A foreign founder and a Thai partner decide to open a company together. They agree on the idea, the brand, and roughly who does what. The paperwork is treated as a formality to get through quickly.
Two or three years later, the questions they never discussed arrive together: who can sign contracts, who decides whether to take a loan, what happens when one partner wants to leave, and whether the Thai partner can sell their shares to someone the foreign partner has never met.
This article covers the decisions to make before the company is registered, when both partners are still aligned and changes are cheap.
Decide the share split for the right reason
The first question is usually whether the foreign side can hold a majority.
Under the Foreign Business Act, a company in which foreigners hold half or more of the shares is treated as a foreign company. For businesses on the restricted lists, including most services, it then needs a foreign business licence or a promotion certificate before it can operate. That is why many companies are set up with the foreign side holding less than half.
That structure is lawful only if the Thai shareholders are real investors. The registrar may ask Thai shareholders to show where their investment money came from. For how licensing works by business type, see our guide to whether your Thai company needs a foreign business licence.
The nominee trap
A nominee arrangement is one where a Thai person holds shares on behalf of a foreigner, usually with the foreigner supplying the money and holding side documents such as pre-signed share transfers or loan agreements that let them take control.
The law treats that as a criminal matter for both the Thai nominee and the foreigner. In practice the bigger danger is civil: the side documents often turn out to be unenforceable at exactly the moment the partners fall out.
A Thai spouse can be a genuine shareholder. The problem is not the relationship. It is a register that says one thing while the money and control say another.
A 49% shareholder is not powerless
Founders often assume the majority side controls everything. Thai company law is more balanced than that.
| Decision | Votes needed | Who can block |
|---|---|---|
| Ordinary resolutions (e.g. electing directors, approving accounts, dividends) | Simple majority of votes | Only the majority |
| Special resolutions (amending the articles, increasing or reducing capital, merger, dissolution) | At least three quarters of votes of shareholders present and entitled to vote | Any holder of more than a quarter |
So a 49% holder cannot appoint the board alone, but can stop the articles being rewritten, new capital diluting them, or the company being wound up.
What the numbers do not give either side is board seats, signing power, or veto over ordinary business. Those have to be agreed.
What the shareholders' agreement should cover
A good shareholders' agreement between a Thai and a foreign founder usually deals with:
- Board composition. How many directors, and how many each side nominates
- Signing arrangement. Which directors must sign together to bind the company, which then goes on the registration. See who can bind your Thai company
- Reserved matters. Decisions that need both sides' consent, such as borrowing above a limit, selling key assets, hiring senior staff, or changing the business
- Capital and funding. Who contributes what, when, and what happens if one side cannot fund a capital call
- Transfers. Pre-emption rights, approval of new shareholders, and who can buy whom
- Deadlock. What happens if the partners cannot agree: escalation, mediation, and in the end a buy-out mechanism
- Exit. How shares are valued when someone leaves, and what a leaving partner may do afterwards
- Brand and know-how. Whether the trademark, domain and client relationships belong to the company or to one founder
The agreement and the articles must match
A shareholders' agreement is a contract between the people who sign it. The company's registrar, its bank, and its counterparties act on the registered articles and particulars.
If the agreement says "no share transfer without the other side's consent" but the articles say nothing, a transfer that is registered anyway may still be effective as far as the company is concerned. You would then be suing your partner for breach of contract rather than stopping the transfer.
The fix is to put the protections that need to bind the company, such as transfer restrictions, into the articles, and to register the signing arrangement you agreed.
The exit problem specific to foreign-partner companies
In an ordinary company, when a partner wants to leave, the other partner buys them out. In a company structured to stay under the foreign-ownership threshold, the foreign partner often cannot buy the Thai partner's shares without turning the company into a foreign company.
The agreement should say in advance what happens then: a new Thai investor, a buy-back by the company within the legal limits, a licence or promotion application, or an orderly sale of the business. Leaving it open is how a friendly exit becomes a deadlock.
Before you register: a short list
- Confirm whether the business activity is restricted for foreign-majority companies
- Decide the share split on the basis of real contributions
- Document where each Thai shareholder's investment came from
- Agree board seats, the signing arrangement and the reserved matters
- Put transfer restrictions into the articles, not only the agreement
- Agree the exit and deadlock mechanism while everyone is still friends
- Decide who owns the brand and the domain
For a company with several foreign founders under investment promotion, see shareholding decisions in a BOI company.
📌 See more: business law services · civil litigation
If you are about to set up a company with a Thai or foreign partner, talk to our team before the documents are signed. Changing a structure later always costs more than agreeing it now.
This article is general information, not legal advice for a specific case.