Summary of Limited Companies under the Thai Civil & Commercial Code (CCC)

Nature & Management of Company Limited

Nature of a Company Limited: A limited company is formed with the registered capital divided into shares, and the liability of the shareholders is limited to the amount (if any) that remains unpaid on the shares that are respectively held by them.

Management of a Company Limited: Every limited company shall be managed by a director or directors under the control of the general meeting of shareholders and according to the regulations (Articles of Association) of the company.

Amending the Company’s Memorandum & Articles of Association: After the company is duly registered at the DBD no regulations may be made and no additions to or alterations of the regulations or of the contents of the memorandum may be adopted except by passing a special resolution[1] at the general meeting of the shareholders (i.e. AGM or EGM). If a change is passed by a special resolution of the shareholders at an EGM or AGM then the company must register such new regulation, addition or alteration within fourteen (14) days from the date of the special resolution.

Registered Office of the Company: Every limited company must have a registered office to which all communications and notices may be addressed. Notice of the location of the registered office and of any change to such office address must be given to the Registrar of companies (DBD), who shall record the same on the Company’s affidavit of company registration.

Limitation if Shares Not Fully Paid Up: As long as the shares of the company have not been fully paid up, the company may not print or mention the capital of the company in any notice, advertisement, bills, invoices, letters or other documents, without clearly mentioning at the same time what proportion of such capital has been paid up.

Shares and Shareholders

Limitation re Owning Own Shares: A limited company may not own its own shares or take them in pledge.

Minimum Capital Contribution by Shareholders: The first payment on the shares must not be less than twenty-five per cent (25%) of their nominal amount (par value). However, it is worth noting that for companies with a Foreign Business License (FBL) or who wish to employ foreign nationals then they will need fully paid up capital of several million baht depending on the number of FBL licenses and/or foreign staff to be employed.

Payment for Shares: Generally speaking the whole amount of every share must be paid in money, except for a few limited exceptions.

A shareholder cannot use a set-off against the company with respect to payments owing on shares. i.e. if the Company owes a shareholder money then such shareholder cannot use the money owed to him by the company to satisfy the money he owes to the company for his shares. 

Calls on Shareholders for Payment of Balance Owing on Shares: Unless otherwise decided by a general meeting of the shareholders (AGM or EGM), the directors may make calls upon the shareholders in respect of all money being due on their shares. At least twenty-one (21) days’ notice must be given by registered letter to each shareholder of each call and each shareholder must pay the amount of such call to the person and at the time and place as shall be specified by the directors. If the call payable in respect of any share has not been paid by the respective shareholder by the payment due date, the shareholder is bound to pay interest counting from the day fixed for payment up until the time that they make such payment. If a shareholder fails to pay a call on the day fixed for payment thereof, the directors may give him notice by registered letter to pay such call with interest.

The notice must specify a reasonable time within which such call and interest must be paid. The notice must also specify the place where the payment must be made. The notice may also state that in the case of non-payment, the shares in respect of which such call was made may be forfeited. If a statement relating to forfeiture of the shares has been made in the notice to the shareholder the directors may, as long as the call and interest remain unpaid by the shareholder, declare the shares to be forfeited.

It should also be noted that the company may decline to register a transfer of shares on which a call is due (unpaid).

Share Nominal Value: The nominal amount of a share in a limited company must not be less than five (5) Baht.

No Public Offering of Shares: In relation to a company limited, no invitation to subscribe for its shares can be made to the public.

Share Subscription: All of the shares with which a new company proposes to be registered must be subscribed or allotted before the registration of the company at the Dept. of Business Development (DBD) under the Ministry of Commerce.

Liability of Shareholders: A person by subscribing for shares binds himself, on condition that if the company is formed, he shall pay to the company the amount of such shares in conformity with the prospectus and the Company’s Articles of Association.

No Right to Cancelation of Shares after Registration: After a company limited is registered at the DBD, a subscriber of shares in the Company cannot enter a claim for cancellation by the Court of his subscription on the ground of, mistake, duress or fraud.

Shares are Indivisible: If a share is held by two or more persons in common, they must appoint one of them to exercise their rights as shareholders. Persons holding a share in common are jointly liable to the company for payment of the amount of the share that is not fully paid up.

Share Certificates: A certificate or certificates shall be delivered to each shareholder for the shares held by him/her. The delivery of a certificate may be subject to the payment of such fee, not exceeding fifty satang, as the directors may decide. Every certificate of shares must be signed by one of the directors at least, and must bear the seal of the company.

A share certificate must contain the following particulars:

1. The name of the company.
2. The numbers of the shares to which it applies.
3. The amount of each share.
4. In the case the shares are not fully paid up, the amount paid up on each share.
5. The name of the shareholder or a statement that the certificate is to bearer.

Note: A ‘name certificate’ in the context of a shareholder certificate is a share certificate which specifically mentions the name of the holder of such shares. A ‘bearer certificate’ means a share certificate which does not specifically mention the holder of the shares but says that the holder of the certificate holds the shares.

Transfer of Shares: The transfer of shares entered in a ‘name certificate’ is void unless such transfer is made in writing and signed by the transferor and the transferee whose signatures must be certified by at least one (1) witness. Such transfer is invalid as against the company and the third person until the fact of the share transfer and the name and address of the transferee are entered in the register of shareholders.

Death or Bankruptcy of a Shareholder: In the case of the death or bankruptcy of any shareholder, another person becomes entitled to a share (such as through a will etc) then company shall, on surrender of the share certificate (when possible), and on proper evidence being produced, register such other person as a shareholder of such shares.

Shareholder Register: Every limited company must keep a register of shareholders containing the following details:

i)     The names and addresses, and occupations, if any, of the shareholders, a statement of the shares held by each shareholder, distinguishing each share by its number, and of the amount paid or agreed to be considered as paid on the shares of each shareholder;

ii)    The date at which each person was entered in the register as a shareholder;

iii)   The date at which each shareholder ceased to be a shareholder;

iv)   The numbers and date of certificates issued to bearer, and the respective numbers of shares entered in each such certificate; and

v)    The date of cancellation of any name certificate or certificate bearer.

Starting from the date of the registration of the company the register of shareholders must be kept at the registered office of the company. It shall be gratuitously open to inspection by the shareholders, during business hours, subjected to such reasonable restrictions as the directors may impose, but not less than 2 hours a day.

It shall be the duty of the directors to send once at least in every year to the Registrar, and not later than on the fourteenth day after the ordinary meeting (AGM), a copy of the list of all shareholders at the time such meeting and those who have ceased to be shareholders since the date of the last ordinary meeting.

Any shareholders of the company is entitled to request a copy of such register or of any part thereof which shall be delivered to him/her on payment of fifty satang for every hundred words required to be copied.

Notices to Shareholders: A notice is deemed to be duly served by the company to a shareholder if it is delivered personally or sent by post to such shareholder at the address appearing in the register of shareholders (i.e. form BOJ5). Moreover, any notice sent by post in a letter properly addressed is deemed to have been served (received) at the time when such letter would have been delivered in the ordinary course of post.

Directors and Meetings of the Board of Directors (BoD)

For more information please also see our other posted article on DLO website regarding Director Rights & Duties in a Company Limited.

Number and Remuneration of the Directors: The number and remuneration of the directors shall be fixed by the general meeting of shareholders (AGM or EGM).

Appointment or Removal of a Director: Generally speaking a director can only be appointed or removed by a general meeting of the shareholders (AGM or EGM).

However, any vacancy occurring in the BoD otherwise than by rotation can be filled up by the directors, but any person so appointed shall only retain his/her office during such time only as the vacating director was entitled to retain the same.

Furthermore, if a general meeting of the shareholders removes a director before the expiration (end) of his/her period of office, and appoints another person in his/her place then the person so appointed shall only retain his/her office during such time as the removed director was entitled to retain the same.

Rotation (Retirement) of Directors: At the first ordinary meeting (AGM) after the registration of the company and at the first ordinary meeting in every subsequent year one-third (1/3) of the directors, or, if their number is not a multiple of three, then the number nearest to one-third (1/3) must retire from office.

Director Resignation: Any director who wishes to resign as a director of the company must submit his resignation letter to the company. The resignation shall take effect from the date of resignation letter reaches the company unless the letter provides otherwise i.e. a later effective date for the resignation.

The director who resigns his/her directorship may also notify the Registrar (DBD) of his/her resignation.

Impact of Bankruptcy or Incapacitation: If a director becomes bankrupt or incapacitated then his/her office is vacated.

Director Voting at BoD: Questions or resolutions arising at any meeting of directors are decided by a majority of votes, in case of an equality of votes (equal number of votes) then the chairperson has the casting vote.

Meetings of the BoD: A director may at any time summon a meeting of the board of directors. The directors may elect a chairperson of their meetings, and fix the period for which he/she is to hold office, but if no such chairperson is elected, or if at any meeting the chairperson is not present at the time appointed for holding the same, then the directors present at such meeting may choose one of their members to be chairperson of such meeting.

BoD Delegation of Power: The directors may delegate any of their powers to managers or to committees consisting of members of the BoD. Every manager or committee must in the exercise of the delegated power comply with any order or regulation that may be imposed on them by the BoD.

Director Standard of Care: The CCC provides that directors must in their conduct of the business apply the diligence of a careful business man. In particular they are jointly responsible for the following:

i)     The payment of shares by the shareholders being actually made;

ii)    The existence and regular keeping of the books and documents prescribed by law (such as balance sheets)

iii)   The proper distribution of the dividend or interest as prescribed by law; and

iv)   The proper enforcement of resolutions of the general meetings.

Obligation to Avoid Conflict of Interest: A director must not without the consent of the general meeting of shareholders (i.e. shareholder resolution at an AGM or EGM), undertake commercial transactions of the same nature as and competing with that of the company, either on his/her own account or that of a third person, nor may he/she be a partner with unlimited liability in another concern carrying on business of the same nature as and competing with that of the company.

Shareholder Ratification of Director Actions: When the acts of a director have been approved by a general meeting of the shareholders, such director is no longer liable for such acts to the shareholders who have approved them, or to the company. Shareholders who did not approve of such acts cannot enter their action (legal action) later than six (6) months after the date of the general meeting on which such acts were approved by the shareholders of the company.

General Meetings (Shareholder Meetings i.e. AGM and EGM)

AGM & EGM: A general meeting of shareholders must be held within six (6) months after the registration of the company, thereafter such meeting must subsequently be held at least every 12 months. Such meeting is called an ordinary meeting or Annual General Meeting (AGM). All other general meetings of the shareholders are called extraordinary meetings or Extraordinary General Meetings (EGM).

EGM’s and Calling an EGM: The directors may summon a EGM whenever they think it is necessary. However, they must without delay summon an EGM when the company has lost half the amount of its capital, in order to inform the shareholders of such loss. An EGM must also be summoned if a requisition to that effect is made in writing by shareholders holding not less than one-fifth (20%) of the shares of the company. The requisition must specify the reason for which the meeting is required to be summoned. Whenever a requisition for the summoning of an EGM is made by the shareholders according to the above, then the directors must summon such shareholder meeting. However, if such meeting is not summoned within thirty (30) days after the date of the requisition, then the requisitionist, or any other shareholder amounting to the required number (any of the other shareholders making up the required 20% of shares), may themselves summon such EGM.

Notice Requirements for Calling a Shareholder Meeting: Notice requirements for a shareholder meeting are as follows:

1. A notice of the summoning of every general meeting must be published at least once in a local paper not later than seven (7) days before the date set for the shareholder meeting.
2. Invitations must be sent by registered post to every shareholder whose name appears in the register of shareholders (form BOJ5) not later than seven (7) days before the date fixed for the meeting.

Note: If the shareholder meeting has a special resolution on the agenda and meeting invitation notice, then the advance period for the newspaper advertisement and invitations is fourteen (14) days and not seven (7).

The notice for the summoning of a general meeting must specify the following details:

i)     The place where the meeting will be held;

ii)    The date and time of the meeting;

iii)   The nature of the business to be transacted at such meeting.

iv)   If the notice is for a special resolution to be made in the general meeting, then the details of the proposed special resolution must also be included in the notice.

Shareholder Right to Attend General Meetings: Every shareholder has the right to be present at any general meeting of the shareholders.

Rules Applicable to General Meetings of the Shareholders: Unless there are provisions to the contrary in a company’s Articles of Association (AoA), the following rules as stated in sections 1178-1195 of the CCC shall apply to general meetings of the shareholders:

1. Quorum: A general meeting may not transact any business unless shareholders representing at least one-fourth (25%) of the capital of the company are present. If within an hour from the time appointment for a general meeting the quorum as mentioned above is not present, the meeting, if summoned upon the requisition of shareholders, will be dissolved. If the general meeting had not been summoned upon the requisition of shareholders, then another general meeting shall be summoned within fourteen (14) days and at such meeting no quorum shall be necessary.
2. Chairperson of Meetings: The chairperson of the board of directors shall preside at every general meeting of shareholders. If there is no such chairperson, or of at any general meeting he/she is not present within fifteen minutes after the time appointed for the holding the meeting, the shareholders present may elect one of their members to be chairperson.
3. Adjourned Meetings: The chairperson may, with the consent of the meeting, adjourn any general meeting, but no business may be transacted at any adjourned meeting other than the business left unfinished at the original meeting.
4. Voting & Resolutions: On a show of hands every shareholder present in person or represented by proxy shall have one (1) vote. On a poll every shareholder shall have one (1) vote for each share of which he/she is the holder. At any general meeting, a resolution put to the vote shall be decided on a show of hands, unless a poll is, before or on the declaration of the result of the show of hands, demanded by at least two (2) shareholders. At any general meeting, a declaration by the chairperson that a resolution has on a show of hands, been passed or lost, and an entry to that effect in the books of the proceedings of the company shall be sufficient evidence of the fact. If a poll is demanded, the result of the poll shall be deemed to be the resolution of the meeting. If a poll is duly demanded, it shall be taken in such manner as the chairperson directs. In the case of an equality of votes, whether on a show of hands or on a poll, the chairperson of the meeting shall be entitled to a second or casting vote.
5. No Vote if Calls Unpaid: No shareholder is entitled to vote at a general meeting of the shareholders unless all calls due by him have been paid i.e. if the directors have issued a call to the shareholders to pay up a certain amount owing on the shares and such amount is still owing by the due date of such call then the shareholder who has not paid is not permitted to vote until the outstanding money is paid up by them.
6. Conflict of Interest: A shareholder who has a conflict of interest in a resolution is not permitted to vote on such resolution.
7. Proxy: Any shareholder may vote by proxy, provided the power given to such proxy is in writing (this is usually in the form of a proxy appointment form). The instrument appointing a proxy must be deposited with the chairperson at or before the beginning or the meeting at which the proxy named in such instrument proposed to vote. The instrument appointing a proxy must be dated and signed by the shareholder and must contain the following details:
   1. The number of shares held by the shareholder;
   2. The name of the proxy; and
   3. The meeting or meetings or the period for which the proxy is appointed.

Cancelling a Resolution through the Courts: If a general meeting of the shareholders has been summoned or held or a resolution passed which is contrary to the provisions of the CCC or the Articles of Association of the company, then 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 to the court is entered within one(1) month after the date of resolution.

Balance Sheet.

Annual Financial Statement: A balance-sheet must be made at least once every twelve (12) months, at the end of the financial year of the company. The balance sheet must contain a summary of the assets and liabilities of the company and a profit and loss account. The balance-sheet must be examined by one or more auditors and submitted for adoption to a general meeting of the shareholders within four (4) months after its date. Furthermore, a copy of it must be sent to every person entered in the register of shareholders (share register book or form BOJ5) at least three (3) days before the general meeting of shareholders. Copies must also be kept open at the offices of the company during the same period for inspection.

Any person is entitled to obtain from any company a copy of its latest balance-sheet on payment of a sum not exceeding twenty (20) Baht. The directors must send to the Registrar (DBD) a copy of every balance sheet not later than one (1) month after it has been adopted by the general meeting of the shareholders otherwise the company will be subject to penalties.

Submission at the General Meeting of Shareholders: On submitting the balance-sheet, the directors must lay before the general meeting of shareholders a report showing how the business of the company was conducted during the year under review. Basically, this means that at the AGM meeting, the directors of the Company have a duty to report and/or update the shareholders of the Company’s business, for example presenting the Annual Report etc.

Dividends and Reserve.

Payment of Dividend: The distribution of dividend must be made in proportion to the amount paid upon each share, unless otherwise decided with regards to preference shares. Hence, for example if you held 100 shares of 1,000 Shares in a company (10%), if the company pays out a dividend of 2,000,000 THB, you will receive a dividend of 200,000 THB (10% of the divided).

Resolution Required for Declaration of Dividend: No dividend may be declared except by a resolution passed in a general meeting. The directors may from time to time pay to the shareholders such interim dividends as appeared to the directors to be justified by the profits of the company.

Dividend only to be paid out of profits: No dividend can be paid otherwise than out of profits. If the company has incurred losses, no dividend may be paid unless such losses have been made good.

Reserve Fund: The company must appropriate (set aside) to a reserve fund, at each distribution of a dividend, at least one-twentieth (1/20^th) of the profits arising from the business of the company, this must be done until the reserve fund reaches one-tenth (1/10^th) part of the capital of the company or such higher proportion thereof as may be stipulated in the Articles of Association of the company.

If shares have been issued at a value higher than the face value, the excess must be added to the reserve fund until the latter has reached the amount mentioned in the above paragraph.

Creditors can demand return of improperly paid Dividend: If a dividend has been paid to the shareholders which is contrary to sections 1201 and 1202 of the CCC, the creditors of the company are entitled to have the amount so distributed returned to the company, provided that a shareholder cannot be obliged to return a dividend which has been received by them in good faith.

Notice of Declared Dividend: Notice of any dividend that may have been declared must be given by letter to each shareholder whose name appears on the register of shareholders (share register book or form BOJ5). If the company has any share represented by a share certificate issued to bearer (bearer certificate), the notice must also be published once at least in a local newspaper. Notice of any dividend that may have been declared must either be:

i)     published twice at least in a local paper; OR

ii)    given by letter to each shareholder whose name appears on the register of shareholders (share register book or form BOJ5).

Interest: No dividend can bear interest against the company. Thus if the company has not paid a declared dividend to the shareholders the shareholders can’t charge interest against the company.

Books & Accounts

Accounting Requirements: The directors of the company must cause true accounts to be kept:

1. Of the sums received and expended by the company and of the matters in respect of which each receipt or expenditure takes place; and
2. Of the assets and liabilities of the company.

Minutes of Meetings: The directors may cause minutes of all proceedings and resolutions of meetings of shareholders and directors to be duly entered in official company record books which shall be kept at the registered office of the company.

Any such minutes signed by the chairman of the meeting at which such resolution were passed or proceedings had, or by the chairman of the next succeeding meeting, are presumed correct evidence of the matters therein contained, and all resolutions and proceedings of which minutes have been made are presumed to have been duly passed. Any shareholder may at any time during business hours demand inspection of the abovementioned documents.

Increases and Decreases in Registered Capital

Increase:

Special Resolution to Issue New Shares: A limited company can by special resolution[2] increase its capital by issuing new shares.

Fully or Partly Paid-Up New Shares: No new shares of a limited company may be allotted as fully or partly paid-up otherwise than in money, except if approved by a special resolution of the shareholders. For example, if shares will be paid up by means of property or labor. This matter must be passed by a special resolution of shareholders meeting.

New Shares must be offered to Shareholders: All new shares must be offered to the shareholders in proportion to the shares held by them.Such offer must be made by notice specifying the number of shares to which the shareholder is entitled, and fixing a date after which the offer, if not accepted, shall be deemed to be declined.After such date or on the receipt of an instruction from the shareholder that he/she declined to accept the shares offered, the directors may offer such shares for subscription to the other shareholders or they may subscribe to such shares himself/herself.

Notice Must be Signed by Directors: A notice to any shareholder to subscribe for new shares must be dated and signed by the directors of the company.

Decrease:

Reducing the Number of Shares: A limited company may, by special resolution, reduce its capital either by lowering the amount of each share or by reducing the number of shares. However, the capital of the company may not be reduced to less than one-fourth (1/4^th) of its total amount.

Notice Requirements to Reduce Number of Shares: When a company limited proposes to reduce its capital, it must publish a notice once at least in a local newspaper and send a notice to all creditors known to the company specifying the details of the proposed reduction and requiring the creditors to present within thirty days from the date of such notice any objection they may have to such reduction. If no objection is raised within the thirty (30) day period then none is deemed to exist. However, if an objection is raised by a creditor(s), the company cannot proceed with the reduction of its capital unless it has satisfied the creditor(s) claim or given security for it. However, if a creditor has, in consequence of his/her ignorance of the proposed reduction of capital, failed to give notice of his/her objection thereto, and such ignorance was in no way due to his/her own fault, those shareholders of the company to whom have been refunded or remitted a portion of their shares remain, for a period of two (2) years from the date of registration of such reduction, are personally liable to such creditor to the extent of the amount refunded or remitted.

Registration of Increase or Reduction of Shares:

The special resolution by which any increase or reduction of capital has been authorized must be registered by the company (at the DBD) within fourteen (14) days after its date.