Private Limited Company vs. Limited Partnership: What's the Difference?
Compare registered capital, fees, and liability for debts between the two business structures, with a clear worked example to help you decide before registering.
When starting a business, one of the first decisions an owner has to make is which structure to register under — a "private limited company" (บริษัทจำกัด) or a "limited partnership" (ห้างหุ้นส่วนจำกัด). Both are juristic persons under the Civil and Commercial Code, but they differ clearly in their liability structure, rules, and the kinds of businesses they suit.
Key Differences
1. Minimum Number of Investors and Registered Capital
Under Section 1097 of the Civil and Commercial Code (as amended by the Civil and Commercial Code Amendment Act (No. 23) B.E. 2565 (2022)), a private limited company must have at least 2 promoters and shareholders (down from 3, effective from 7 February 2023). Shares must be valued at no less than 5 baht each, and at least 25% of the registered capital must be paid up on first call. A limited partnership, under Book 3, Title 22 of the Civil and Commercial Code, likewise needs at least 2 partners, but there's no fixed minimum capital or payment ratio — giving it more flexibility.
2. Fees and Complexity of Setting Up
According to the Department of Business Development's (DBD) fee schedule, registering a limited partnership starts at around 1,000 baht, while a private limited company has higher setup fees and a more complex process — the law requires a company to prepare a memorandum of association, hold a shareholders' meeting, and complete every step set out in the Civil and Commercial Code.
3. Liability for Debts
Private limited company: under the Civil and Commercial Code's principles governing companies, every shareholder's liability is limited to the unpaid amount on their shares. Even if the company's debts exceed the capital invested, shareholders are not required to use personal assets to cover the shortfall.
Limited partnership: under Book 3, Title 22, Chapter 3 of the Civil and Commercial Code, partners are split into two types — the "managing partner" (an unlimited-liability partner), who is liable for all debts without limit, and the "limited-liability partner", who is liable only up to the amount invested.
A worked example: Suppose a business has debts of 1 million baht and shuts down.
- If it's a private limited company with 2 shareholders who each invested 250,000 baht and paid up their shares in full, neither shareholder has to pay anything more, even though the debt exceeds their combined investment.
- If it's a limited partnership where you are the managing partner (invested 250,000 baht) and a friend is a limited-liability partner (also invested 250,000 baht), your friend is liable for at most their 250,000 baht investment — but as the managing partner, you would be responsible for the entire remaining debt out of your personal assets.
4. Credibility and Growth Opportunities
A private limited company tends to be seen as more credible by trading partners, financial institutions, and investors, because its governance structure is more clearly defined by law. That makes it a better fit for businesses planning to expand or raise capital in the future.
Which One Should You Choose?
| Factor | Better Suited to a Private Limited Company | Better Suited to a Limited Partnership |
| Business size | Medium to large, planning to expand | Small, just starting out |
| Risk | Want to limit everyone's liability | Comfortable taking on risk as the managing partner |
| Credibility | Need to deal with banks/investors | Prioritise flexibility and low cost |
| Partner relationships | Multiple shareholders who may not know each other closely | Partners who trust each other highly |
Summary
The most important difference between the two structures comes down to "liability for debts" as set out in the Civil and Commercial Code. A private limited company clearly separates shareholders' personal assets from the company's assets — no matter how much debt the company runs up, shareholders' personal assets remain protected. A limited partnership is more flexible and cheaper to set up, but the line between personal assets and the partnership's assets is less clear-cut, particularly for the managing partner, who is legally liable for debts without limit using personal assets. Choosing a business structure should therefore take into account the size of the business, the level of risk you can accept, and your future growth plans. If you're not sure which structure suits your business, it's worth consulting an accounting and legal professional before deciding to register.
