How to start a partnership in Thailand
You have an idea to start a business in Thailand. A sole proprietorship is good if you have money to establish your business. But if you do not have enough capital and it also means you have to take all of the risks and liable by yourself. The partnership is another choice and it is commonly registered among Thai nationals.
Generally, when we make a partnership we make a contract between two or more people to share profit. All partners make an agreement to join together, in order to invest and start a business. They can share capital, labor and property . The agreement shall be clearly specified in terms of orally or in writing. Although it is not necessary to make the establishment contract in writing, but partnerships which are created to perform a big project, or require substantial investments, or the activities require documentary evidence should done the agreement in writing to avoid disagreement in future. In some cases, a partner is able to join an existing partnership by either entering as a new partner or buying shares from one of the actual partners. Incorporating a partnership for Thailand is considered very simple and flexible to do with fewer restrictions. The partnership is something in the middle between an individual and a bunch of people like companies. In a Civil and Commercial code it means two or more persons agree to unite for a common undertaking with a view of sharing profit. (Sections 1012) The Thai law also recognizes partnerships in the form of Ordinary Partnerships, which is a form of association where all partners are jointly and wholly liable for all the obligations of the partnership without limitation, and Limited Partnerships, an advanced form of union. Limited Partnership involve two or more partners conducting a business but one is only liable for his capital investment. The partnership is divided into three different categories, as following Unregistered Ordinary Partnership, Registered Ordinary Partnership and Limited Partnership. Firstly, Unregistered Ordinary Partnership is two or more natural person decide to do a business and working together, and not officially registered as a juristic person. It would have no legal status and would be treated as an individual where all partners are responsible for their respective obligations and personal income tax payments, you pay tax and do the contract with other business under your own name not as the shop name. Although they are not registered, they still recognized as a Thai legal entity. e.g., My wife and I decided to open and operate a restaurant together. When supplies are bought. It must purchased under my name or my wife's name not the restaurant name because the restaurant does not exist. Secondly, Registered Ordinary Partnership registered with the Department of Business Development are considered as a juristic person. Once registered it means the business actually exist and they are not natural person. They are a juristic person, and they can do the contract under their shop name. They are taxed as corporate legal entities in Thailand. Lastly, Limited Partnerships are also registered with the department of business Development. In a Limited partnership must consist of at least one Limited partner, and one General Partner. General partners like skill labors who are jointly and unlimitedly liable for partnership debts. On the other hand, limited partners are an investor who give the money to general partners to establish a business. Limited partner or Silent partner is not personally liable for partnership debts beyond their capital contribution. General partners or Managing partners will manage and run all the business while limited partners invest money without participating in the management of General partners. For an example, Taktaii invest money in Fahsai’s shop. The money help Fahsai pay her staff and maintain equipment. Taktaii does nothing to help run the Fahsai’s shop, but he received a monthly share of its profit, therefore Taktaii is earning a passive income from the shop, Fahsai keeps Taktaii update on the shop finances and status, but expect nothing more from her. Taktaii’s investment risk is the chance, Fahsai’s shop fails and his investment receives no profit. Taktaii is not liable, If Fahsai’s shop getting a large amount of debt when all break down. In the case that foreigners who wish to start a business in Thailand, but are restricted by the Foreign Business Act. You are not able to own and run a business on your own in terms of a sole proprietorship. Especially foreigners who desire to operate in any kind of partnership as a managing partner or ordinary partner, you must obtain a non-Immigrant visa for business or work purposes and a work permit. Partnerships are an optional choice for legally get the dividend as a profit. Therefore to avoid the Foreign Business License Law, Foreigners should not invest more than half or act as a general partner or ordinary partner who operate the business. If you are interested and decided to start an official registered partnership in Thailand.
There are 4 following steps of the establishment of a partnership.
Step 1: Make an agreement between partners on important matters.
Step 2: Request to check and reserve the name of the registered partnership.
Step 3: Create a registration request and supplementary documents when name has been booked.
1. The applicant for registration must prepare the seal of the partnership.
2. Fill details
Step 4: Apply for registration can be done in 2 ways.
1. Submit the registration request together with the supporting documents to the Registrar. In this case, the managing partner can be registered by oneself or delegated to others to act on their behalf.
2. Submit registration via electronic juristic registration system (e-Registration) at https://ereg.dbd.go.th/ERegistMemberWeb/nonmemberpages/home.xhtml.