A holding company is a corporation with no substantial activities of its own, whose business operations consist primarily of holding shares in other active firms (domestic and/or foreign) and accomplishing its earnings from these types of investments.
A holding company is also a company created to buy and own the shares of other companies, which it then controls. Our specialists in company registration in Thailand can help you establish this type of company.
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The main advantages of a holding company in Thailand
Opening a holding company in Thailand has increased its popularity because of the following two main reasons:
- when an entity opens a holding company in Thailand, it enables business progress and expansion into new companies through domestic and/or foreign subsidiaries, which may be connected or not to the current activity;
- an increasing number of affiliated firms with different organizations wish to have their stocks listed on the Exchange;
- because it is not involved in economic activities, the Thai holding company will not need special permits and licenses;
- the holding can be incorporated by foreign nationals and, although investment restrictions apply in certain protected business fields, holding securities is permitted.
In order to avoid problems that could arise because of contradiction among the lines of business of various companies from within a group, the Exchange has set special listing criteria for companies that have company-like structures and that invest in the local markets or abroad.
Our company registration advisers in Thailand can provide more information on the current listing criteria. We can also help you with other relevant information about the treatment of securities. They can also handle the entire process of opening a bank account in Thailand.
Holding company listing requirements
Below, our team describes the main requirements set forth by the Stock Exchange for the listing of a holding corporation:
- it has no significant operations and invests in local or foreign firms;
- its revenue is derived from dividends;
- it needs to pass the profit test and the market capitalization test;
- it must have more than 50% stake in the core company;
- the core company is not a listed company and it engages in its primary business field/core business.
The annual fee for a holding company listed on the Stock Exchange of Thailand is calculated according to the listing duration.
The aforementioned annual fee has progressive rates that vary according to the level of the paid up capital (minimum THB 50,000 and maximum THB 3,000,000). The Stock Exchange reserves the right to change these fees.
Listing a Thai holding company can be a suitable option given the fact that the holding is a corporation that continues to expand, even into unrelated business lines.
The Thai holding company can not only expand irrespective of the business field, but it can also do this locally or overseas.
When there are several businesses within one group, investors will need to choose a single company that will be a suitable representative for the said group. This company will apply for listing.
Essentially, the relationship between the holding company and the core company can be summarized as below:
The holding company is the company that is to be listed. It exercises control over the core company, which is one subsidiary that can operate locally or overseas and it is not a listed company.
For investors who decide to list a holding company in Thailand, the following five steps are essential:
- appoint a financial advisor and auditor;
- convert the private limited company into a public limited company;
- apply for IPO and listing;
- distribute the shares to the general public;
- trade and list on the Stock Exchange.
Our Thai company formation agents underline the fact that the preparation for listing can begin 18 to 24 months before the filing of the application.
The audit committee for the holding that will be listed is convened approximately 12 months before the filing and the IPO is launched 6 months before the filing, in most cases.
The conversion of the corporate form can be accomplished 2 months before the filing, with our help.
The timeline above is for informative purposes only.
If you are interested in listing a holding company on the Thailand Stock Exchange, please reach out to our team for more details.
Holding company taxation in Thailand
When opening a holding company in Thailand, investors will be interested in knowing more about the holding regime.
Our Thai company formation agents list some of the key issues concerning the holding regime:
- Listing: a holding company that is listed on the Exchange is subject to an application fee of Baht 50,000, an initial listing fee, and an annual fee; please keep in mind that these fees can be subject to change;
- Dividends: in general, dividends are subject to full taxation in Thailand; dividends received from a Thai subsidiary by a Thai company that is not listed on the Exchange are subject to a 50% exemption; a 100% exemption can also apply in some cases;
- For local shareholdings, a Thai limited corporation or a listed firm is exempted from corporate income tax on dividends acquired from another limited organization, if it has held a minimum of 25% of voting stocks for a minimum of three months before and three months after the date of dividend payment without cross-shareholding;
- For shareholding in alien subsidiaries, the Thai holding corporation is exempt from corporate income tax on dividends paid from the net profit, which is taxed at 15% in the country where the foreign subsidiary is localized. The Thai holding corporation is obliged to have held minimum 25% of the voting stocks for minimum six months prior to obtaining the overseas dividends.
Our company formation professionals in Thailand can provide more details on this subject.
There is no separate tax on capital gains. This means that income arising from the disposal of assets is treated as ordinary income that is subject to corporate income tax.
Tax losses can be carried forward for five years. There is no option to carry-back tax losses in Thailand.
The standard corporate income tax in Thailand is 20%.
Holding company incorporation in Thailand
Investors who open a company in Thailand for the purpose of holding shares in other legal entities, or other types of assets such as the intellectual property will need to follow the standard company registration steps.
The limited company is the most popular business form in Thailand, and it is also preferred by foreign investors. We list some of the most important steps for its creation below:
- reserving the company name;
- drawing up the company’s documents
- depositing the capital;
- registering the company.
At least 3 founders are needed to open this business form and they are the ones to submit the company’s Memorandum of Association. This is done within 30 days of receiving the approval for the company name.
The next step is for the company directors to sign the request for company registration within 3 months of the statutory meeting of the founders/promoters. This is an essential step and the registration of the holding company will not be complete without this meeting.
Special information for foreign investors
According to law, all foreign nationals doing business in Thailand or working here need to have a valid and proper visa (or work permit, as may be required).
This also means that foreign investors interested in opening a holding company will need a visa to remain in the country for the purpose of registering the company and acting as founders.
The smart visa is the latest visa type available to investors who are start-up founders. It was developed by the Thailand Board of Investment with the particular purpose of attracting foreign talents.
The Smart I (Investor) visa is suitable for those who can make a minimum investment in technology businesses in key industries.
While a holding company does not have economic activities, nor is it a technology-based business, investing the minimum amount in a subsidiary controlled by the holding company can be a manner in which the foreign investor obtains the 4-year visa.
The main conditions for the Smart I (Investor) visa are the following:
- Minimum investment in a tech company: at least 20 million Bath in a tech-based business in one of the target industries (as an individual investor or through a venture capital company in Thailand);
- Minimum investment in other businesses: a direct investment of at least 5 million Baht in a startup or accelerator program; investments in more than 1 business are possible; the investment must be maintained throughout the entire duration of the visa;
- Target business: the company in which the investment is made must be a technology-based one in the manufacturing or services sectors;
- Venture capital investment: in this case, the investment must be certified through relevant agencies.
The benefits of the Smart Investor visa are the following:
- it is valid for 4 years;
- there is no need to apply for a work permit when working with a government agency; other conditions apply if the holder wishes to change jobs;
- the holder has 1 year to report to the Immigration authorities (extended from 90 days);
- there is no need to apply for a re-entry permit;
- the spouse and children can join the visa holder and have the right to remain in Thailand for the same duration as the holder; the spouse can work without the need to obtain a work permit;
- the visa holder has access to fast-track services at international airports in Thailand.
Our team can give you more details on the conditions for obtaining the visa, the required documentation, and how to apply before you travel to Thailand.
Opening a holding company in Thailand can be a suitable option for investors interested in entering the Southeast Asian market.
If you need to know more, please contact our Thai company formation advisors.