Thailand: Expected Amendments To Corporate Law (Part II)

1. Decrease of the minimum number of promoters and shareholders required for a limited company from three (3) to two (2) persons

Currently, a private limited company must be initiated by having at least three (3) individuals (so-called "promoters") enter into a memorandum of association and thereafter proceed with the formalities required by laws (Section 1097 of the CCC). The Bill proposes reducing the minimum number of promoters from three (3) to two (2) persons.

As a consequence of the above, the Bill also proposes reducing the minimum number of shareholders in a private limited company from three (3) to two (2) persons. It is noteworthy that, technically, the CCC does not explicitly stipulate the minimum number of shareholders in a private limited company. Instead, the CCC stipulates that, if the number of shareholders in a private limited company is less than three (3), a court may dissolve such company (Section 1237 (4) of the CCC), which implies that such company must maintain at least three (3) shareholders at all times to avoid a court-ordered dissolution.

2. Clarification of the minimum number of attendees at a shareholder meeting

Presently, the CCC simply stipulates that shareholders holding one-fourth (1/4) of the capital of a company must be in attendance at a shareholder meeting for a quorum to be present. The Bill proposes adding further clarification that two (2) or more shareholders must be in attendance at a shareholder meeting, either in person or by proxy, for a quorum to be present.

A commonly understood legal principle stipulates that a minimum of two (2) shareholders must attend a shareholder meeting for the purpose of joint consultation. This was confirmed by several official sources, including Opinion of the Office of the Council of State (Krisdika) No. 9/2508 (1965) and Supreme Court Decision No. 3074/2560 (2017). Therefore, the proposed wording in the Bill re-confirms this legal principle.

3. Official recognition of mergers by the CCC and measures to protect minority shareholders in M&A cases

The CCC currently recognizes the principle of amalgamation whereby two (2) or more companies amalgamate or combine to form one (1) new company, which will assume all rights and liabilities of its constituent companies (Sections 1241 and 1243 of the CCC).

The Bill will officially introduce into the CCC mergers whereby one (1) company will cease to exist and merge with another company. More details will also be officially introduced into the CCC in respect of the statutory formalities (e.g., an option whereby a minority shareholder can exit a merger or an acquisition plan with the fair value of such shareholder's shares, a list of agenda items to be considered at joint meetings between companies to be merged/amalgamated, etc.).

In addition to the key amendments above, the Bill also contains some provisions that reiterate the amendment of the CCC in accordance with Order of the Head of the National Council for Peace and Order No. 21/2560 on Amendments of Laws to Facilitate the Ease of Doing Business dated 4 April 2017 (e.g., (i) the option to stipulate a clause for dispute settlement between directors and shareholders in the articles of association (Section 1108 (1) of the CCC), (ii) the obligation of a company and its directors to distribute a dividend within one (1) month after the date of approval thereof (Section 1201, paragraph 4 of the CCC), etc.). Also, the penalties concerning the proposed amendments above were simultaneously approved by the Cabinet (the so-called "Act prescribing Offences Related to Registered Partnerships, Limited Partnerships, Limited Companies, Associations and Foundations of 1956"); therefore, this ensures that, if the above amendments become effective, there will also be criminal penalties imposed on those companies and their directors who fail to comply.