A Thai majority owned company limited is the most common form of doing business in Thailand, but requires that the company have a Thai majority shareholder and Thai director.
Thailand has a law called the Foreign Business Act (FBA), which basically restricts majority foreign owned companies from performing service type businesses in Thailand without first going through a costly and time consuming application process to obtain a foreign business license.
Thai majority owned companies are exempt from the provisions of the FBA and allowed to perform all types of businesses in Thailand.
In order to avoid application of the FBA, it has been a common practice for foreigners in Thailand to establish a Thai majority owned / foreign controlled company.
A Thai majority owned company is considered any company that has Thai person holding 51% or more of any class of shares in the company.
A Thai owned / foreign controlled company is structured so a Thai person holds 51% of the shares and a foreigner to hold 49%.
The 51% shares owned by the Thai citizen would be categorized as a special class of shares (preference shares), which have minimal to no voting or dividend rights in the company.
The 49% shares owned by the foreigner would be categorized in a separate class of shares (common shares), which have 100% of the voting and dividend rights in the company.
The result of this type of company register is the foreigner would only own 49% of the company on paper, yet legally have 100% control over the company’s business & funds while avoiding the application of the FBA.