Hong Kong: Thailand - Business Vehicles - Public Company

Last Updated: 20 November 1995
Most Read Contributor in Hong Kong, October 2018
A Public Limited Company is a company established for the purpose of offering shares for sale to the public and the liability of the shareholder shall be limited up to the amount to be paid on these shares. The said purpose shall be indicated in the Memorandum of Association of the company.

1. Establishment of Public Company

The establishment of Public Company begins, that fifteen or more promoters prepare a Memorandum of Association and bring it to register at the Department of Commercial Registration, Ministry of Commerce that are the same as a Limited Company.

The Memorandum of Association shall contain the purpose of the company in offering shares for sale to the public. The offer of shares for sale to the public or to any other person shall be in accordance with the law governing the securities and exchange.

2. The offer of shares for sale to the public

Promoters of a Public Limited Company shall receive an approval for offering newly issued shares for sale to the public or any other persons from the Office of the Securities and Exchange Commission (SEC).

In considering the application for approval, the Office shall notify the applicant of the result within forty-five days from the date of receipt of the application.

After receiving an approval from the SEC, promoters must submit the registration statement and the draft prospects in respect to the offer for Sale of Securities to the public or any other person. It may be made only when the registration statement and the draft prospectus, which have been filed with the Office, have been effective.

3. Statutory Meeting of A Company

The promoters shall call the statutory meeting of the company when the subscription of shares reaches the number specified in the prospectus or a public offering document, which shall not be less than fifty percent of the number of shares specified in the Memorandum of Association. The notice of such a meeting shall be given within two months of the shares on which the subscription for shares reaches the specified number, but shall not be later than six months from the date on which the Registrar registers the Memorandum of Association.

Where for reasons of necessity it is impossible to call the statutory meeting within the period stipulated in the first paragraph, if the promoters wish to proceed further they shall supply in writing for an extension of the period, describing the reasons to the Registrar not less than seven days prior to the expiry date of such a period. If the Registrar deems it expedient, he or she may permit an extension of not less than one month but not more than three months from the expiry date of the stipulated period.

If the statutory meeting cannot be completed within the period stipulated in this Section, the Memorandum of Association shall be deemed to be ineffective upon the expiration of such period and the promoter shall, within fourteen

days of the date of ineffectiveness of the Memorandum of Association ,return the payment or subscription for shares to the subscribers.

4. Shares

Each share of the company shall be equal in value and each share shall have a par value of not less than five baht.

If the company offers shares for sale at a price higher than the registered par value, the company shall call the subscribers to pay the money in excess of the par value together with the payment on shares.

If a company which has been in operation for not less than one year suffers a loss, it may offer its shares for sale at a price lower than the registered par value as specified in the Public Limited Company Act. This is different from a Limited Company.

5. Shareholders

A Thai company is a company consisting of Thai shareholders holding shares of more than half of all issued shares, that is 51% shareholders can be natural persons and corporations of any nationality, domicile and residence. The rights of Shareholder:-

- to receive dividends;
- to attend and vote at any General Shareholders' Meeting;
- to request for the summoning of an Extraordinary Shareholders' Meeting; and
- to control transactions of the Company.

6. Directors

The Public Company shall have a Board of Directors comprising of at least five Directors to conduct the business of the company, not less than half of whom reside within the Kingdom.

The election of Directors must be made by the Shareholder Meeting. The cumulative voting methods will be used for the election of a Director:-

1. Each shareholder shall have a number of votes general to the number of shares held, multiplied by the number of the Directors to be elected.

2. Each shareholder may exercise all the votes he or she has under (1) to elect one or several persons as Director or Directors. If several persons are to be elected as Directors, the shareholder may allot his or her votes to any person in any number.

3. After the vote, the candidates shall be ranked in order descending from the highest number of votes received to the lowest, and shall be appointed as Directors in that order until all of the Directors positions are filled. Where the votes cast for candidates in descending order are ties, which would otherwise cause the number of Directors to be exceeded, the remaining appointments shall be made by drawing lots.

7. Shareholder Meetings

Shareholders' Meetings are the same as a Limited Company. Shareholders Meetings will comprise of an ordinary meeting and an extraordinary meeting.

The Board of Directors shall call a Shareholders' Meeting which is an Annual Ordinary General Meeting of Shareholders within four months of the last day of the fiscal year of the Company.

8. Accounts and Reports

The company shall prepare and maintain accounts including the auditing of accounts and the company shall prepare a balance sheet as well as a Statement of Profit and Loss at least once during each twelve month period which is a fiscal year of that company.

The Board of Directors shall prepare the balance sheet and the Statement of Profit a Loss as of the last day of the fiscal year of the company for submission to the Shareholders' Meeting for consideration and approval at the Annual General Meeting.

Shareholders have the right to examine the balance sheet, the Statement of Profit and Loss and the report of the Auditor of the Company at any time during the office hours of the company, and they may ask the Company to deliver to them copies of such documents, together with certification. In this regard, the Company may charge for expenses as specified in the Articles of Association of the Company.

The Company shall deliver to the Registrar the annual report together with copies of the balance sheet and the Statement of Profit and Loss which have already been audited by the Auditor and approved at the Shareholders' Meeting and a copy of the minutes of the Shareholders' Meeting, specifically the part concerning the approval of the balance sheet, the allocation of profit and the distribution of dividends, certified to be true by a person authorised to sign on behalf of the Company. The Company shall also publish the balance sheet for public information in a newspaper for a period of a least one day within one month of the date of Shareholders' Meeting at which approval of the balance sheet was granted.

NOTE: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

If you would like further advice please contact: David Ellis, Johnson Stokes & Master, 16th Floor, Princes Building, 10 Chater Road, Hong Kong; Tel 2843 4226; Fax no. : 2845 9121. Alternatively do a text search "Johnson Stokes and Master" and "Business Monitor".

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