What is the main source of law authorising this entity form?
Public Limited Companies Act
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.
Memorandum of association
Liability of incorporators / shareholders
Liability of each shareholder is limited to the unpaid amount on their shares.
Board of directors
Can this type of entity be involved in international transactions and restructurings (e.g. cross border mergers, asset acquisitions, equity acquisitions, etc.)?
Can this type of entity be publicly listed or held?
Yes, this type of entity can be listed or publicly held. A listed public limited company is subject to the rules and regulations of the Securities and Exchange Commission (“SEC”) of Thailand.
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 offering shares for sale to the public, and thus, 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.
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 (“Pu-Rermgorgarn”) are required. Not less than half of the promoters must reside in Thailand.
Minimum number of directors (or other applicable officers) and residency requirements
At least 5 directors (“Gummagarn”) are required, and not less than one half must reside in Thailand. There are no requirements for the minimum share capital.
Minimum share capital, or equivalent, and payment requirements (including opening a bank account)
There are no requirements for the minimum share capital.
Is the physical presence of incorporators / directors required in the jurisdiction for incorporation, formation or organization?
Under Thai law, at least half 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?
A tax identification number is not required for a public limited company.
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?
Yes, the process for appointing, dismissing, or replacing non-executive directors is similar to the process for executive directors.
Generally, the non-executive directors are in 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 at a stock exchange, it must also comply with the specific laws and regulations of the SEC.
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?
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)?
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:
- 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;
- 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
- 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 the public or to 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. The transfer of ownership must be made within one month from the date of the registration of the company.
Any requirements with respect to share cancellation, share repurchase and other capital reductions
A public limited company may repurchase shares in the following cases:
- The company may repurchase its shares from a shareholder who votes against the 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 shall 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. 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
A draft amendment of the Public Limited Company Act has been submitted to the Council of State for their consideration. However, details of the proposal have not been finalized at this stage.