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Foundation Establishment

Foundation Establishment

Definition of “Foundation”

The Royal Institute Dictionary B.E 2525 (Sixth Edition, B.E. 2539) defines the word “foundation” as “Assets specifically allocated with the objectives to support the public charity, religion, science, literature, education, or any other public interests. Foundation shall not seek for any interest to allocate for its members and the foundation must be a registered juristic person in accordance with the Commercial and Civil Code of Thailand”.

The Commercial and Civil Code, the revision edition B.E.2535, article 110 defines the meaning of foundation as below:

“Article 110 Foundation is assets which are prepared only for the objectives of public charities, religion, arts, science, literature, education, or any other public interest and the foundation must be registered under the regulation of this Law.

Management of assets of any foundation must not seek for benefit or interest for any person, except the activities which are operating under the objectives of that foundation”.

In pursuance with the foregoing definition of “foundation”, the Foundation shall consist of 4 subject characteristics as following:

1. Special allocated Assets. The operation of the foundation shall have the allocated assets as the subject fund.

2. Objectives for public interest. The assets that is allocated as the subject fund shall be used in accordance with the objectives of the foundation which are the activities of public interest, religion, art, science, literature, education, or other public interest, and shall strictly not be used for an individual interest.

3. None interest seeking for apportion. The foundation may gain assets or revenue. The obtained assets or revenue shall be used in the activities regarding to the objectives of the foundation, but shall strictly not be divided and shared out among its members.

4. Registered under the Commercial and Civil Code. A person or a group of persons who are the initiators of the foundation have to apply to register the foundation as a registered juristic person under the regulations of the article 122 of the Commercial and Civil Code, the revision edition B.E.2535, which defines that “a registered foundation is a juristic person.”

Significant Compositions of Foundation

Foundation consists of 3 significant compositions as below:

•  Foundation’s name, office, and objectives.

•  Foundation’s assets which is allocated as the operating fund.

•  Foundation’s regulations and the board of committee members.

 

Composition 1. Foundation’s name, office, and objectives

1.1 Foundation’s name

Criterions of Foundation’s name selection are as follow:

•  The name of any foundation must contain with the word “foundation”

•  The foundation should use Thai name. If it cannot find Thai name, the foundation shall write the Thai pronouncing name which is a closest pronunciation of the original foreign name, and shall provide the original foreign name along side with the said Thai pronouncing name.

•  Using the name of the King or member of the royal family as the name of the foundation must have a prior written consent of the Bureau of the Royal Household.

•  Using the name or surname of any individual as the name of the foundation must have a written consent of the name’s owner or his/her heir. In case the foundation cannot contact the heir of the name’s owner, the foundation has to make a written announcement to public before using that name.

•  Should not use the name of any government offices as the name of the foundation, except that foundation is established under the specific policy of the government. However, the foundation may use the other names to support the governmental offices such as:

“Foundation for the Education of ….School” or,

“Foundation for Supporting …..Hospital”

•  Not use the same name of the other existed foundations or associations.

•  Not use the name of any shrines, house of priest, guardian spirit, goddess, or other similar name as the foundation’s name.

•  Not use the name of any political parties as the foundation’s name.

1.2 Office of the Foundation

Criterions of the foundation’s office establishment are as follow:

•  Should not use the location of any government offices as the foundation’s office, except for the case that the foundation is established in accordance with the policy of the government.

•  Should not use the public place, sacred item or holy subject place such as shrine, provincial place of worship, or monument as the location of the foundation’s office.

•  In case the foundation has set up any branch offices, the foundation shall notify and register the branch office with the registrar of the Foundation Registration Area Office of the area that the branch office is located.

Objectives of the Foundation

Criterions for stipulating the Foundation’s Objectives are as follow:

•  The foundation’s objectives must be set up for benefit and interest of the public and society, not for the interest of the initiators, family or relatives, directors, or any other individuals.

•  Stipulating objective must be clear and specific, it should not be too wordy or broad for the operating of the foundation.

•  Objective must not be illegal, against the good morality of the public, or be harmful to the peace of public or the nation security.

•  Objective shall not be set up for soliciting money from people or raising funds for spending in operating of the foundation.

•  Objective shall not be set up for lending out the fund, or mortgaging, or pledging for any revenue or profit.

•  All foundations has to have these two following objectives to add with the main objectives of the foundation as following:

1. “The foundation is established to cooperate with other charity organizations in operating any activities of public interest” and,

2. “The foundation shall not involve with any political activities”.

For the foundation that is established for promoting and supporting the Democracy which has the King as the chief of the state, the second objective mentioned above which is “The foundation shall not involve with any political activities” shall be replaced with “The foundation shall be impartial in supporting and promoting the Democracy which has the King as the chief of state, and shall not provide financial support or any assets to any political parties or politicians.”

 

Composition 2. Foundation shall have the assets which are allocated as the operating fund of the foundation.

The foundation shall use its assets which have been allocated as the operating fund of the foundation to operate activities in accordance with the objectives of the foundation under the following regulations:

1. Regulation of the Foundation Registration

1.1 Regarding to the ministerial letter no. Mor-Thor. 0402/Wor. 1548 dated on 18 th September 1991, the Ministry of the Interior has stipulated that the initial registered fund of the foundation must be in cash not less than 500,000 baht (five hundred thousand baht only), or not less than 250,000 baht if there are other assets included with the initial registered fund.

1.2 Regarding to the ministerial letter no. Mor-Thor. 04023/Wor. 2073 dated on 18 th December 1991, the Ministry of the Interior has agreed to support any foundation which has objectives to prevent and solve society problems which is in accordance with the government policy, so the Ministry of the Interior has stipulated the additional regulations of the foundation registration as following:

1.2.1. The foundations that are established with the objective to operate social works, or support the education, sport, religion, public hazard, or operate medical treatment, research, and prevent the patients from drugs, AIDS, or any foundations that are established by any government offices herein are allowed to use the former regulations of the ministerial letter no. Mor-Thor. 0402/Wor.1310, dated on 17 th October 1986, issued by the Ministry of the Interior which states that the initial registered fund of the above foundation must be in cash not less than 200,000 baht (two hundred thousand baht only). In case there are other assets included in the initial registered fund, the initial registered fund shall consist of the cash proportion not less than 100,000 baht (one hundred thousand baht) and when included with the other assets, the total initial registered fund must be not less than 200,000 baht (two hundred thousand baht).

1.2.2. The foundation which is out of the scope of the above mentioned regulations but desires to request the government for the abatement of the initial registered fund from 500,000 baht (five hundred thousand baht) to be 200,000 baht (two hundred thousand baht), the foundation should submit a written statement to explain the reasons of making the said request to the Ministry of the Interior. Then the request will be considered case by case.

2. Regulations of the Assets Obtaining of the Foundation.

The foundation may obtain assets by these following ways;

2.1. Money or assets given by the result of the testaments or other contracts which has no obligations or conditions to obligate the foundation to be liable to any debts or any responsibilities. In case the asset is a land, it shall be evaluated and issued a price evaluation letter by the officer of the Area Office of the Land Department.

2.2. Donated money or assets.

2.3. Income of the foundation such as the interest of the bank saving money.

2.4. Income which occurs from the assets of the foundation such as the rental fee of the assets.

2.5. Income which occurs from the activities of the foundation such as a gala or ball which is arranged to earn money.

 

Composition 3. The foundation must have the regulations and the board of directors.

The Revision of Commercial and Civil Code B.E.2535, Article 110, 112, and 123 are stipulated as below;

“Article 110 Foundation shall have regulations and the board of directors which consists of at least three persons to operate the foundation in accordance with the related law and the regulation of the foundation.”

“Article 112 The regulations of the foundation must contain these following items:

1. Foundation’s name.

2. Foundation’s objectives.

3. Foundation’s head office and all branch offices.

4. The assets owned by the foundation at the time of establishment.

5. Regulations concerning to the board of directors of the foundation which are about the amount of committee member and the nomination of the committee member.

6. Regulations of the foundation management, assets and accounting management.”

“Article 123 The committee of the foundation shall represents the foundation to do businesses and activities which related to the outsiders.”

Whereas, in order to make the management and operation of the foundations more accurate, neat and tidy, and effective, each foundation has to have its regulations which are deemed as the covenants of the operation, and the foundation must have the board of directors to manage the foundation in pursuant with the objectives and the procedures of each foundation.

What are the responsibilities of the foundation?

According to the Revision of Commercial and Civil Code B.E.2535, Section 2 The Juristic Person, Part 1 General Provisions, Article 66 which states as below;

“Article 66 Juristic person shall have the right and duty in accordance with the regulations of this Law and other laws within the scope of power or objectives which are legislated or stipulated in the law, regulations or established instrument.”

In conclusion, when any foundation was registered as a juristic person, it shall operate activities under the regulations of the related law without any exemption.

Laws related to the foundation are as following:

1. The Act of the Enforcement of the Revision of Commercial and Civil Code B.E.2535.

2. The Revision of Commercial and Civil Code B.E.2535, Chapter 1 General Principles, Aspect 1 General Provisions, Part 3 Foundation, Article 110 to Article 136.

3. The Determination of Fault of the Registered Partnership, Limited Partnership, Company Limited, Association, and Foundation (the Second Edition) B.E.2535.

4. The Revenue Code which is the part concerning to the foundation.

5. The ministerial regulations of the Ministry of the Interior which is the part concerning to the foundation.

6. The official statement, regulations, and orders of the government which are related to the foundation.

7. The registered regulations of each foundation.

 

Ministerial Regulations of Fee Payment and Fee Exemption

Concerning to the Foundation B.E. 2545 (2002)

Regarding to the authority of the Article 136 (2) of the Commercial and Civil Code, the Minister of the Ministry of the Interior has stipulated the ministerial regulations per the following:

1. The fees of the foundation registering, document verifying, document copying and the fee of requesting the registrar to perform any actions concerning to the foundation shall be levied per the following:

(1) 10 baht for each application form.

(2) 200 baht for registering to set up a foundation.

(3) 50 baht for assigning the entire board of directors or change of any committee name.

(4) 50 baht for registering any changed or added regulations of the foundation.

(5) 50 baht for each time of document verifying made by each foundation.

(6) 10 baht for each copying and certifying of a document.

(7) 50 baht for each request that the applicant asks the registrar to operate any action that is not in line with the item (2) (3) (4) (5) or (6).

Each time of receiving a fee payment, the officer shall issue a receipt for the applicant.

 

2. The following foundations are exempted from the fee payment:

(1) The foundation that is established under the Royal Thought of His Majesty the King.

(2) The foundation that is established under the intention of the members of royal family who are ranked from the grades of Prince, Princess, Royal Highness, and higher ranking, or the foundation that has the members of the royal family who are ranked from the grades of Prince, Princess, Royal Highness, and higher ranking as the committee or the committee chairman.

(3) The foundation that is under the His Majesty the King’s patronage or under Her Majesty the Queen’s patronage.

 

3. The request for verifying, copying, and certifying the copy of the foundation’s documents for using in the businesses of the government sectors, government offices, or any state enterprise offices, shall be exempted from the fee payment.


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