Learn more about Limited Partnership
Any foreigner wishing to carry out an economic activity in Thailand must first create a company in Thailand. Thus, the legal entity Limited Partnership can perfectly answer to the persons wishing to carry on a business activity. The limited partnership structure is more flexible than the Private Limited Company, which is the legal form most used by the entrepreneurs. Indeed, the number of shareholders required is reduced. However, the shareholders are jointly and severally liable without limit. With Themis Partner, create your partnership to start your economic activity in Thailand and benefit from the help of our lawyers to assist you.
Table of contents
What is an ordinary partnership?
The provisions of this company are defined by the Thai Civil and Commercial Code in section 1064 and following. This type of company may or may not be registered with the Department of Business Development (DBD) of Thailand.
In an ordinary unregistered partnership
The business will be operated in his or her name. Operating a business in one’s own name or as a sole proprietor means starting a business without creating a legal entity separate from the operator. This legal status is only possible for an entrepreneur who starts a business alone. If several people are involved in the project, it is mandatory to operate as a company.
Here are the essential points to remember about the sole proprietorship:
| ➤ The liability of the individual entrepreneur is unlimited. Personal property is not protected, except the principal residence. Other real estate not used for the business activity can also be protected by a declaration of incapacity established by a notary |
| ➤ The operation is relatively simple, whether it concerns the creation, the process or the closing of the business. The individual entrepreneur is the sole decision-maker |
| ➤ The professional profits are subject to income tax. For tax purposes, there is no notion of remuneration or dividends |
| ➤ Only Thai entrepreneurs can carry out a personal activity in Thailand. Any foreigner wishing to carry out an economic activity will have to constitute a company and to ask for a work permit |
In an ordinary registered partnership
The activity will be conducted through a joint venture, which involves two or more companies pooling their resources and expertise to achieve a particular objective. The risks and benefits of the venture are also shared. Reasons for forming a joint venture may be to expand a business, develop new products, or enter new markets, especially overseas.
Your business may have strong growth potential, and you may have innovative ideas and products. However, a partnership can give you:
| ➤ More resources |
| ➤ More capabilities |
| ➤ Greater technical expertise |
| ➤ Access to established markets and distribution channels |
Typically, the two companies are contractually linked by a joint venture agreement. This company’s provisions are defined by the Thai Civil and Commercial Code in Articles 1064 and the following.
What is a limited partnership?
The limited partnership has a legal personality. The limited partnership has the particularity of allowing a separation between the management of the company and the holding of its share capital. Thus, in a limited partnership, two categories of partners must be distinguished:
| The partners in name: | Play an active role in the company. As a result, they have the status of traders and their liability is unlimited. In return, they receive a larger share of the company's profits |
| Capital partners: | Play a passive role in the company (capital contribution). Consequently, they do not have the status of a merchant and their liability is limited to the number of their contributions |
What are the characteristics of a limited partnership?
The structure of a limited partnership differs from that of a limited liability company without its structure and the responsibility of the shareholders.
A certain number of partners and associates: 2 shareholders are required to form the partnership.
Minimum and/or maximum capital: no minimum amount is required. However, a registered capital of THB 2,000,000 is required per work permit for foreigners.
Liability of partners: The liability is limited to the contributions for at least one person and unlimited for the others. The liability is total for at least one or more partners.
Registration of the company: The company must be registered with the DBD. The registration procedure can take between 3 and 5 days. The name of the company must also be reserved in advance.
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