In June 2020, Thailand’s cabinet approved two sets of amendments to the Civil and Commercial Code (CCC) to update corporate governance and transactional rules and simplify the process of setting up and conducting businesses in Thailand. The draft amendments will be sent for parliamentary approval before being officially promulgated in the Government Gazette.
First Set of Amendments
On June 9, 2020, the cabinet approved draft CCC amendments that had already been reviewed by the Council of State. The proposed amendments allow greater flexibility in the registration process for some businesses and embrace the use of technology for corporate operations.
Registration process for partnerships and private company
For private companies and partnerships, applications for registration and subsequent corporate changes can be submitted at any approved Department of Business Development (DBD) registration office, regardless of the location of the partnership or private company. The Ministry of Commerce is empowered to set or waive registration fees for incorporation, obtain copies of any necessary corporate documents, and so on. A company’s memorandum of association will automatically expire if the company is not incorporated within three years (reduced from the current ten years) after registration.
Electronic meetings of shareholders and directors of limited companies are permitted in principle, unless otherwise prohibited in a company’s articles of association. In April 2020, e-meetings were approved by the Royal Decree on Teleconferences through Electronic Means B.E. 2563 (2020), and these new amendments to the CCC represent a formalization of this approval.
Company meeting notification
Under the amended CCC, notices calling for company meetings no longer have to be published in a local newspaper, except when the company has bearer share certificates (which is very uncommon in Thailand). The requirement to mail notices to all shareholders via return-receipt post remains in place.
Second Set of Amendments
Additional amendments to the CCC were approved in a cabinet meeting on June 23, 2020. A brief summary of the amendments is set out below.
Until now, the CCC only has only recognized the concept of “amalgamation” of companies, which refers to the formation of a new company by the integration of two or more companies. The draft amendment offers an alternative: a merger of companies, whereby one company will merge into another survival company.
Dividend payment timeline
The draft amendment formally sets a limit of one month (counting from the declaration of the dividend at the relevant meeting) for companies to make their dividend payments. This timeline has been in place since the National Council for Peace and Order’s Order No. 21/2560 in 2017.
Company promoters and shareholders
The incorporation of a limited company in Thailand will require only two promoters (reduced from three), and companies will now be required to maintain a minimum of only two shareholders at all times. In addition, the court is authorized to dissolve a company if the total number of shareholders decreases to one. Please note that the long-awaiting Single-Person Company Act—which will further impact these measures—is still being considered by the Council of State and is not expected to be issued soon.
Shareholders meeting quorum
A minimum of two shareholders must attend shareholders meetings, whether in person or by proxy. This is an adoption of the precedent set by court and DBD rulings that no meeting can be convened by only one person.
For more details on the progress of these amendments to Thailand’s CCC, please contact Kobkit Thienpreecha at [email protected] or +66 2056 5534, or Thammapas Chanpanich at [email protected] or +66 2056 5561.