Overview of Company Director Appointments and Removals

Every private limited company in Thailand must be managed by one of more directors who are under the control of the general meeting of the shareholders and in accordance with the Articles of Association (AoA) of the company. Company directors of a private company are important persons given that through the Board of Directors (BoD) they have the power to make many key decisions as well as fulfil a number of important functions such as the execution of documents and agreements on behalf of the company.¹ This article shall provide an overview of key issues relating to appointing and removing a director from a private limited company including how each can be accomplished and legal issues to consider before making such changes to the directorship.

Appointing a director to a private limited company in Thailand

A director can be appointed to a private limited company in a number of ways including:

1. When a new company is incorporated a director can be appointed at the statutory meeting which is the first official meeting of the new company where the promoters (who set up the company) hand over the running of the new company to the directors.
2. Subject to the provisions contained in a company’s AoA, a director can be appointed at a properly called meeting of the shareholders. Ordinarily this requires the passing of an ordinary resolution² of the shareholders present at such meeting, which may be an Annual General Meeting (AGM) or an Extraordinary General Meeting (EGM) of the shareholders. However, some companies may have higher requirements provided for in their AoA such as director appointments requiring the passing of a special resolution and in such case the appointment must comply with these requirements.
3. If the number of directors falls below the number required to form quorum for a BoD meeting, then the Civil & Commercial Code (CCC) provides that the remaining directors are permitted to act for the purpose of increasing the number of directors to be able to meet quorum or to summon an AGM or EGM of shareholders but for no other purpose.
   Before appointing a new director to the BoD, the shareholder must ensure that such person meets the minimum legal requirements, which are as follows:
   1. The new director cannot be a bankrupt or lacking mental capacity;
   2. They must be at least 12 years of age;
   3. They must agree to such appointment, this is evidenced when they sign form Kor.

Removal of a director from a private limited company in Thailand

A director can be removed from a private limited company in a number of ways including:

1. A director can retire at any time by submitting a signed letter of resignation to the company. Unless the letter provides otherwise, the resignation shall take effect from when it is received by the company. If a director wishes to resign, the writer recommends that they keep a scan of such letter and send it to the company by registered post so that there is evidence of sending and when the letter was received.
2. At each AGM of a company, ordinarily 1/3³ of the directors must retire, however it may be more if the company’s AoA provides otherwise. It is worth noting that the CCC provides that a retiring director is eligible for re-election but their re-election shall depend on the voting of the shareholders and proxies present at such AGM. Moreover, during the first two years after the company is registered, the directors to retire at the AGM shall be drawn by lots but in every subsequent year thereafter the directors who have been longest in office shall retire.
3. The CCC provides that if a director becomes bankrupt or mentally incapacitated, then their office is vacated. In order to prove mental incapacitation it shall be necessary to obtain a finding by the Thai courts that the director lacks sufficient mental capacity; such finding by the courts will require suitable medical evidence such as a report on the mental state of the director.
4. Subject to a company’s AoA, a director can be removed by ordinary resolution of the shareholders at a properly called shareholder meeting. If the removal of a director is likely to be controversial then it would be advisable to record the shareholder meeting to prove that the necessary legal steps were taken such as that quorum was met, the vote met the required threshold and that the meeting was conducted in accordance with the law and the AoA.

A private limited company in Thailand must have at least one director at all times, hence if a company only has 1 director then such person cannot resign or be removed from office unless another person is appointed to replace them. If a single director dies in office then a shareholder meeting should be called to appoint one or more new director(s) as soon as possible.

If a company only has one director then it cannot hold a BoD meeting as this requires as least two directors. Hence, every resolution would need to instead be passed by shareholder resolution at a properly called shareholder meeting (EGM or AGM). This can be quite burdensome given that a shareholder meeting requires at least 7 days advance notice to be given to each shareholder by invitation notice (sent by registered post) and at least one advertisement notice in a local Thai newspaper.

Removal of the Chairperson of the BoD and their replacement

If the director removed is the appointed chairperson of the BoD, then subject to the AoA and any shareholder agreement, the remaining directors may elect a new chairperson of their BoD meetings. In doing so, the directors may fix the period for which such person is to hold office but if no person is elected as chairperson or if they fail to attend a BoD meeting then the directors present at such meeting may choose one of their members to be the chairperson of such meeting.

Updating the Department of Business Development (DBD) following changes to the directorship

The CCC provides that where there are changes to the authorized directors of a private limited company, such changes must be registered with the DBD within 14 days from the date of the change or within 14 days from the date the company receives the resignation letter or the effective date of resignation, if it is done later then fines shall apply. Such change must be done by preparing relevant forms which mention the changes and such forms will need to be executed by an authorized director(s) in accordance with the signing power as stated in the company’s affidavit of company registration. In the case of the appointment of a new director, they shall need to sign a form called form Kor which captures their basic details such as full legal name, address, nationality, phone number and Thai ID card number (for Thai citizens) or passport number for others.

¹ In accordance with their authorized director signing power as stated in the affidavit of company registration.
² An ordinary resolution requires an affirmative vote of at least 50% of the votes of the shareholders present.
³ If the number of directors is not a multiple of 3 then the number nearest to one third (1/3^rd)

Dharmniti Law Office Co., Ltd.
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Tel: (66) 2680 9777
Fax: (66) 2680 9711
Email: ryan@dlo.co.th or chalapunj@dlo.co.th