EP2 รูปแบบการประกอบธุรกิจ | ENT1301: Introduction to Business | ดร.ขจรพงษ์ พูลสวัสดิ์

Business models + company formation in Thailand (Chapter 2)

1) Business registration (must-do before operating)

Entrepreneurs must register the business in the forms prescribed by Thailand’s Ministry of Commerce.

Entities covered

• Individuals
• Limited liability companies (up to three entities mentioned in the subtitle)
• Legal entities established under foreign law with branches in Thailand

Examples of businesses required to register

Businesses commonly include:

• Rice milling and sawmills using machinery
• Selling goods with:
  • Total daily sales ≥ 20 baht, or
  • Cash on Delivery (COD) total ≥ 500 baht
• Brokers/agents selling goods with total sales ≥ 20 baht
• Handicraft and industrial businesses with total sales ≥ 1 baht
• Regulated sectors also include:
  • Maritime transport
  • Engines
  • Rail/bus transport
  • Land auctions
  • Money lending
  • FX exchange
  • Banks
  • Pawnshops
  • Hotels
• Entertainment-related items (e.g., zeny/video tapes/Blu-ray and similar)
• Services like:
  • Local community internet services
  • Computer services
  • Internet marketing

Example referenced

• A karaoke/jukebox/music-streaming type venue requires commercial registration (exceptions may exist).

Exemptions noted (examples)

Examples of exemptions include:

• Street vending
• Religious/charitable activities
• Certain entities under the Commercial Code (e.g., ministries, departments, foundations, associations, cooperatives, philanthropic organizations), if registered and published in the Royal Gazette

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2) Core legal/business entity types covered (8 types)

The video lists these as the main business models/organizational forms in Thailand:

• Sole proprietorship
• Partnership
• Limited liability company (LLC)
• Public limited company
• Cooperative
• State enterprise
• Foreign legal entity
• Joint venture (under the Revenue Code)

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Comparison of business models (advantages/disadvantages)

A) Sole proprietorship

What it is

• One owner invests their own assets, controls operations, keeps profits, and bears losses personally.

Advantages

• Easy/fast to set up and dissolve
• High independence and flexibility
• Direct decision-making by the owner
• Fewer regulations compared with other models
• Easier to keep business secrets (e.g., recipes)

Disadvantages

• Limited capital → harder to expand (vs. multi-investor models like KFC/Pizza Hut)
• Losses affect the owner alone
• Business continuity risk (e.g., owner sickness can halt operations)
• Harder to build credibility/trust due to small scale
• Fewer external ideas/inputs; decisions remain centralized

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B) Partnership

What it is

• Two or more people invest (cash/assets; labor/intellect may be considered) and share profits under a contract.
• The contract can be oral or written.

Types

General partnership

• Partners have unlimited joint and several liability for partnership debts
• All partners typically can manage

Limited partnership

• Must be registered as a legal entity
• Includes “Limited Partnership” in its name
• Has two roles:
  • Partners liable up to their invested amount (limited liability)
  • Managing partner(s) with authority; unlimited liability behavior implied

Advantages

• Easier to start with less initial investment
• Setup/dissolution not overly complicated
• Enables different partners’ skills to support management
• Higher credibility than sole proprietorship
• Greater expansion potential
• Supported by law

Disadvantages

• Capital may be limited
• Partners with limited knowledge may resist expansion
• Invested capital may be difficult to recoup until dissolution
• Uncertain lifespan (depends on partner changes/factors)
• Decision-making complexity (no board; decisions among partners)

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C) Limited liability company (LLC)

What it is

• Formed by pooling capital from individuals; capital divided into shares.
• Shareholders’ liability is limited to their contribution.

Formation requirements (as stated)

• At least 7 founders sign the Memorandum of Association and register
• After registration: ensure all shares are subscribed
• Hold a company meeting:
  • Notice sent at least 7 days in advance
• Appoint a board of directors after the meeting
• Pay at least 25% of share value initially
• Each share must be at least 5% in value; share capital not less than 5 baht
• Directors register the company within 3 months of the founding meeting

Advantages

• Credibility improved vs sole proprietorship/partnership
• Governed by a board of directors elected by shareholders

Disadvantages

• Complicated registration/compliance
• Liability periods upon dissolving can be difficult
• Governance risk if directors lack expertise/sincerity and company goals fail

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D) Public limited company

What it is

• A company intending to offer shares to the public; shareholders’ liability limited to paid share capital.

Stated structure under Public Limited Company Act (1992)

• At least 15 shareholders
• No minimum registered capital requirement (as stated)
• Shares: same value; paid fully in one lump sum
• At least 5 directors, must be Thai

Operating/transition pathway mentioned

• Register with at least 15 people
• Either:
  • Prepare a prospectus to invite public share purchase, or
  • If founders subscribe all shares: hold a meeting and then transfer operations to elected directors
• Conversion from private to public:
  • Requires a special resolution by shareholders

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E) Cooperative

What it is

• A voluntary group business pooling capital, labor, and knowledge.
• Operates under self-help, mutual assistance, and frugality principles.
• Key objective: non-profit—benefits members economically/professionally and shares profits with them.

Stated requirements

• At least 10 committed members (investors)
• Capital divided equally among shares
• Members vote with 1 member = 1 vote
• Legal entity required; can be limited or unlimited cooperative:
  • Limited cooperative: member count limited to unpaid-share value framework
  • Unlimited cooperative: members jointly responsible for cooperative debts

Types listed (6)

• Agricultural, fisheries, land settlement, savings, consumer, service cooperatives

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F) State enterprise

What it is (ownership > 50% framing)

• Owned by the government or government investment exceeding 50%.
• Subtitle notes evolving definitions due to debt restructuring and stock exchange listing.

Stated “in short” rule

• Any organization with government ownership stake ≥ 50% is considered a state enterprise.
• Applies to companies/partnerships where government holds ≥ 50% shares, or where government controls the entity’s investment/majority.

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G) Foreign legal entity

What it is

• A foreign-controlled legal setup with branches/operations.
• Subtitle emphasis: foreign shareholder must hold more than 50% of capital.

Tax liability conditions (high level)

Corporate income tax in Thailand if it meets any listed conditions, including:

• Conducting business in Thailand
• Receiving assessable income paid from domestic/international sources
• Operating via employees/agents/representatives acting in Thailand

Restriction noted

• Certain business activities may be restricted; many require Thai citizens only (example referenced in the subtitle: agriculture-like restrictions).

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H) Joint venture (Revenue Code framing)

General concept

• B2B/B2P cooperation via contract to pursue a project; participants share responsibilities and outcomes.

Operational/tax structure mentioned

• For Revenue Code joint ventures:
  • Entity must be registered as a limited company with juristic personality (implied “general limited company” type)
  • Parties’ participation may be treated as a taxable base entity concept depending on structure

Common project example

• Joint ventures used for bidding in infrastructure such as electric trains/high-speed rail
• Once objectives/funds are achieved, parties disperse (short-lived project nature)

Nuance about taxation/status

• If structured like an unregistered general partnership (participants only bid together a few times), it may not have juristic person status and may require separate tax ID/VAT obligations.

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Suggested growth path (actionable recommendation)

• Start small, then upgrade entity complexity:
  • Sole proprietorship → Partnership → Public company
• Rationale: progressively increase options and credibility, potentially reaching publicly traded status later.

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Frameworks / playbooks explicitly provided

• No formal business frameworks (e.g., SWOT/OKRs/GTM) were presented.
• Closest “playbook” is the stepwise entity evolution strategy:
  • Sole proprietorship → partnerships → eventually a public company

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Key metrics / KPIs / targets

• No revenue/margin/CAC/LTV/churn KPIs were discussed.
• Quantitative items mentioned were mainly legal thresholds and timelines, such as:
  • LLC share payment: 25%
  • Meeting notice: 7 days
  • LLC/directors registration timeline: within 3 months
  • Minimum founders:
    • 7 for LLC
    • 15 for public limited company
  • Business sales thresholds:
    • 20 baht daily
    • 500 baht COD

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Concrete examples and cases mentioned

• Restaurants/grocery stores to illustrate ease of starting/closing as a sole proprietorship
• KFC/Pizza Hut as examples of scaling via multi-investor capital
• Thai Airways as an example of what qualifies as a state enterprise changing over time
• Karaoke/music-streaming venue example requiring commercial registration
• High-speed rail project bidding as an example of why joint ventures appear frequently

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Presenters / sources

• Presenter/Author: ดร.ขจรพงษ์ พูลสวัสดิ์ (Professor Dr. Pongkun Sawan)
• Referenced authority/source: Ministry of Commerce (Thailand)
• Referenced legal sources (mentioned in subtitles):
  • Civil and Commercial Code
  • Public Limited Company Act (1992)
  • Public Limited Company conversion rules
  • Revenue Code (for joint venture/tax framing)
  • Royal Gazette (for exemptions)