Thailand:
Amendment To The Civil And Commercial Code With An Aim To Introduce A New Form Of Merger And Changes In The Structure Of A Private Limited Company.
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On November 8, 2022, the Act Amending the Civil and Commercial
Code ("CCC") (No. 23) B.E. 2565 (2022) (the
"Amendment Act") was published in the
Royal Gazette and will enter into force 90 days from the day after
the publication date, i.e., on February 7, 2023.
Key amendments introduced by the Act
Shareholding Structure
Prior to the Amendment, the minimum number of promotors required
to form a company is three individuals. This has been changed to
just two individuals.
CCC |
Amendment
Act |
- The minimum number of promotors is three
- If the number of shareholders is reduced to two, the court may
order the company to be dissolved or the company may file for
dissolution.
- The quorum requirement for the shareholders' meeting is at
least one-fourth of the company's capital
- The DBD allows the shareholders to agree on the Memorandum of
Association remaining in force for 10 years from the date of
registration of the MOA; if the shareholders do not express an
agreement on this, the general rule is that the MOA will remain in
force perpetually
- The share certificate shall present a director's
signature
- The notice of convening the shareholders' meeting shall be
delivered to all shareholders via registered mail and made public
in a local newspaper.
|
- The minimum number of promotors is two
- If the number of shareholders is reduced to one, the court may
order the company to be dissolved or the company may file for
dissolution
- The quorum requirement for the shareholders' meeting is the
presence of at least two shareholders (or their proxies)
representing at least one-fourth of the company's capital
- If the company is not registered within 3 years from the date
on which the Registrar registered the Memorandum of Association,
the latter shall no longer be valid
- The share certificate shall bear at least a director's
signature and stamped the company's seal (if any)
- The notice of convening the shareholders' meeting shall be
delivered to all shareholders via registered mail at least 7 days
prior to the meeting, and only in case the company has issued share
certificates to bearers, it shall be made public in the local
newspaper at least once or posted in the electronic media in
accordance with the procedure prescribed in the Ministerial
Regulation no less than 7 days before the meeting. A notice
convening a general meeting where a special resolution is required
to be obtained shall be made in the stated manner at least 14 days
in advance of the meeting.
|
Consolidation of private limited companies
The CCC before the Amendment recognizes only the concept of
"amalgamation" in which two or more companies can
amalgamate into one new legal entity. The Amendment introduces the
merger in which one company merges with another company without
forming a new legal entity.
CCC |
Amendment
Act |
- Amalgamation is the only type of business consolidation: two or
more companies consolidating cease to exist and form a new
entity
- There is no protective measure for a shareholder objecting to
the business consolidation
- Creditors can object to the business consolidation within 60
days from the notification date
- A Joint Shareholders' Meeting is not provided by the
Code
- There are no provisions regarding the handover of the
business
|
- Business consolidation can happen in two ways: Amalgamation;
Merger, with one of the companies surviving and
the other consolidating companies being dissolved
- The company must arrange for the shareholders who participated
in the general meeting where the special resolution was passed who
objected to the consolidation resolution to sell their
shares at an agreed price, or at a price determined by an
appraiser. Such shareholders will become shareholders of the merged
or new entity if they do not accept the offer to buy their shares
within 14 days of receipt of the offer to purchase.
- Creditors can object to the business consolidation within
1 month from the notification date
- Within 6 months from the date of the last company's
shareholders' meeting resolving to consolidate, a Joint
Shareholders' Meeting shall be convened to consider a
prescribed agenda * The 6-month deadline can be extended by the
resolution of the Joint Shareholders Meeting, but for no more than
1 year.
- The handover of the business shall occur
within 7 days from the last Joint Shareholders' Meeting.
|
*The regulation specifies the agenda items that must be considered
at the Joint Shareholders' Meeting. To mention some, the name
of the Company resulting from the consolidation, the objectives,
the appointment of directors, and the appointment of an auditor. In
addition, the Joint Shareholders' Meeting shall be held in
proximity to the headquarter of one of the consolidating companies.
A quorum to be met is provided, namely, a minimum of half of each
company's total shares must be represented. A Chairperson of
the meeting shall be elected by the attending shareholders. Unless
otherwise agreed, resolutions shall be resolved by the majority
votes of the attending shareholders.
Transitional provisions
The Amendment Act also provides a set of transitional provisions
to address the transition period and allows limited companies to
adapt. In particular, Section 19 of the Amendment Act provides that
in the event that an MOA is already registered prior to the date
the Amendment Act becomes effective (i.e., February 7, 2023, the
"effective date") but the company has not yet been
registered, the company shall be registered within 180 days from
the effective date of the Act. However, as we already mentioned in
the first table above, in case the MOA has not yet been registered
prior to the effective date of the Act, the company shall be
registered within 3 years from the MOA registration to avoid the
latter being invalid.
Moreover, any business consolidation approved by a
shareholders' meeting prior to the effective date of the
Amendment Act can be carried out according to the unamended version
of the CCC.
What ILCT Ltd. can do for you
ILCT Ltd. can support companies in evaluating and carrying out
the procedures for a business consolidation, either in the form of
Amalgamation or Merger.
The firm has extensive experience in mergers, takeovers, and
acquisitions of both private and public-listed companies. Our
services include performing due diligence investigations, handling
tender offers, tax planning and handling other formalities with the
Securities Exchange Commission and the Securities Exchange of
Thailand (in the case of public-listed companies), as well as
preparing the necessary documentation to effect the change in
ownership and the taking of necessary corporate actions, etc.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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