Regional offices are different from branch offices in terms of their structure. Regional offices, are not separate legal entities and perform their businesses in Thailand on behalf of its head office abroad. Likewise, they are limited to performing only 7 specific activities. These activities fall under List three of Foreign Business Act 1999 (FBA). These are:
- Communicating, coordinating and directing, on behalf of the head office
- The operation of branches and affiliates which are located in the region
- Providing services in consulting and management
- Training and personnel development
- Financial management
- Marketing control and sales promotion planning
- Product development
- Services in research and development
Regional offices are likewise required to apply for a Foreign Business License. Before beginning their activities in Thailand, foreign companies must have at least one active branch office or affiliate in Asia. Moreover, regional offices are also restricted from earning income, purchasing, selling, and negotiating.
Capitalization rules under the FBA also apply to Regional Offices. It must be at least 25 percent of the average estimated expenses for the first 3 year but not less than THB 3,000,000. Please feel free to contact us for a professional legal consultation and get more information about regional office establishment in Thailand.