Thailand client case studies in 2021
Registration of a event organizing company in Thailand
- In 2017, our Client, an Australian business recently purchased by a USA corporate investor, contacted Healy Consultants Group PLC to project-manage their expansion in Thailand and multiple other Asian countries;
- The business activities of our Client include mainly the organization of events in hotels and resorts with key players of the accommodation industry;
- The Thailand subsidiary would perform the same activities and would directly sign contracts and bill its local customers for the provision of the related services.
- During the engagement planning phase, our Client confirmed us he expected to sign shortly a important contract with a customer, related to the organization of an event in the Greater Bangkok;
- Such event would also be attended by the managing director of their USA shareholder, so ability to timely close the deal was also important for future relations between the two businesses;
- Consequently, our Client’s priority was to have a fully operational subsidiary within six weeks after the start of the engagement;
- Before being legally allowed to trade, foreign-owned entities in Thailand are usually required to secure a foreign business license when they operate in most services industries (including event organizing). Approval by the Thailand Ministry of Commerce of such license can take several months.
Corporate structure we recommended
- After liaising with our affiliate office and other local lawyers, we recommended our Client to register a company wholly foreign-owned by their USA investor;
- The above allows the business to benefit from a fast track issuance procedure under the Thailand United States Amity Treaty, which we expected to enable us to complete the registration process within 6 weeks;
- However, endorsement by the USA Government of a Thailand Amity treaty application requires the shareholders (or their representative) to visit in person its Embassy in Bangkok;
- Consequently, we agreed with our Client to:
- Register the business with nominee Thailand shareholders for faster business incorporation then;
- Appoint a professional passive USA national nominee supplied by Healy Consultants Group PLC as shareholder, who would be removed and replaced by our Client after Amity Treaty endorsement and licensing approval.
Nominee LLC setup and corporate banking strategy
- We started the engagement by drafting a quality nominee joint venture agreement, protecting our Client against any (unlikely) misuse of the company by nominee shareholders. We also supplied our Client with KYC documents on them;
- One week after the beginning of the engagement, we completed incorporation and tax registration of the Thailand entity. Click on this link for further details on the incorporation process;
- During the second week of the engagement, our USA nominee visited Thailand to i) submit an endorsement application for Thailand Amity Treaty to the local USA Embassy and ii) open the corporate bank accounts of the entity;
- The approval process for the foreign business license was uneventful: the USA Embassy confirmed endorsement within two weeks and the Thailand Ministry of Commerce confirmed issuance of the business certificate within four weeks.
Changes of corporate structure
- After completion of the above, we were ready to proceed to the change of corporate structure. the first step to complete the same was to secure approval from the Thailand Government for a purchase of shares by our Client and appointment of his preferred directors;
- After signature by our Client of the required documents, we submitted the same to the Thailand Government and secured its approval within one week;
- We then informed the two banks of the above changes and completed appointment of the new signatories within 3 weeks, after liaising with each bank to minimize their in-house compliance requirements.
- Today, our Australian Client has an operational business in Thailand, which can render services and trade with hotels and resorts, in a fully compliant manner with local regulations;
- We are proud of having assisted our Client to realize the same and we hope that our work will assist our Client to expand its business operations in Southeast Asia.
Hotel business gains Amity Treaty Approval
A global hotel chain with a longstanding history of operation in Thailand approached Healy Consultants. The success of the company’s high-class resorts in Thailand’s premier vacation spots was causing growing pains. The Client’s corporate structure of multiple subsidiaries was making tax and accounting compliance cumbersome and management operations haphazard. As such, the Firm wished to consolidate their corporate structure under one roof, with branch offices reporting to a mother holding company.
In addition, restrictions on business activities allowed by Thailand’s Foreign Business Act were making their hotel business confined to narrow parameters. Employment visas were difficult to obtain as foreign-owned entities must hire upwards of 5 Thais for every foreigner. The company also had increased pressure by Thai authorities to jettison their Thai shareholding friends for appearing to circumvent the Foreign Business Act with Thai nominees.
As such, the Client engaged Healy Consultants to consolidate their business structure and assist in navigating the complexities of Thai company law.
Upon being formally engaged, Healy Consultants began an in-depth investigation of all the possible ways to achieve these goals. Legal specialists and government officials were contacted regarding the possibility of foreign branches, Board of Investment feasibility approval, and the US Amity Treaty.
The 1966 Treaty of Amity between the United States and Thailand allowed for US-owned companies to benefit from most of the advantages of locally-owned companies. With Amity Treaty approval, the resort company would be allowed to i) conduct their hotel business free of most restrictions, ii) hire more foreign staff, iii) operate local branches through a US mother company and iv) grant greater control and ownership of to the beneficial owners.
Healy Consultants presented our Client with a 20 page engagement strategy document containing i) all the corporate structure options, ii) procedures and timelines, iii) fees, iv) expectations, v) legal matters, vi) comparison tables, and vii) shareholder’s agreements. The Client compared the options and settled our fees to proceed with incorporation and Amity Treaty approval.
Healy Consultants then proceeded to find a US citizen in Southeast Asia willing to become the nominee shareholder of this new company. After contacting three interested parties, an American living in Singapore, Mr. Ottoman, was available to meet with the company in Thailand and sign on as the US shareholder.
Mr. Ottoman travelled to Ko Samui to review the resort’s operations and discuss the shareholders’ agreement. Mr. Ottoman visited several of their hotel properties, met with the resort management and legal team, and accessed the liabilities associated with becoming a member of such a large company. After detailed due diligence was provided by both parties, our Client and the US sponsor were happy to enter into a mutual agreement of trust.
Healy Consultants legal team began writing a detailed shareholders’ agreement to be governed under the laws of New York. This shareholders’ agreement included i) expectations of both parties, ii) instructions for share holding and transfer, iii) legal representation, iv) compensation, v) violation clauses, vi) confidentiality vii) event of death, and viii) stipulations forbidding control of company operations/finances.
Incorporation and Amity Treaty Approval
Mr. Ottoman travelled to Bangkok to meet once more with our Client and apply for Amity Treaty approval for the new company. He had his passport certified at the US Embassy and Healy Consultants then initiated the incorporation process.
Healy Consultants applied for a company name with the Department of Business Registration and prepared company deeds of establishment, articles of association and Memorandum of Association. A business lease agreement, office registration number (“Tabien Baan”) and supporting documents were supplied by our Client as they already had several Bangkok properties. Healy Consultants then submitted the necessary documents to the Company Registry Office. As the Client had pre-existing bank contacts, they opened a new corporate account and supplied our firm with a certificate of deposit for the minimum share capital of US$67,000.
After the company registration certificate was received in three weeks, Healy Consultants began incorporating a New York company to serve as the mother company for the Thai branches. New York was chosen as it i) has the strongest Trust and company laws in the United States ii) is a reputable jurisdiction for Total Resorts’ Clients and iii) allowed for maintenance of Thai branches Amity Treaty approval. We filled the incorporation documents with the N.Y.S. Department of State and received the incorporation certificate within 6 working days. Healy Consultants then published the company’s formation announcement in two New York county newspapers in conjunction with New York law.
At this point, we transferred the shares of the Thai company to the New York LLC. Upon completing all of these steps, the Thai holding company address was transferred to Ko Samui and Healy Consultants successfully applied for VAT registration. A branch office of the US mother company was formed in Bangkok and is now able to sponsor more visas for the hotel’s foreign employees. These last steps took one month to compile the necessary signatures, paperwork, and government approvals.
In total, this Thailand engagement lasted for 5 months. Following engagement completion, the Client was presented with a complete company kit including Thai and US legal company documents. The Firm later engaged Healy Consultants to assist in their international banking and merchant account setup. To date, our firm has a strong relationship with the hotel company and we assist in the US company’s tax and accounting compliance.
US businessmen buy Thai property through company
Our Client John represents a group of five retired US businessmen who were interested in investing in real estate in Thailand. He was recommended to Healy Consultants by one of our Clients, who had set up an offshore corporate structure through us to hold his Thai property assets. John therefore approached Healy Consultants with a view to exploring the most risk-free way to purchase Thai property and collect rental incomes.
At this early stage we explained the main legal aspects of buying a property in Thailand. Although the Thai government encourages property investment in designated areas of the country, foreigners are restricted in the way in which they can buy property. The group had not earmarked a specific property for purchase, but was particularly interested in the island of Koh Samui, which is one of the areas designated by the Thai government for foreign investment
Preliminary research by John’s consortium had identified that incorporating a limited company, which would ultimately purchase the property, would be the most suitable way forward, despite the requirement for seven shareholders, the majority holding of which must be Thai. Since there were five US citizens already in the project, John asked if Healy Consultants could provide the additional two shareholders as nominees, including the Thai 51% shareholder. On this basis Healy Consultants provided a detailed e-mail quotation to John and his associates, for their review and consideration.
One month later John reverted to Healy Consultants with the go-ahead for the incorporation. He returned our Client Engagement Letter (signed by all five US shareholders), as well as providing the standard due diligence Healy Consultants requests from all Clients. We explained to John that Thai company incorporation procedures were time consuming and uncertain, especially as at the time Thailand was experiencing political instability, but our Bangkok office is experienced in minimising inconvenience to our Clients during the process, including not requiring our Clients to visit Thailand at any stage of the incorporation.
That said, with five shareholders based in the US, a common challenge throughout the engagement was obtaining signatures on corporate documents, and arranging for due diligence (passport copies, bank reference letters etc) to be translated from English into Thai, as required. Thankfully, John and his business partners were in no hurry to complete incorporation, and had budgeted for a lengthy process.
The first task for our Bangkok staff was to register the company’s intended name with the Department of Business Development at the Ministry of Commerce in Bangkok. This involved filling out an application form online, including four proposed names for the company. Name approval was given in two days.
The next step was for our Incorporation Team to draft the company’s Memorandum of Association (in Thai), which would need to be sent to the shareholders in the US. The Memorandum contains details such as the company name; the head office location; company objectives; registered capital; and details of the seven shareholders.
The Memorandum was couriered to John in the US, and we advised him that we needed to submit it to the Commercial Registrar’s Office in Bangkok within 30 days of the company name reservation, or that would become invalid. This proved a challenge for John, primarily because two of the US partners were traveling, but thanks to their cooperation our Bangkok office received the signed Memorandum within three weeks and we were able to meet the submission deadline.
The Commercial Registrar’s Office approved the Memorandum registration within two working days, enabling our team to move to the next step of the incorporation process – registering the company at the Commercial Registrar’s Office. The application for registration involves submitting the following information: names, addresses, occupations, and nationality of the initial shareholders and directors of the company; the head office address (including a letter from the landlord granting permission to use the premises, in this case Healy Consultants’ agreed to provide the office address for John’s company); a company seal; company bylaws; the name of a Thai-certified auditor (supplied by Healy Consultants); the financial year. In addition, our Bangkok incorporation team paid the Thai government fees of ฿5,000, based on the company’s minimum registered capital. The Commercial Registrar’s Office issued a Certificate of Registration within three weeks, confirming John’s company as a legal entity.
To enable the company to receive rental incomes and make payments, the next step was for Healy Consultants to assist in opening a corporate bank account in Thailand. Healy Consultants works closely with leading international banks, and is one of the few corporate consultants able to open a corporate bank account without the signatories needing to visit Thailand. Thus, our Bangkok-based Banking Team completed a Standard Chartered Thailand account application form. Our Singapore-based Marketing and Media Team also prepared a business plan for the company, outlining details of the company’s activities, shareholders’ and directors’ information, financial projections and a brief market analysis.
Both the application form and business plan were e-mailed to John, and he was asked to sign the business plan and also arrange for all signatories to sign the bank account application. Our Bangkok team received the signed documents within two weeks, and with this they were ready to approach the bank in Thailand. Our Banking Team submitted a complete package, including signed business plan and application form, as well as corporate documents, to the bank. Our staff also attended a brief bank interview, explaining why the company required a corporate bank account. The bank provided corporate bank account approval within 10 days by issuing a bank account number, which was forwarded to John. In the following three weeks, our Bangkok office received ATM cards and PIN numbers, including for Internet banking facilities.
Through the Thai company, John and his business partners have successfully purchased two apartments in Koh Samui, as well as a villa in Jomtien beach, close to Pattaya to date. The corporate structure is working as they had expected, although in the future John plans to live in Thailand with his wife, and will request Healy Consultants’ assistance to arrange residence visas.
Austrian entrepreneur launches high-end property magazine
Our Client Philip is an Austrian entrepreneur who wished to launch a property magazine catering to the upper end of Thailand’s property market.
Healy Consultants has worked closely with Philip to provide a wide range of business setup services in Thailand to help him fulfill his initial business objectives. It is likely going forward that Healy Consultants will continue to support the growth of Philip’s fledgling business.
Philip contacted Healy Consultants
while on a business trip to Singapore. He had become aware of our website during an internet search, and called us to find out how we could assist with his strategic goals, and to arrange an appointment to see our team during his stay in the city.
Philip visited our office in late June, meeting with Aidan Healy, managing director of Healy Consultants. During the meeting, Philip highlighted his plans and priorities – to set up publishing house in Phuket, produce a glossy property and lifestyle magazine, highlighting to foreign investors the latest projects and developments in the country. Philip envisioned the need for one expatriate staff member, as well as himself as managing editor, plus a staff of two or three Thai nationals.
Aidan explained to Philip the many challenges he would face in setting up a business in Thailand, the principal one being that a Thai company requires seven shareholders, and the majority shareholding has to be Thai-held. Although Philip was aware of this requirement, we reinforced to him the potential (albeit small) risks, as well as the additional expense of seven nominee shareholders, of this corporate structure.
Aidan suggested to Philip that Singapore may be a more media-friendly environment for a magazine startup to flourish. However, Philip explained that since his magazine would be catering solely to the Thai market, he needed to be geographically close to advertisers and property developments, and that the operational costs would be lower in Thailand (compared to Singapore) in the medium to long-term.
Accounting and tax support
Having been made aware of the legal, accounting and tax-related issues of setting up a business in Thailand, Philip returned to Austria to consider our proposal, and within a week he had signed and returned our Client Engagement Letter, and paid our engagement fees, to confirm the beginning of the project.
While Philip was obtaining the due diligence required by Healy Consultants, our Incorporation Team in our Bangkok office drew up a strategic engagement project plan which included:
- Incorporating a Thai limited liability company, including seven nominee shareholders and a Thai resident director;
- Opening a corporate bank account in Thailand with Standard Chartered Bank;
- Obtaining a publishing license for the magazine from the Ministry of Interior in Bangkok;
- Helping obtain a work permit for Philip;
- Locating a suitable office in Phuket town for the publishing house.
Philip had outlined his preferred corporate structure to our Thailand Incorporation Team, to meet both his business as well as statutory requirements. Although Philip was in theory able to find Thai nationals who could act as shareholders, he felt more comfortable with the idea of using Healy Consultants’ professional nominee services, especially as our nominees do not act as bank signatories and have no active role in the daily running of the business. It was also decided that Healy Consultants would act as the Thailand resident director, until Philip officially obtained his work/residence permit.
With this structure in place, our Thai office approached the Commercial Registrar’s Office at the Ministry of Commerce in Bangkok to obtain approval for the company name, which was completed within one working day. At this point, our Incorporation Team then prepared the company’s Memorandum of Association containing details of company name (as reserved with the Commercial Registrar’s Office); the head office location in Phuket; the company’s objectives; the initial registered capital of the company, and the names, addresses and occupations of the seven shareholders.
Since a Thai company is required by law to have a physical office, part of the incorporation process requires a copy of a lease agreement. Philip had already located a suitable office in Phuket Town, and already had this document ready for submission to the incorporation authorities.
The Memorandum of Association was also signed by Philip during a visit to Bangkok. He had also brought the personal due diligence required by Healy Consultants.
Meanwhile, Healy Consultants arranged for the nominee shareholders to sign a share subscription form. Under normal circumstances, this is a challenging task if a Client has handpicked shareholders through personal contacts or business associates. However, on this occasion our Incorporation Team was able to complete this step in one day.
The next step was for our Incorporation Team to submit the signed Memorandum of Association to the Commercial Registrar’s Office in Bangkok. The Memorandum was approved in writing within 10 working days.
Eight days after receiving Memorandum approval, the shareholders of a Thai company are required to deposit at least 25% of the company’s registered capital in an ESCROW bank in Thailand. In our Client’s case, since he required a work permit, a minimum registered capital of two million baht (US$61,400) was required (by law), so Philip deposited 25% of this total in the ESCROW account.
With this step complete, our Incorporation Team filed the following with the Commercial Registrar’s Office:
- Names, addresses, occupations, and nationality of the initial shareholders of the company, including a statement of the number of shares held by each;
- Head office address, including the copy of the lease agreement;
- The Company’s Bylaws;
- Names, addresses, occupations, and nationalities of members of the initial board of directors;
- Names of directors authorised to sign on behalf of the company;
- The name of a certified auditor, licensed to practice in Thailand, together with the auditor’s CPA number and the amount of remuneration to be paid for the audit of the first fiscal year, must be stated;
- The company’s intended financial year.
Seven working days after submitting these documents to the Commercial Registrar’s Office, our Bangkok team received a Certificate of Registration for Philip’s company, confirming that it had been fully incorporated.
The next step in the incorporation process was to register the newly-incorporated company at the Thailand Revenue Department in Bangkok. Three days after completing this, Healy Consultants obtained a Taxpayer identification card from the Revenue Department.
With the incorporation phase of the engagement complete, Healy Consultants approached Standard Chartered Bank in Bangkok to open a corporate bank account for the company. To achieve this, Healy Consultants Banking Team completed a Standard Chartered Bank Thailand corporate bank account application form, which was then couriered to Philip (as the sole bank signatory) in Austria for his signature and return to us.
Our Banking Team then prepared an application pack for the bank, comprising the bank account application form, the company’s Thai incorporation documents, and information on the bank signatories. Since Healy Consultants was acting as the resident director, our Bangkok officer represented the company at an interview at the bank, explaining the company’s activities and why it required a corporate bank account.
Our Banking Team receiving an account number in 12 working days. This information was then passed to Philip, who was delighted that we had been able to open an account without him needing to travel to Thailand again just for this purpose.
Obtaining a publishing license in Thailand is a complex task if not approached properly. A detailed application must be submitted to the Ministry of Interior in Bangkok, stating clearly many facets of the publication.
Healy Consultants’ Singapore-based Marketing and Media Team has wide-ranging experience of preparing information in the format and under the guidelines required by licensing authorities, and as such prepared a detailed Business Plan providing the following information:
- Information on the magazine’s content;
- Target markets and demographics;
- Marketing strategy and revenue streams;
- Operational strategy;
- Print run and distribution strategy;
- Staffing levels;
- Goals and milestones.
The document was prepared in one day, and sent by e-mail to our Thailand office, who arranged for it to be translated into Thai (as required). This step was time consuming – although the translator was highly competent and experienced in business terminology, some of the property-related technical language used in the Business Plan presented her with a challenge.
Joy, one of our administration staff in Bangkok, then submitted the Business Plan, as well as a completed license application form, to the Ministry of Interior.
The approval process for the publishing license proved frustrating for Philip. His office was now fully functioning in Phuket, he had hired two Thai staff, he had sourced a printer and distributor and the licensing procedure was the only major remaining hurdle. In Healy Consultants’ experience, approval for a publishing license in Thailand takes up to two months, and this time had elapsed. Joy continued to follow up by phone with the Ministry of Interior, who confirmed that there was nothing wrong with the application. It appeared that the approval was caught up in the wheels of Thai government bureaucracy.
In early November, Healy Consultants received written approval from the Ministry of Interior confirming that a license had been granted for Philip’s magazine, must to his relief.
As part of our ongoing service, Philip has asked Healy Consultants to assist his company to prepare financial statements in preparation for his statutory return. At this time, our Accounting Team will also prepare an annual tax return for the company.