Holding Company in Thailand
Updated on Thursday 12th May 2016
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A holding company is a company opened in Thailand which owns outstanding stocks of other businesses. This terminology is generally used for a company that does not yield services or goods by itself; instead, its aim is to own shares of different companies in order to arrange a corporate group. Holding businesses enable the decrease of the risk for its owners and might permit the control and proprietorship of a number of various companies.
What does a holding company in Thailand mean?
Actually, a holding company in Thailand implies two separate legal business bodies. As an alternative to subscribing shares in a foreign investor’s operating business, a second company – the holding company in Thailand – is opened to own most of the shares of the foreign investor’s operating business. This holding company has a much lower registered capital (only THB 100,000, the equivalent of USD 2,830) compared to the operating business, serving the only purpose of holding most of the shares of the operating business as an investor.
Therefore, the foreign investor needs to associate with a Thai investor who is able to reliably finance 51% of THB 100,000, rather than 51% of more than THB 1,000,000 (approximately USD 28,300). The Thai holding company necessitates a loan from the foreign investor’s head office to finance the acquisition of most of the shares of the operating business. Through a loan and warranty agreement, these shares are warranted to the head office as a collateral for this loan.
The operating business will be owned with 51% by the holding company in Thailand and 49% by the foreign investor. The holding company will be owned with 51% by the Thai investor and 49% by the foreign investor. Consequently, both companies will be registered as Thai companies and they will be able to involve in business activities.
What kind of Thai investor is needed for a holding company in Thailand?
According to the Thai legislation, partaking with a Thai shareholder who owns shares on behalf of someone else without having financed with his or her own funds (“Nominee Shareholder”) is illegal.
Consequently, our lawyers in Thailand recommend finding a reliable Thai partner to associate with in your business endeavor. Nevertheless, it could be problematic to find an affluent Thai investor to form such an association through a holding organization in Thailand. It is important to know that a wealthy local investor is not necessary, being enough to find a trustworthy Thai party.
Our Thailand law firm can provide you further assistance on this matter. Please contact us if you need to know more.