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Civil and Commercial Code - Partnerships and Companies
Civil and Commercial Code, Book III, Title XXII
The information is reviewed and updated monthly against official sources.
In short
Thailand's Civil and Commercial Code, Book III, Title XXII, sets the rules for forming and running a private limited company, covering promoters, the memorandum, share subscription, ordinary and preference shares, share registration, directors, shareholder meetings, and government registration.
1096: Definition of a limited company
A limited company is a business entity whose capital is split into shares of equal value. Each shareholder's financial exposure is capped at the amount still unpaid on the shares registered in their name, so personal assets beyond that unpaid balance are not at risk for company debts.
1097: Promoters required to form the company
To set up a limited company, at least three individuals must act as promoters. They sign the memorandum of association and follow the Code's procedures. Each promoter is obliged to take at least one share, which means a newly formed company starts with a minimum of three shareholders.
1098: Mandatory contents of the memorandum
The memorandum must state the company name, which has to end with the word "Limited"; the province where the registered office sits; the scope of business; a declaration that shareholder liability is limited; the registered capital with the number and par value of shares; and the promoters' personal details.
1100: Minimum share taken by each promoter
Every promoter is legally required to subscribe for and hold at least one share in the company being formed. This rule ties the founders financially to the venture and ensures that the persons who initiate the company also become genuine shareholders from the outset.
1105: Issue of shares and discount prohibition
As a rule, shares may not be issued for a price below their stated par value. Shares may be issued at a premium if the memorandum permits, in which case the excess over par must be paid together with the first call and recorded as a share premium.
1108: Business of the statutory meeting
At the first (statutory) meeting the subscribers adopt the company regulations, approve any contracts and expenses incurred by promoters, fix payments to promoters, set the number and preferential rights of any preference shares, decide on shares issued for property rather than cash, and appoint the first directors and auditors.
1110-1111: Allotment of shares and registration of the company
After the statutory meeting the directors allot shares and call up the first payment. Once at least twenty-five percent of the par value of every share is paid in, the directors apply to register the company with the Department of Business Development; on registration the company becomes a separate legal entity.
1117: Minimum par value of a share
The par value of a single share cannot be set below five baht. This statutory floor governs how the registered capital is divided, so founders choosing the number of shares and capital structure must keep each share's nominal value at or above this minimum.
1119: Payment of share value and shareholder undertaking
The full nominal amount of each share must be payable in money, except where the statutory meeting approved issuing shares against property or services. A subscriber cannot escape liability by setting off a claim against the company; the agreed share payments remain due in full.
1128: Share certificates
Each shareholder is entitled to a share certificate signed by at least one director and bearing the company seal. The certificate identifies the shares it covers, their numbers, and the amount paid, serving as formal evidence of ownership in the company.
1138-1139: Register of shareholders
The company must keep a register of shareholders recording each holder's name and address, the shares held with their numbers, the amount paid, and the dates of acquisition and cessation of membership. The register is open to shareholders and supports verification of who legally owns the company.
1142: Preference shares and fixed preferential rights
Once preference shares have been issued, the preferential rights attached to them, such as priority on dividends or on capital in a winding-up, are fixed and cannot afterwards be altered. This protects holders of preference shares against later dilution of their bargained advantages.
1144-1145: Management by directors and shareholder meetings
A limited company is managed by one or more directors acting under the control of the general meeting of shareholders and within the company's regulations. Certain decisions are reserved to shareholders, so directors run day-to-day affairs while ultimate authority rests with the meeting.
1151-1155: Appointment, removal and acts of directors
Directors are appointed and removed by resolution of the general meeting. A vacancy may be filled temporarily by the remaining board, subject to confirmation. Acts of a director remain valid toward third parties acting in good faith even if a defect in the appointment later comes to light.
1168: Duties and liability of directors
Directors must conduct the company's business with the diligence of a careful businessman. They are responsible for keeping proper accounts and records and for ensuring lawful dividends. Directors who act improperly or in breach of these duties can be held personally liable to the company.
1171-1172: General meetings of shareholders
An ordinary general meeting must be held within six months of registration and at least once every twelve months thereafter. Other meetings are extraordinary. Directors may convene an extraordinary meeting at any time and must do so when shareholders holding the required proportion of shares demand it.