Myths about Foreign Business in Thailand: 1 Thai Director, 4 Thai Staff
At GPS Legal, we get many inquiries about starting a business in Thailand. We often find that these entrepreneurs have received misleading or even completely erroneous information. Here, we would like to address some misconceptions about the need for a Thai director and staff.
A Foreign Business in Thailand Does Not Always Need a Thai Director
There have been cases where foreign investors have been misled into creating a convoluted nominee structure, mainly to the benefit of an unscrupulous advisor. Part of this “advice” may also include that the business must have one Thai director registered with the new company, which the advisor can help identify, for an additional fee.
There are only a few situations where a company needs one or more directors to be a Thai national, such as a foreign business conducting operations that fall under List 2 of the Foreign Business Act. There are other circumstances as well, but these are more the exception and not the rule. While it may make sense to have a locally resident Thai or foreign director for expediency, the Civil and Commercial Code does not stipulate the need for a locally resident director, or that a director must be Thai. Only that a company must have at least one authorized director.
A Foreign Business in Thailand Does Not Always Need 4 Thai Staff Per Work Permit
Another misconception that is frequently repeated is that a company must have a ratio of four Thai staff to one foreigner to qualify for a work permit for that foreigner. This is wholly incorrect. The employee ratio requirement is actually related to Immigration regulations for the 1-year extension and renewal of a Non-B visa application and not to the 90-day “B” visa or to the Labor Department’s work permit requirements. To be clear, the Labor Department only requires that a company meets the minimum capitalization of THB 2M per work permit holder, with little to no emphasis on local staffing levels.
Further, the ratio depends on the entity type. A standard company limited (foreign or Thai majority owned) must employ four Thai staff to one foreigner employee’s visa, while a branch, foreign representative office, or regional office need only employ a one to one ratio per visa holder for their authorized representatives, though any other foreign staff must adhere to the 4:1 ratio. Also, there are other options available that rely on certain business and employment structures.
Furthermore, there are exemptions from the employee ratio requirement for businesses with Board of Investment certification.
GPS Legal Knows How to Structure a Foreign Business in Thailand
GPS Legal wants to help you establish your business in Thailand in the most efficient, effective, and affordable way possible. There is no need to try to make your situation more complex with nominee structures or unnecessary local staff hires to fulfill a ratio. Want to learn how? Contact us for a free initial consultation.