Setting up a Thai limited company, the most common type of business entity in the country, is relatively easy although there are a lot of procedures and paperwork involved, according to Sally Lefley, a legal adviser with the Bangkok firm Kitt and Murray. What you need to have in place before you even think about setting up a limited company are seven promoters. These have to be individuals since companies are not allowed. Both Thais and foreigners can be appointed promoters and it is not necessary for them to live in Thailand.

``Each promoter has to have at least one share in the company and quite often the promoters go on to become shareholders and even major shareholders in the company,'' she said.

Once you have seven promoters, the first step you have to take is to register the company name. You are allowed to submit three names in the order of preference. The registrar will then check with existing company names to see whether there are any clashes. Certain names are not accepted, generally those including words like trust or investment or anything to do with the Royal Family.

However, you can have a name that includes your own name or you can have a name that describes the type of business that your company will be operating.

``So that's the first process and that can normally take between two to four days to come back with an answer,'' Ms Lefley said, adding if all three names are rejected then you start again and submit another three names.

The next step is to register a memorandum of association. This can take between one to five working days. After that, you call a statuary meeting by issuing a notice and at this meeting the articles of association are approved and any acts of the directors and promoters and the expenses of the promoters are ratified.

``At that meeting, we appoint the directors and the authorised director. Once that's done, you need to register the company within three months after that meeting, and it can take between three and 10 days for all the papers to be dealt with.''

The next important step is to have a registered office for your company. This can be a real office or if you are running your business from your home then it could be your house. Unfortunately, you cannot generally run your business from a residential condominium because a lot of condominiums have rules against it.

If you don't own an office and are renting one, you must submit the rental agreement and a letter of consent from the owners confirming that they will allow you to run a business from that office. If you are leasing an office or building, you need to provide a copy of the lease.

``You also need to provide a copy of the household registration of the owner of the office, that is if you don't own the office,'' Ms Lefley said.

As for the directors of the company, you can have Thai or foreign directors or a mix of both. The authorised director, whose signature binds the company, can also be a foreigner, she added.

It is important to remember that the maximum foreign shareholding in a Thai company is 49%. Another key issue is that a company can hold a stake in another company but it cannot be a promoter.

``Shareholders can hold both preferred and ordinary shares. If you have foreign shareholders who want to be involved in major decision-making, they can be allocated preferred shares, which can give them increased voting power.''

The idea behind a limited company is that the directors benefit from limited liability which means that they can only lose whatever funds they have invested in the company with their personal property being protected.

However, if a director of a limited company has acted as a personal guarantor on a loan or mortgage for the company, he or she can be sued in a personal capacity, Ms Lefley said.

If directors of a Thai limited company who have given their personal guarantee for a loan or mortgage that the company took out are sued in the event of bankruptcy, they will find that it would be very difficult to enforce a court ruling overseas so the lawsuit it would be against any Thai assets that they have.

The rules on setting up a limited company in Thailand are quite similar to those in England but the latter does have the concept of sole trader. A sole trader in England would have unlimited liability, meaning that if his business is sued he could lose the business plus all his personal belongings..

Other types of companies that you can set up in Thailand include a limited liability partnership. If you are an American, you can set up an Amity Treaty company, which means that you register as a Thai company but you get certain protection under the Thailand-US Treaty of Amity.