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Partnership

  /  Partnership

A partnership is established through an agreement made by the potential partners. All prospective partners agree to invest in the establishment of a partnership prior to the commencement of a certain activity; in some cases a partner can join an already existing partnership (it can be done by either entering as a new partner or buying shares from one of the actual partners).

Generally, Thai law recognises two types of partnerships, “ordinary partnerships” and “limited partnerships”.

An ordinary partnership may or may not register as a juristic person, thus there is a:

Non-registered ordinary partnership – This entity has no status as a juristic person and is treated for tax purposes as an individual. All partners are jointly and wholly liable for all obligations of the partnership
Registered ordinary partnership – This entity is registered with the Commercial Registrar as a juristic person and is taxed as a corporate entity.

There are also two types of limited partnership, consisting of either:

i. One or more partners whose individual liability is limited to the amount of capital contributed to the partnership.
ii. One or more partners who are jointly and unlimitedly liable for all the obligations of the partnership.

While incorporating a Partnership for Thai nationals is considered very simple to do with far less restrictions, partnerships for Foreigners are restricted by the Foreign Business Act. Under the Foreigner Business Act, foreigners who wish to operate in any kind of partnership soon find out that their participation is restricted. If a foreigner invests more than half of the overall investment or names themselves a managing partner, the Foreign Business License law shall be applied. Therefore, to avoid the Foreign Business License, foreigners should not invest more than half and should not act as a managing partner in a partnership. THUS, if a foreigner cannot act as a managing partner, it is less likely that they can protect their interests.

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