Amendments to the Civil and Commercial Code were published in the Government Gazette on 3 March 2008 and became effective on 1 July 2008. Generally, the amendments aim to simplify both the registration requirements and ongoing corporate governance requirements for Thai Limited Companies. In addition, new provisions will allow a qualifying registered partnership to more easily convert to a private limited company. The purpose of this briefing update is to provide a high level summary of the amendments. This update does not constitute legal advice.

Background & Context

The laws governing limited companies are generally found in Book III, Title XXII, Chapter IV of the Thai Civil and Commercial Code B.E.2472 which was promulgated in 1929 and had been amended 17 times. The 18th set of amendments is the subject of this briefing update. We will identify the Code together with its amendments simply as the “CCC”.

Registering and operating a Thai limited company has historically been a relatively lengthy and burdensome process, especially when compared to such jurisdictions as Hong Kong or Singapore. Each limited company was required to have seven “promoters” who were responsible for filing a memorandum of association. A statutory waiting period of seven days then followed, and at the end thereof a statutory meeting was held whereby the initial directors were appointed and a minimum of seven shareholders subscribed for their respective shares, among other things. At this point, the company could register with the Ministry of Commerce and commence operations. After registration, the company would be required to hold annual general meetings of its shareholders and, in certain instances, extraordinary meetings. The recent amendments to the CCC address each of these processes, as well as a few others, in an effort to make the registration and ongoing operational processes more efficient and transparent.

Summary of Changes

Key aspects of the amendments include:

• Number of Shareholders and Promoters: The number of promoters who can form a company and the minimum number of shareholders required upon registration has been reduced from seven to three.

• Accelerated Registration Period: Registration of a Thai Limited Company may be completed within a single day instead of over seven days. To do so, Directors of a new company must file the company’s memorandum of association, hold the statutory meeting and have the initial shareholders subscribe for their shares within the same day.

• Notification of Shareholder Meetings: Notice of a shareholder meeting must now be sent by hand or registered mail to every shareholder and published at least once in a local newspaper at least seven days prior to the meeting (meetings for purposes of passing a “special resolution” are subject to a minimum advance notice of 14 days). Publication in a “local newspaper” (meaning any newspaper distributed within the province of the company’s registered address) is meant to prevent companies from backdating shareholders meetings.

• Other Notice Requirements
  • Reduction in Capitalization: Notice of a capital reduction requires publication at least once in a local newspaper and notice by registered mail to all creditors of the proposed reduction, and the period within which the creditors may object to such reduction is reduced from three months to 30 days.
  • Amalgamation: A proposed amalgamation requires publication in a local newspaper at least once and notice by registered mail to all creditors, whereby the creditors have 60 days to notify the company of any objection.
  • Liquidation: The liquidator must publish notification of such liquidation at least once in a local newspaper and inform the company’ creditors by registered mail that they must apply for payment of any outstanding debts with the liquidator.
  • Dividend: Notice of any dividend declared by a company must be given to each shareholder by registered mail. If the shares are issued in bearer form, then the notice must also be published at least once in a local newspaper.
  • Directors vote by proxy: Directors may not grant proxies to others to vote at directors meetings.
  • Special Resolution of Shareholders: A special resolution may now be passed at a single shareholders meeting with at least 75% of the votes present approving such resolution. Previously, two separate shareholders meetings held at least 14 days apart were required in order to pass a special resolution.
  • Removal of Defunct Companies by Ministry of Commerce: If the registrar suspects that a company is no longer operating, he may (i) deliver notice by registered mail to a company inquiring whether it is still operating and (ii) if the company confirms it is no longer operating or fails to respond within 30 days, the register may send another notice that the company’s name will be removed from the register 90 days following the date of such second notice.
  • Conversion from Partnership to Limited Company: A new chapter to the CCC provides for the conversion of a registered partnership or limited partnership into a Thai limited company. To be eligible, a partnership must have at least three partners and all partners must consent to the conversion.
  • New Registration Forms: The Regulations of the Partnership and Companies Registration Office have been amended to be consistent with the amendments to the CCC. Most application forms for registering a Thai Limited Company are to be replaced with new versions (including forms Bor. Or. Jor. 1, 2, 3, and 5, form Gor, and forms Lor. Chor. 1 and 2) effective as of 1 July 2008.

Companies registered before the new amendments take effect will not need to amend their articles of association or other corporate documents. Instead, the amendments shall automatically supersede any inconsistent provision of a company’s articles of association (unless such provision provides for a higher standard more beneficial to a company’s shareholders than is required by the amendments (for example, if the articles of association require 21 days’ notice for a shareholder meeting, then the new amendments to the CCC shall not supersede such provision)).

These amendments do not impact the foreign equity restrictions and Thai participation requirements that are currently issues for many Thai limited companies which have foreign shareholders or directors.