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Partnership Forms in Thailand
The three partnership forms under the Civil and Commercial Code — Ordinary Partnership, Registered Ordinary Partnership, and Limited Partnership — and when each is appropriate.
Overview
Thai partnership law is codified in Title XXII of the Civil and Commercial Code (CCC), specifically Sections 1012 to 1095. The CCC recognises three forms: the Ordinary Partnership (ห้างหุ้นส่วนสามัญ), the Registered Ordinary Partnership (ห้างหุ้นส่วนสามัญนิติบุคคล), and the Limited Partnership (ห้างหุ้นส่วนจำกัด). They differ in registration status, separate legal personality, and the liability of partners. Registration is performed at the Department of Business Development (DBD / กรมพัฒนาธุรกิจการค้า) and confers juristic-person status on the registered forms.
Key Points:
- Legal basis: Civil and Commercial Code Sections 1012-1095 — ประมวลกฎหมายแพ่งและพาณิชย์ มาตรา 1012 ถึง 1095
- Ordinary Partnership: unregistered; not a separate legal entity; partners jointly and severally liable without limit
- Registered Ordinary Partnership: registered with DBD; separate legal entity; partners still jointly and severally liable without limit
- Limited Partnership: registered with DBD; separate legal entity; at least one general partner (unlimited liability) and one or more limited partners (liability capped at contributed capital)
- Limited partners lose their liability cap if they participate in management (CCC Section 1088)
- Registered partnerships are subject to Foreign Business Act B.E. 2542 (1999) — a partnership with a foreign managing partner OR ≥50% foreign capital is itself a 'foreigner'
- Annual financial statements and audit obligations apply to registered partnerships (smaller threshold than limited companies, but still required)
Ordinary Partnership (Unregistered)
An Ordinary Partnership under CCC Section 1012 is formed by agreement between two or more persons to carry on a business together for profit. It does not need registration and is not a separate legal entity.
- Formation: written or oral agreement; no DBD filing
- Liability: every partner is personally liable jointly and severally for all partnership debts (CCC Section 1025)
- Tax: partnership income flows through to individual partners and is taxed under personal income tax
- Dissolution: occurs on death, bankruptcy or withdrawal of any partner unless agreement provides otherwise
- Best suited to small, low-risk co-ventures between Thai nationals
Registered Ordinary Partnership
A Registered Ordinary Partnership is an Ordinary Partnership that has been registered with DBD under CCC Section 1064. Registration confers separate legal personality but does not change the unlimited liability of partners.
- Formation: file registration with DBD; receive certificate of registration
- Separate legal entity: can hold property, sue and be sued in its own name
- Liability: partners remain jointly and severally liable without limit
- Tax: treated as a juristic person; pays corporate income tax under the Revenue Code
- Annual filings: financial statements with DBD, CIT returns with Revenue Department
- Useful where partners want a juristic vehicle but accept unlimited personal exposure (often Thai professional partnerships)
Limited Partnership
A Limited Partnership under CCC Sections 1077-1095 combines at least one general partner (unlimited liability) with one or more limited partners (liability capped at contributed capital).
- At least one general partner — typically takes management role and bears unlimited liability
- Limited partners contribute capital but cannot participate in management (CCC Section 1088); breach forfeits the liability cap
- Must be registered with DBD to be effective
- Separate legal entity; pays corporate income tax
- Profits and losses divided per partnership agreement, defaulting to capital contributions
- Common structure for family businesses where elders provide capital and younger generation operates the business
Relevance for Foreign Nationals
Partnerships are far less common for foreign investment than limited companies because of unlimited liability for general partners and because the FBA still classifies partnerships with foreign managing partners or majority-foreign capital as 'foreigners'. Foreign investors normally prefer a Private Limited Company or OPLC. Where a partnership is unavoidable (e.g., professional-services context), the Limited Partnership with a Thai general partner is the most common structure.
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