What is the main source of law authorising this entity form?

Public Limited Companies Act, B.E. 2535 (1992), as amended.

Give a brief summary of the entity form:

Does the entity possess separate legal personality?

Yes, the entity has a separate legal entity

(Maximum) period of existence

There is no maximum period of existence. A public limited company could be dissolved for the following grounds: (i) upon a meeting of shareholders passing a resolution to that effect, with the votes of not less than three-fourth of the total number of votes of the shareholders present at the meeting and entitled to vote; (ii) upon bankruptcy of the company; or (iii) upon being ordered by the Court to be dissolved in accordance with the law, provided that such order becomes final.

Governing document(s)

Similar to the private limited company, various registration documents are required, including a Memorandum of Association containing the company’s business objectives, and Articles of Association which are the regulations of the company agreed upon by the shareholders. After the registration documents are approved by the Registrar (Nai Tabien), a certificate of incorporation is issued to eh company.

Liability of incorporators / shareholders

The liability of each shareholder is limited to the unpaid amount, if any, on the shares respectively held by them. on their shares.

(Governing) bodies

A company must, for the operation of its business, have a board of directors consisting of at least five (5) directors, provided that not less than one half of the total number of directors must have a residence in Thailand.

Can this type of entity be involved in international transactions and restructurings (e.g. cross border mergers, asset acquisitions, equity acquisitions, etc.)?

Yes.

Can this type of entity be publicly listed or held?

Yes, this type of entity can be listed or publicly held including offering securities for public sale. The criteria for issuing securities, offering securities, listed securities, and listed companies are subjected to the rules and regulations of the Securities and Exchange Commission (SEC) and the Stock Exchange of Thailand.(SET).

Can this type of entity be used for a non-profit or charitable organization?

Generally, no, as a public limited company is established with the purpose of conducting businesses and offering its shares to the public, it has a commercial nature.

Give a brief summary of the process of incorporation, formation, or organization, including:

In general, there are two ways of establishing a public limited company: 1. Registering for the establishment of a public company; and 2. Converting a private company into public limited company via an extraordinary resolution passed by a shareholders’ meeting.

Main documents required

• Application for the registration of a public limited company (BorMorJor. 101)
• Memorandum of Association (BorMorJor. 001)
• The Objectives of the Company (BorMorJor. 002)
• Company Name Reservation Application
• Power of Attorney (if any)

Involvement of notary, company register, governmental authorities

The objectives of the company must be submitted to the Registrar (“Nai Tabian”) for the incorporation of the public limited company.

Timing (estimate)

The Board of Directors must apply for the registration of a public limited company within 3 months from the date of the conclusion of the statutory meeting. It takes around one month for the conversion of a private limited company into a public limited company.

Main costs, including registration and similar fees (excluding legal fees)

The fees for the registration of a public limited company shall not exceed THB 250,000, and the fees for the registration of the Memorandum of Association shall not exceed THB 50,000 depending on the capital of the public limited company.

Minimum number of incorporators / shareholders and residency requirements

At least 15 individual promoters are required. Not less than one-half (1/2)of the promoters must reside in Thailand.

Minimum number of directors (or other applicable officers) and residency requirements

At least five (5) directors are required, and not less than one-half (1/2) must reside in Thailand.

Minimum share capital, or equivalent, and payment requirements (including opening a bank account)

There are no requirements for minimum share capital, but all shares must be fully paid by a one-time payment.

Is the physical presence of incorporators / directors required in the jurisdiction for incorporation, formation or organization?

Under Thai law, at least one-half (1/2) of the incorporators/directors are required to have residence in Thailand.

Is a tax identification number, or equivalent, required? If so, how is it obtained?

Once the company incorporation has been registered, the company’s registration number is used as its taxpayer identification number in dealing with Thai tax authorities.

What is the title of the applicable company registry?

Department of Business Development (DBD) (“Grom Patthanadhurakijgarnkar”), Ministry of Commerce (MOC) (“Krasuang Panitch”).

What types of information must be filed at the (company) register, and which of them will it be publicly available, e.g.:

The following information must be filed at the DBD and will be publicly available:

• Memorandum of association (“Nangsue Borikonsonthi”)
• Articles of association (“Kor Bangkub Khorng Borisat")
• Date of incorporation
• Name and address of the company, including principal and all branch offices
• Registered capital
• List of shareholders, including their nationalities and other particulars
• Names and addresses of the directors
• Details of the directors with binding signatory authority
• Details of the auditor
• Annual financial statements
• The company’s seal (if any)

 

What is the title of the executive body and its members? What are their main duties, tasks and responsibilities?

The board of directors. In general, the Board of Directors represents the company, and it must perform its duties in accordance with the objectives and the Articles of Association of the company.

How are the members of the executive body appointed, dismissed and replaced?

Directors are generally elected at a meeting of shareholders.

Unless otherwise specified in the articles of association, the meeting of shareholders can also pass a resolution removing directors by a vote of not less than three-fourths of the number of shareholders attending the meeting and having the right to vote. The total number of shares must not be less than half of the number of shares held by the shareholders attending the meeting and having the right to vote.

If there is a vacancy in the board of directors for reasons other than the termination of the term of office, the board of directors can elect a person as a substitute director at the next meeting of the board of directors. The substitute director will hold office only for the remaining term of office of the director whom he or she replaces.

Is it possible to appoint corporate directors or must all directors be natural persons?

No. Only natural persons are permitted to be directors.

Is there a requirement to have non-executive directors? How are they appointed, dismissed and replaced? Do non-executive directors serve on a separate body (two-tier structure) or can a one-tier board (with executive and non-executives) be appointed, or is some alternate structure used?

Non-executive directors are also deemed to be company directors. The process for appointing, dismissing, or replacing non-executive directors is similar to the process for executive directors. Generally, non-executive directors and executive directors serve on a one-tier board.

What is the title of the body of owners / shareholders / members, and what are the main tasks / responsibilities / powers of that body?

A general meeting of the shareholders (“Garnprachoom Puthuehoon”) is the main decision-making body of the owners, with all the rights and responsibilities provided to it by law and the articles of association. The shareholders have the right to consider and approve or reject important matters reserved for the shareholders by law, such as increasing or reducing capital, amending the memorandum of association, amending the articles of association, declaring dividends, appointing or removing directors and considering their remuneration, amalgamation, dissolution and liquidation, etc..

An annual ordinary general meeting of the shareholders (“Garnprachoom Samun Puthuehoon”) (AGM) must be held annually within four months after the end of each fiscal year, to consider, among other things, the audited financial statement, rotation of the directors, and appointment of an auditor. Other general meetings of the shareholders are called extraordinary general meetings of the shareholders and may be convened to consider other matters.

What are the majority and quorum requirements for decisions by the shareholders? Can they be varied or changed?

In general, there must be at least 25 persons, or half of the total number of shareholders, and such shareholders must hold shares in an amount that is not less than one-third of the total number of shares, in order to constitute a quorum.

The Public Limited Company Act does not prohibit deviations from the law concerning majority and quorum requirements for decisions by the shareholders when specified in the articles of association. However, the registration of such variation may be subject to the registrar’s discretion.

Any special governance regimes (e.g. depending on size, being listed at a stock exchange, or other criteria)?

There is no special governance regime based on the size of the entity. However, if the public company is listed on a stock exchange, it must also comply with the specific laws and regulations of the SEC and the SET.

What are the periodic accounting obligations incumbent upon the entity? To whom must those accounts be submitted?

Under Thai law, a company must prepare and maintain accounts, as well as a balance sheet and a profit and loss account, at least once during each twelve month period, which is the accounting year for that company.

The annual report, together with copies of the balance sheet and the profit and loss account which have already been audited by the auditor and approved at the meeting of shareholders, must be submitted to the Registrar.

Is the entity permitted to determine its own financial year?

Yes.

Is the entity subject to any statutory (external) auditor obligations?

Financial statements must be audited by a qualified certified public accountant (CPA) in Thailand.

Requirements to appoint other persons (officers, secretary, internal auditor / accountants). If so, what are their functions? Are there any residency requirements?

The company must appoint an independent, licensed CPA and an auditor, who must audit the company’s balance sheet and profit and loss account for each financial year and issue a report to the company's shareholders. The auditor is first appointed by the shareholders at statutory meeting to incorporate the company, and is thereafter appointed at each AGM. The shareholders determine the auditor’s remuneration.

What is the title designated for 'ownership interests' (e.g. shares, quota, interests, membership)?

Shares (“Hoon”)

Are different classes of ownership interests possible? If so, what are some examples of different classes?

Different classes of ownership interests are possible. Examples include ordinary shares and preference shares.

What documentation is required for the transfer of ownership interests?

A transfer of shares will only be valid upon: (i) the transferor’s endorsement of the share certificate, by indicating the name of the transferee; (ii) signature of both the transferor and the transferee, and; (iii) delivery of the share certificate to the transferee.

Are there any additional formal requirements required for the transfer of ownership (notary, approvals, stamping, filings, corporate records)?

The transfer of shares must also be recorded in the company’s register, in order to enable the transfer to be set up against third persons.

Are there any applicable stamp duties imposed when transferring ownership interests?

Yes. A share transfer document is subject to stamp duty at the rate of THB 1 for every THB 1,000 of the paid-up value or the sale price, whichever is higher. Unless otherwise agreed by the parties, the transferor is liable to pay the stamp duty.

How are shares issued? (including information on payment obligations, registration requirements)

The issuance of new shares to increase a company’s registered capital may be made when:

1. all the shares have been sold and fully paid-up, or in the case where the shares have not fully been sold, the remaining shares must be ones issued in accommodation of convertible debentures or share warrants;
2. the issuance has been approved by a resolution of a meeting of shareholders, with the votes of not less than three-fourths of the total number of votes of the shareholders present and entitled to vote; and
3. registration has been made with the Registrar, in pursuance of such resolution, for an alteration of the registered capital, within fourteen days from the date on which such resolution was passed by the meeting.

The shares which are intended to be additionally issued, as mentioned above, may be offered for sale in whole or in part, and may first be offered for sale to existing shareholders in proportion to the number of shares held by each shareholder, or they may be offered for sale to specific investors, the public or other persons, in whole or in part, in accordance with the resolution of the meeting of shareholders.

Further information on equity contributions, e.g., non-cash payments on shares, (share premium) contributions without issuances of shares, can partially paid shares/ownership interests be permitted and what are the restrictions on them?

It is possible to make payment on shares in the form of any property, other than money by passing an extraordinary resolution with a majority of not less than three quarters.

When a public limited company is established, the company may offer shares for sale at a price higher than the registered par value.

No. All shares must be fully paid-up by a one time payment.

Any requirements with respect to share cancellation, share repurchase and other capital reductions

In general, the company may not own its own shares or take its own shares in pledge, except in the following cases:

• A public limited company may repurchase shares in the following cases: The company may repurchase its shares from a shareholder who votes against a resolution of the meeting of shareholders to amend the Articles of Association of the company, which is related to the right to vote and the right to dividend payments, which is unfair in the view of such shareholder.
• The company may repurchase its shares for the purpose of financial administration, when it has accumulated profits and surplus liquidity, and such repurchase not cause a financial problem for the company.
• The company shall dispose of the repurchased shares within the period prescribed in the Ministerial Regulations (Khot Grasuang). If it does not dispose of, or is unable to dispose of, all the shares within such period, the company shall reduce its paid-up capital by cancelling the remaining registered shares which have not been disposed.
• The company can also reduce its capital by lowering the par value of each share, or by reducing the number of shares, provided that no reduction shall be made to the extent of rendering the capital to be below one-fourth of the total capital.. Capital reductions must also be made upon a resolution passed at the meeting of shareholders by a vote of not less than three-fourths of the total number of votes of the shareholders attending the meeting and having the right to vote.

Any requirements with respect to distributions to shareholders?

Under Thai law, dividends must not be paid other than out of profits.

Generally, no dividends may be declared unless agreed by resolution of a general meeting. However, the law provides an exception whereby the directors may, from time to time, pay the shareholders such interim dividends as appear to the directors to be justified by the profits of the company.

When dividends are distributed, a company must appropriate 1/20th of the profits into a reserve fund until the reserve fund is at least 1/10th of the capital of the company or a higher amount as stipulated by the company. The reserve cannot be distributed until liquidation.

Can the owners or shareholders adopt a restrictive or governing agreement among themselves such as a Shareholders Agreement?

In general, a public limited company cannot make any restrictions on the transfer of shares, unless such restrictions are for preserving the rights and benefits to which the company is lawfully entitled, or for maintaining the ratio of the shareholdings between Thais and foreigners. For a listed public limited company, the restrictive or governing agreement must be subject to SEC regulations.

Which are the typical annual maintenance costs of maintaining the existence and legal good standing of such an entity (excluding legal fees)?

The shareholders must hold an annual general meeting. The company must also prepare and keep accounts, as well as submit to the Registrar an annual report, and an audited balance sheet and profit and loss account, at least once during its accounting year. The costs of maintaining the existence and legal good standing of the public limited company also vary, depending on the nature of such business.

What are the general corporate tax rates? (Specify if there is a national versus local distinction).

Generally, the standard rate for corporate income tax is 20%. However, the tax rates may also vary depending on the type of taxpayer. For example, small and medium enterprises (SMEs) are subject to a 15% tax rate on net profit from THB 300,000 to THB 3,000,000. Any profit above this threshold will be subject to 20% standard corporate income tax rate.

Summary of any specific matters, e.g. recent or prospective major legal developments

On May 23, 2022, the Public Limited Companies Act (No. 4) B.E. 2565 (2022) was approved and published in the Government Gazette. Notable examples of the amendments are as follows:

Electronic Dissemination of Company Notices and Advertisements:

Under the previous version of the Public Limited Companies Act, required company notices, statements, and advertisements had to be published in a local newspaper where the company is located, for at least three consecutive days.

However, the amended act allows such notices, statements, and advertisements to be sent via electronic means, though the process must comply with sub regulations to be issued by the Department of Business Development (DBD).

Electronic Delivery Options for Documents: The amended act allows public limited company notices or documents to be sent to company directors, shareholders, or creditors electronically instead of by registered mail, as long as the recipients have consented to receive such documents via electronic means. Electronic delivery of documents must comply with sub-regulations to be issued by the DBD.

Additional Individuals Authorized to Call BOD Meetings: In keeping with the previous version of the law, the amended act grants the chairperson of the BOD the authority to call a board meeting, and allows any two directors to jointly request that the chairperson call a meeting, in which case the chairperson must call the meeting within 14 days. The amended act further stipulates that if the chairperson does not call the meeting in accordance with the request, at the lapse of the 14-day window, the requesting directors can then directly call a BOD meeting in the following 14 days. The new act also allows the vice-chairperson to call a BOD meeting if there is no chairperson; this authority passes to any two directors if there is no vice-chairperson.

Electronic meetings: The amended Act allows the company to hold Board of Directors’ meetings and shareholders’ meetings via electronic means.