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Many people living in Thailand will find themselves as either a director or shareholder in a Thai limited company but I think there is still a lot of confusion about what the responsibilities of directors and shareholders are.
Although the requirements for companies under Thai law are very much the same as they are in other countries many people may not have experience of running a company and therefore are not aware of the basics.
The first thing to realise when you form a company is that the whole idea is that people have gotten together to invest money in a project. The shareholders provide this money or “capital” in order to do the business.
The director of a company is the person who is appointed by the shareholders to manage their investment and to hopefully make sure that the business is profitable.
It is very important to understand that a director is what we call a “Fiduciary” that is someone who is responsible to other people for their money. This is the reason why companies have to have an annual meeting (AGM) to accept the audited accounts, and why a director as well as the company will be fined if they fail to attend to this duty.
Another important part of being a company is to show that you are actually trading, this means that you must take care of all receipts you issue to customers and all invoices you pay (these invoices must be in the company name and preferably have withholding tax deducted from them). If you do not have these items for the auditor to look at, they will not know what you did, how you paid your salaries/rent and what the trading of the company was. It is not legal in Thailand just to have a holding company, which does not trade.
Companies are responsible both for withholding taxes from other companies or individuals who are providing services to them but also should have tax withheld and paid to the revenue department when they provide services, the level of withholding tax will vary depending on the type of service provided.
One of the biggest responsibilities of a company is when it is also an employer, the company must make sure that staff are paid (at least the minimum wage, there is a minimum for foreigners as well as
Thai’s depending on where you are from), that the staff are getting social security where they are entitled to it, this is everyone who works for you except the managing director. There is also responsibility for holidays, sick leave and discipline and these all need to be dealt with carefully.
So whether you are dealing with shares and assets, audits and taxes, employment and profits make sure that you get professional help with your company when you need it.