A Thai business partnership is one of the most commonly used business structures in Thailand, particularly for small to medium-sized enterprises, family businesses, and professional ventures. Governed primarily by the Thai Civil and Commercial Code (CCC), partnerships offer flexibility, relatively simple formation procedures, and fewer regulatory requirements compared to limited companies. However, they also carry significant legal and financial implications—especially regarding liability, management authority, taxation, and foreign participation.

This article provides an in-depth analysis of Thai business partnerships, covering the types of partnerships recognized under Thai law, formation requirements, rights and obligations of partners, taxation, foreign ownership considerations, and common legal risks.

1. Legal basis of Thai business partnerships

Thai business partnerships are regulated under Book III of the Civil and Commercial Code, which establishes the legal framework for partnerships and governs how partners interact with each other and with third parties. Unlike limited companies, partnerships are often viewed as extensions of the individuals who form them, particularly in terms of liability.

Thai law recognizes two main types of partnerships:

  1. Unregistered Ordinary Partnership

  2. Registered Partnership (which may be ordinary or limited)

Understanding the distinction between these structures is critical before choosing a partnership model.

2. Types of business partnerships in Thailand

2.1 Unregistered ordinary partnership

An unregistered ordinary partnership is formed when two or more persons agree to jointly carry on a business and share profits. This type of partnership:

  • Does not have separate legal personality

  • Is not registered with the Department of Business Development (DBD)

  • Exposes all partners to unlimited joint liability

Each partner is personally liable for partnership debts, even beyond their investment. Creditors may pursue a partner’s personal assets directly.

2.2 Registered ordinary partnership

A registered ordinary partnership is formally registered with the DBD and gains juristic person status. Despite having legal personality:

  • All partners still bear unlimited liability

  • Partners are jointly responsible for obligations incurred by the partnership

Registration improves credibility and administrative clarity but does not reduce personal risk.

2.3 Limited partnership

A limited partnership is the most structured form of partnership in Thailand and includes:

  • At least one managing partner with unlimited liability

  • One or more limited partners whose liability is limited to their capital contribution

Limited partners may not participate in management. If they do, they risk losing their limited liability protection.

This structure is commonly used where investors wish to limit exposure while allowing an active partner to manage operations.

3. Formation and registration process

3.1 Partnership agreement

Although not legally required in all cases, a written partnership agreement is strongly recommended. It typically covers:

  • Capital contributions

  • Profit and loss sharing

  • Management authority

  • Partner admission and withdrawal

  • Dispute resolution mechanisms

Clear documentation reduces internal conflicts and legal uncertainty.

3.2 Registration with the Department of Business Development

Registered partnerships must file:

  • Partnership name reservation

  • Details of partners

  • Business objectives

  • Registered address

  • Capital contributions

Once approved, the partnership becomes a juristic person and may operate under its registered name.

4. Management and authority of partners

Under Thai law:

  • Each managing partner has authority to bind the partnership

  • Restrictions on authority must be registered to be enforceable against third parties

  • Acts performed within the scope of business bind all partners

For limited partnerships, only managing partners may represent the partnership legally.

5. Rights and obligations of partners

Partners generally have the right to:

  • Share in profits according to agreement

  • Access partnership accounts

  • Participate in management (unless restricted)

Obligations include:

  • Acting in good faith

  • Avoiding conflicts of interest

  • Contributing agreed capital

  • Sharing losses as agreed or proportionally

Breach of fiduciary duties may result in personal liability.

6. Liability considerations

Liability is the most critical factor in partnership selection:

  • Ordinary partners are jointly and severally liable

  • Managing partners in limited partnerships face unlimited liability

  • Limited partners’ liability is capped at their investment

Because of these risks, partnerships are generally unsuitable for high-risk or capital-intensive businesses.

7. Taxation of partnerships in Thailand

Registered partnerships are subject to:

  • Corporate income tax

  • Withholding tax

  • Value Added Tax (VAT), if applicable

Unregistered partnerships may be taxed as individuals, depending on circumstances. Profits distributed to partners may also be subject to personal income tax.

Proper tax planning is essential to avoid double taxation or penalties.

8. Foreign participation in Thai partnerships

Foreign involvement in Thai partnerships is restricted by the Foreign Business Act (FBA). Key points include:

  • A partnership is considered foreign if foreigners hold 50% or more ownership

  • Certain business activities are prohibited or restricted

  • Foreign partners may require a Foreign Business License (FBL)

  • Nominee arrangements are illegal and heavily penalized

Foreigners often prefer limited companies or BOI-promoted structures for greater certainty.

9. Comparison with Thai limited companies

Compared to limited companies, partnerships:

  • Are easier and cheaper to form

  • Have fewer corporate formalities

  • Carry significantly higher personal liability

  • Are less attractive to institutional investors

For scalable or foreign-invested businesses, limited companies are usually preferred.

10. Dissolution and termination

A partnership may be dissolved due to:

  • Expiration of term

  • Completion of objectives

  • Partner withdrawal or death

  • Court order

  • Mutual agreement

After dissolution, assets are liquidated, liabilities settled, and remaining assets distributed among partners.

11. Common legal risks and mistakes

Frequent issues include:

  • Lack of written agreements

  • Unclear authority limits

  • Informal capital contributions

  • Foreign ownership violations

  • Tax non-compliance

  • Personal liability exposure

These risks often surface during disputes or financial distress.

12. When partnerships are appropriate

Thai business partnerships are suitable for:

  • Professional services

  • Family-owned businesses

  • Small local ventures

  • Short-term or low-risk projects

They are generally unsuitable for large-scale or foreign-dominated enterprises.

Conclusion

Thai business partnerships offer flexibility and simplicity, making them attractive for certain types of ventures. However, the trade-off is significant personal liability and limited protection for partners. Understanding the legal structure, registration requirements, tax obligations, and foreign ownership restrictions is essential before forming a partnership in Thailand.

With proper planning, clear agreements, and professional advice, partnerships can function effectively. Without these safeguards, they can expose partners to substantial legal and financial risk. Choosing the right business structure at the outset remains one of the most important decisions for doing business in Thailand.