5 Common Mistakes Foreigners Make When Registering a Thai Company

Registering a business in Thailand as a foreigner can be a smart move—if done correctly. But many foreign entrepreneurs unintentionally make mistakes that cause delays, legal risks, or even outright rejection of their company registration, visa, or work permit.

Here are the five most common mistakes we see—and how to avoid them.

1. ❌ Using Thai Nominees to Circumvent Foreign Ownership Laws

The Mistake:

Foreigners often register a “Thai-majority” company (51% Thai / 49% foreign) using nominee Thai shareholders who don’t actually invest or control the business.

It’s an attempt to avoid the Foreign Business Act restrictions.

Why It’s a Problem:

• This is illegal under Thai law (Section 36, Foreign Business Act)

• The DBD and Ministry of Commerce are actively investigating nominee structures

• If discovered, penalties include fines up to 1 million THB and company dissolution

What to Do Instead:

• Consider legitimate routes:

  • Foreign Business License (FBL)

  • BOI promotion

  • U.S.-Amity Treaty (if eligible)

• If you want Thai partners, they must be real investors who contribute capital and have control rights

2. ❌ Under-Capitalizing the Company

The Mistake:

Setting up a company with just 100,000 THB in registered capital—even if you plan to live and work in Thailand.

Why It’s a Problem:

• You can’t get a work permit unless the company has 2 million THB paid-up capital per foreign employee

• Banks, landlords, and potential clients may not take your business seriously

• You may be rejected during visa or BOI application audits

What to Do Instead:

• Align your capital with your immigration and business goals

• At minimum:

  • 2M THB per foreigner for visa/work permit

  • 3M THB if applying for an FBL

  • BOI capital depending on your investment plan (typically 1M+ THB)

3. ❌ Choosing the Wrong Business Category

The Mistake:

Foreigners often select a business objective or activity without checking if it’s restricted under Thai law.

Why It’s a Problem:

Many business activities are restricted to foreigners under the Foreign Business Act, including:

• Trading

• Service businesses

• Import/export (under certain conditions)

Registering a company in a restricted sector without a license or promotion could render it illegal.

What to Do Instead:

• Consult a legal expert before finalizing your objectives in the registration form

• If needed, apply for:

  • BOI promotion

  • FBL

  • Treaty exemptions

4. ❌ Choosing Inappropriate Shareholding Structure

The Mistake:

Randomly allocating shares among foreign and Thai shareholders without understanding:

• Visa/work permit impact

• Voting/control rights

• Profit distribution

Why It’s a Problem:

• Shareholding affects whether your company is considered “foreign”

• Thai shareholders may outvote you if not structured carefully

• Improper structure may lead to future disputes or legal complications

What to Do Instead:

• Use different share classes (if needed) to balance control and compliance

• Make sure shareholding matches investment and real contributions

• Draft a clear Shareholders Agreement

5. ❌ Using a Template Without Tailoring to Your Case

The Mistake:

Using free or generic templates for:

• Company registration documents

• BOI application

• Work permit support letters

Why It’s a Problem:

• These templates often don’t reflect your real business model

• They may contain outdated or inconsistent clauses

• Government officials can spot boilerplate filings—and reject or delay them

What to Do Instead:

• Have all registration documents custom-drafted or reviewed by a qualified lawyer

• Include:

  • Accurate business objectives

  • Realistic capital plans

  • Correct director powers and conditions

  • Language consistent with visa/work permit intent

Bonus: Ignoring Immigration & Tax Strategy

Many foreigners treat immigration, tax, and company registration as separate processes.

In reality, they are deeply connected.

For example:

• Capital affects your visa eligibility

• Work permit timelines affect payroll and tax compliance

• Director residency affects withholding tax obligations

Summary: Avoid These Pitfalls

Need Help Setting Up the Right Way?

GENTLE LAW IBL specializes in foreign-friendly company formation in Thailand.

We guide you through:✅ Legal shareholding✅ Capital planning✅ BOI or FBL applications✅ Visa/work permit compliance✅ Tax and employment setup

📩 Get a free initial consultation to structure your company legally and securely—no guesswork, no shortcuts.