A minimum of three shareholders is required at all times. A private limited company may be wholly owned by foreigners. However, in those activities reserved for Thai nationals, foreigner participation is generally allowed up to a maximum of 49%.

Public Limited Companies

Subject to compliance with the prospectus, approval, and other requirements, public limited companies registered in Thailand may offer shares, debentures, and warrants to the public and may apply to have their securities listed on the Stock Exchange of Thailand (SET).

Public limited companies are governed by the Public Limited Company Act B.E. 2535 (A.D. 1992), as amended by Public Limited Company Act No. 2 B.E. 2544 (A.D. 2001) and Public Limited Company Act No. 3 B.E. 2551 (A.D. 2008). The rules and regulations concerning the procedure of offering shares to the public is governed by the Securities and Exchange Act B.E. 2535 (A.D. 1992) and the amendments thereto, under the control of the Securities and Exchange Commission (SEC). All companies wishing to list their shares on the SET must obtain the approval of and file disclosure documents with the SEC, and then obtain SET approval to list their shares.

For public limited companies, there is no restriction on the transfer of shares (except to satisfy statutory or policy ceilings on foreign ownership); director's proxies are not allowed; circular board resolutions are not allowed; directors are elected by cumulative voting (unless the MOA provides otherwise); at least 50% of the directors must reside in Thailand; and board meetings must be held at least once every three months. Directors' liabilities are substantially increased.

A minimum of 15 promoters is required for the formation and registration of a public limited company, and the promoters must hold their shares for a minimum of two years before they can be transferred. The Board of Directors must have a minimum of five members, at least half of whom are Thai nationals. Shares must have a face value of at least five baht each and be fully paid up.

Restrictions on share transfers are unlawful, with the exception of those protecting the rights and benefits of the company as allowed by law and those maintaining the Thai/foreigner shareholder ratio. Debentures may only be issued with the approval of three quarters of the voting shareholders. The registration fee is 2,000 baht per million baht of registered. capital.

Branches of Foreign Companies

Foreign companies may carry out certain business in Thailand through a branch office.

Branch offices are required to maintain accounts only relating to the branch in Thailand.

There is no special requirement for foreign companies to register their branches in order to do business in Thailand. However, most business activities fall within the scope of one or more laws or regulations which require special registration, either before or after the commencement of activities. Therefore, foreign business establishments must follow generally accepted procedures.

It should be borne in mind that the branch is part of the parent company and therefore the parent retains legal liability for contracts and for tortious acts done.

For tax purposes, a branch is considered a permanent establishment, and its revenue is subject to Thai tax.

It is important to clarify beforehand what constitutes income that is subject to Thai tax because the Revenue Department may consider revenue directly earned by the foreign head office from sources within Thailand to be subject to Thai tax.

A condition for approval of a Foreign Business License for a branch of a foreign corporation is that minimum capital amounting to no less than five million baht be brought into Thailand within four years of start-up.

The branch may be allowed to operate for a period of five years, unless a shorter period is applied for.

Extension of the original duration of the license to operate may be granted, provided that the working capital to be brought into Thailand requirement is met.

Representative Offices of Foreign Companies

Foreign companies may establish representative offices in Thailand. Such an entity is regarded as a service business within the meaning of Schedule of the Foreign Business Act as such an application to establish such an entity is submitted to the Department of Commercial Registration.

These offices cannot engage in any profit-seeking or profit-making enterprise. The scope of the activities must be limited to approved activities, otherwise significant Thai tax liabilities may arise.

The risk of exceeding the scope of activities is that the income of the parent or affiliated companies may be deemed to have been earned in Thailand and hence be subject to taxation. In addition, the representative office cannot act on behalf of third persons.

Approved Representative Office Activities:

# The finding of sources of purchase of goods or services in Thailand for the head office.

# The checking and controlling of the quality and quantity of goods purchased or hired by the head office for manufacturing in Thailand.

# The giving of advice on various aspects concerning goods of the head office sold to agents or consumers in Thailand.

# The dissemination of information concerning new goods or services of the head office.

# The report of movements of business in Thailand to the head office.

Thus, a representative office which undertakes one or more of the approved activities in Thailand without rendering any other service to any other person, and which refrains from prohibited activities, is not subject to Thai taxation.

It is understood that such a representative office may receive a subsidy from the head office to meet expenses in Thailand. Gross receipts or revenues received by a representative office from the head office are not characterized as revenue and are thus not included in the computation of juristic person income tax or VAT.

Even though they are not subject to taxation in Thailand, all representative offices are still required to obtain a Corporate Tax Identification number and submit income tax returns and audited financial statements to the Revenue Department.

They are also required to submit the same to the Department of Business Development.

The head office must transfer at least 5 million baht into Thailand as working capital for the representative office, of which two million baht must be remitted in the first year, and at least one million baht per year after that.

The manager of the representative office must prepare an annual report on activities undertaken and file this with the MOC as a condition of the office being permitted to carry on its activities.

There are three types of representative offices that require licensing:

# Finance, security, and credit financier offices

# Foreign bank offices

# International business offices

Certain requirements of the Bank of Thailand (BOT) and the SEC must be met. There are also requirements regarding the remittance of funds into Thailand.