Before a company's shareholders decide to amend their company's articles of association (AoA), there are a number of issues which should be carefully considered. This article shall discuss a number of matters relating to amending a company's AoA including key issues that a Company's shareholders and directors should be mindful of when implementing such change.

Legal Compliance of Proposed Changes to AoA

Firstly, it is necessary to ensure that the proposed amendments to the AoA comply with the Thai Civil and Commercial Code (CCC) as well as the company's Memorandum of Association (MoA). If the proposed amendments are contrary to Thai law or the MoA then if they are later challenged they could be struck out by the Thai courts.1 It would also be sensible to see if the CCC already provides for the proposed amendment as this would make such change redundant. Before a company decides to make changes to their AoA, it would be prudent to have a lawyer examine such changes to ensure that they are legally compliant and not already provided for under the CCC or other Thai laws.

Shareholders' Approval (Special Resolution)

In accordance with section 1145 of the CCC, the amendment of a company's AoA requires the company's shareholders to approve such change via a special resolution passed at a duly called shareholders meeting held in compliance with such company's AoA and Thai law. According to section 1194 of the CCC, the passing of a special resolution requires a majority vote of not less than 3/4 of the votes of the present shareholders who are eligible to vote.

It is also worth noting that in order to properly call a shareholder meeting to pass a special resolution, it is necessary for a meeting invitation notice to be sent out to all shareholders at least 14 days before such shareholder meeting. The invitation notice should be sent out by registered post to all shareholders and should mention several key details including the location, date and time of the meeting as well as details of the proposed special resolution i.e. mention the proposed amendment of the AoA.

Board of Directors' Approval

Any amendment to a Company's AoA must also be approved by a resolution of the board of directors (BoD) before it can be presented to the shareholders. The BoD should also call the relevant shareholder meeting (EGM or AGM) to pass the necessary special resolution if it passes the BoD meeting.

Clarity of Proposed Changes

The proposed changes to the AoA should be drafted in such a way to ensure that the amended AoA are both clear and comprehensive. If the changes are initially drafted in English then they must be translated into Thai so that they can be submitted to the Department of Business Development (DBD. If translation is required then it would be advisable to have the changes translated into Thai by a qualified translator who has experience with legal translation support. If the proposed changes are already provided for in the CCC then it may not be worth going to the trouble and expense of amending the AoA as such change would result in unnecessary duplication.

Filing requirements

Once the amendment has been approved by special resolution of the shareholders, then in accordance with section 1146 of the CCC the application to amend the AoA must be submitted to the DBD within 14 days of the shareholder meeting at which the amendment was approved.

Main Steps in Amending the AoA

The main steps involved in amending the AoA of a private company limited in Thailand are as follows:

Step 1 – Determine what changes are to be made to the Company's AoA and draft them in writing.

Step 2 – Send out invitations to all directors for a board of director (BoD) meeting to pass a resolution to approve such change to the AoA and to summon a meeting of the shareholders. Need to ensure that such meeting complies with quorum and voting requirements.

Step 3 – Hold the BoD Meeting and pass the two necessary resolutions i.e. approving amendments to the AoA and calling a meeting of shareholders (EGM or AGM) to pass a special resolution to amend the AoA.

Step 4 – Send out an invitation to all shareholders of the Company at least 14 days in advance of the shareholder meeting and the invitation should mention the agenda for such meeting, especially the special resolution to amend the AoA.

Step 5 – Hold the shareholder meeting (EGM or AGM) and pass the necessary special resolution at such meeting. Note that the passing of a special resolution requires a majority vote of not less than 75% of the votes of the present shareholders who are eligible to vote.

Step 6 – Within 14 days if the meeting, the company should submit the necessary application with the DBD to amend the AoA, the application documents will need to be executed by authorized directors of the company in accordance with their signing authority as stated in the Affidavit of Company Registration. The proposed changes will be checked by the DBD officer and if they comply with the law they will implement them and re-issue a new updated version of the AoA which reflects the amendments.

Footnote

1 According to section 1195 of the CCC "If a general meeting (shareholder meeting) has been summoned or held or a resolution passed contrary to the provisions of the CCC or contrary to the regulations of the company, the Court shall on application of any director or shareholder, cancel any such resolution or any resolutions passed at such irregular general meeting, provided that the application is entered within one month after the date of resolution".

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.