Since 7 February 2023, forming and operating a Thai private company limited for doing business in Thailand has been made simpler with recent amendments to Thailand's Civil and Commercial Code (Thai CCC). These changes should make it easier for entrepreneurs to start a business in Thailand, as well as streamline and modernize the process for handling and executing corporate governance procedures.
This article will cover the amendments that have the most significant impact on establishing and managing a Thai private company limited.
Establishing a Thai private company limited
Minimum shareholders
Previously, a business would need a minimum of three promoters (ostensibly, shareholders) to hold at least one share each in the company-to-be and sign the Memorandum of Association to begin the registration process. Now, only two promoters are needed.
Memorandum of Association
Once a Memorandum of Association (MoA) was registered, a company's promoters used to have ten years to register the company's incorporation. To expedite the process and encourage better planning and preparation, the ten-year period has been cut to three years.
Share certificates
Share certificates must now be stamped with the company's seal (if any), along with a director's signature. The addition of "if any" suggests that a company seal is no longer a requirement for its establishment.
Managing a Thai private company limited
Minimum shareholders
As with establishing a company, the minimum number of shareholders required to maintain a company has been cut from three to two. Failure to meet the minimum puts the company at risk of a court-ordered dissolution.
Board of director meetings
During the pandemic, an emergency decree allowed companies to convene board of directors (BoD) meetings remotely, through video conferencing and online. The amendment updates the law to no longer restrict BoD meetings to in person events. They can now be held electronically.
Notice for shareholders meetings
Companies previously had to publish a shareholder meeting notification in a local newspaper, as well as send every registered shareholder such notification by registered mail at least seven days before the meeting. Now, companies only need to mail shareholders notification. Unless the company has issued bearer certificates, then the company must publish the notification in a local newspaper or electronic media at least seven days before the general meeting and 14 days for special resolutions.
Quorums for shareholders meetings
Before the amendments, the quorum for a shareholders meeting was only that at least a 25% shareholding was represented, which could be just one person. Now, the 25% still applies, but at least two shareholders, either in person or by proxy, must also be present.
Dividends
Any dividends declared in a general or BoD meeting must be paid within one month of that meeting. Previously, there was no prescribed deadline for dividend payments once declared.
Dealing with deadlocks
Companies must now include in their Articles of Association (AoA) procedures for dealing with deadlocks among BoDs and shareholders. Before, there was no legal requirement to do so.
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.
