Starry Research | Corporate Organization Forms in Thailand
1. What are the organizational forms of companies in
Thailand? What are the definitions and distinctions of each type?
Under the Thai Civil and Commercial Code, a Thai company is
a legal unit recognized by law as having the status of a "person" in
the realm of private law — that is, a juristic person. A juristic person may,
in the same manner as a natural person, enjoy rights and bear obligations in
accordance with the law, including the ability to enter into contracts, own
property, and sue or be sued in its own name.
Under the Thai Civil and Commercial Code, juristic persons
in the private law sphere are classified into five types, as follows:
1)
Private Limited Company
Established by at least 2 natural persons as promoters;
capital is divided into shares, each with a par value of not less than 5 Thai
Baht.
The liability of shareholders is limited to the amount of
their respective shareholdings.
Managed by a Board of Directors; required to hold an annual
general meeting of shareholders and prepare financial statements each year.
2)
Limited Partnership
Requires at least two partners, comprising both limited
partners and general partners.
The firm name must include the name of at least one general
partner.
Business management is the responsibility of the general
partners.
3)
Registered Ordinary Partnership
All partners are jointly and unlimitedly liable for the
obligations of the partnership.
An ordinary partnership may choose whether or not to
register with the Department of Business Development (DBD); however, it only
acquires juristic person status upon registration with the DBD.
All partners are entitled to participate in the management
of the partnership's business.
4)
Association
Must be composed of at least 10 members.
Its purpose of establishment must not be for profit-making, can
be such as cultural, sports, or religious objectives.
Managed by the Association Committee; required to submit
annual reports.
5)
Foundation
Has no membership structure, but there must be a committee
consisting of no less than three persons; established by founders contributing
property for charitable purposes.
Acquires juristic person status upon registration.
Managed by the Foundation Committee; required to submit
annual audit reports.
Comparison Table of Juristic Person Types
|
Comparison Item |
Private Limited Company |
Limited Partnership |
Registered Ordinary Partnership |
Association |
Foundation |
|
Purpose of Establishment |
For profit |
For profit |
For profit |
Non-profit |
Non-profit |
|
Minimum Founders |
≥ 2人 ≥ 2 persons |
≥ 2人 ≥ 2 persons |
≥ 2人 ≥ 2 persons |
≥ 10人 ≥ 10 persons |
≥ 3人 ≥ 3 persons |
|
Member Liability |
Limited liability proportional to shares held |
Limited / Unlimited liability |
Unlimited joint and several liability |
No personal liability |
No personal liability |
|
Management Structure |
Managed by the Board of Directors |
Managed by general partners |
Managed jointly by all partners |
Managed by the Association Committee |
Managed by the Foundation Committee |
|
Income/Profit Distribution |
Profits distributed to shareholders |
Profits distributed to partners |
Profits distributed to partners |
Not distributed |
Used according to the foundation's established purpose |
2. What are the important company documents following the
incorporation of a Thai company (e.g., articles of association, shareholders'
agreement, register of shareholders, etc.), and what is the function of each
document for a company?
Important Documents Following the Incorporation of a Thai
Company and Their Functions
|
No. |
Document Name |
Description |
|
1 |
(Registration certificate of the Company and Partnership) Registration Certificate of the Company and Partnership |
Issued by the DBD upon completion of company registration.
This is the official document confirming that the company has been legally
established as a juristic person under the Civil and Commercial Code. |
|
2 |
(Affidavit) Affidavit |
A document certifying that the company is registered as a
juristic person, containing information such as the juristic person
registration number, company name, names of authorized directors, registered
address, registered capital, and business objectives. |
|
3 |
(Memorandum of Association) Memorandum of Association |
Records the date of incorporation, the company name in
Thai and English, the head office address, and details of the founding
shareholders, among other information. |
|
4 |
(Registration of Establishment List) Registration of Establishment List |
Sets out the company's registered capital and share
structure, including classes of shares, the company seal, and registered
address. |
|
5 |
(Shareholder List) Shareholder List |
Lists in detail all current shareholders' names, number of
shares held, share numbers, and amounts paid up on shares. |
|
6 |
(Minutes of Statutory Meeting) Minutes of Statutory Meeting |
Minutes of the meeting held at the time of incorporation,
covering the following agenda items: 1. Verification of the list, identity,
and details of share subscribers 2. Consideration of the draft articles of
association 3. Ratification of acts previously done by the promoters and
establishment expenses 4. Consideration of share allotment matters 5.
Appointment of the first Board of Directors 6. Appointment of auditors and
determination of their remuneration |
|
7 |
(Article of Association) Articles of Association |
The governing rules of the company, covering mechanisms
such as share transfers, issuance of new shares, scope of directors'
authorities and responsibilities, and shareholders' meetings. Legally binding
on the company. |
|
8 |
( share register book) Share Register Book |
Records the detailed history of changes for all past and
present shareholders, including dates of acquisition, share numbers, and
dates of transfer. Unlike the Shareholder List, which shows only current
shareholders, this register reflects all historical changes. |
|
9 |
(Share Certificate) Share Certificate |
Comprises the original share certificate and its
counterfoil, specifying the shareholder's name, share numbers, subscription
date, and amount paid. Formally delivered to the shareholder as proof of
share ownership. |
How Are the Above Important Documents Obtained?
The Registration Certificate of the Company and Partnership
is issued by the DBD upon completion of company registration.
If registration is completed through the online system, the
DBD will send the documents by electronic delivery methods; if registration is
handled in person at a DBD office, the documents may be collected on-site.
Regarding the documents: (1) the Registration Certificate of
the Company and Partnership, and (2) the Affidavit, are both issued by the DBD.
As for the remaining documents (3) to (7), the company is responsible for
preparing them and keeping them safe after the registration process is
completed. Furthermore, documents (8) and (9) must also be prepared and maintained
by the company itself and are not required to be submitted to the DBD; however,
failure to comply may result in a fine under the Thai Civil and Commercial
Code.
What Are the Consequences of Non-Compliance with the
Articles of Association?
•
If a company's act is not carried
out in accordance with its articles of association, such act may be deemed void
or incomplete.
•
If a resolution of the Board of
Directors is in breach of the articles of association, such resolution may be
set aside.
•
If an act of a director is in
violation of the articles of association, such act shall not be legally binding
on the company, and the company may not be held liable therefor.
Although the consequences of violating the articles of
association are not explicitly prescribed in terms of whether they render the
relevant act void or what legal effect they produce, where a company has
drafted its own articles of association (i.e., not using the standard template
provided by the DBD), such articles must undergo a review to assess their
compliance with applicable laws. If the content of the articles is inconsistent
with the Civil and Commercial Code or other DBD regulations, the company will
be required to make amendments to bring them into conformity. Accordingly, once
the articles have passed review, they carry legal force and effect and are
enforceable in accordance with their terms. Should the company, in the course
of its actual operations, act in breach of or in non-compliance with its
articles, the relevant acts may be rendered void or voidable.
For example, Thai Supreme Court Judgment No. 1121/2565 held
as follows:
Pursuant to Article 13 of the articles of association of the
first respondent (the company): "Any shareholder who is unable to attend
the meeting in person may appoint a proxy to attend on their behalf." And
Article 14: "At a general meeting of shareholders, the Chairman of the
Board of Directors shall preside as chairman of the meeting; if the Chairman is
absent or does not attend, the meeting shall elect one of the shareholders
present to act as chairman." Under these articles, the person presiding as
chairman of the meeting must be a shareholder personally present at the meeting
and elected by those in attendance.
In this case, "P." was not a shareholder of the
first respondent, but merely a proxy authorized by the second respondent (a
shareholder) to attend the meeting and vote on their behalf. Accordingly,
"P." was only entitled to attend the meeting and vote in accordance
with the scope of the proxy; no other acts not expressly stated in the proxy
instrument could be performed. Furthermore, the grant of a proxy did not make
"P." a shareholder of the company, as the status of "shareholder"
belonged exclusively to the second respondent and could not be transferred by
proxy.
Accordingly, the act of the shareholders' meeting in
electing "P." (the proxy) to serve as chairman and preside over the
meeting was in violation of the company's articles of association and
constituted an act without authority. This rendered the convening and
resolution process of the first extraordinary general meeting of shareholders
of the first respondent, held in 2016 (B.E. 2559), unlawful, and such meeting
and resolutions should be set aside.
As can be seen from the above Supreme Court judgment, a
violation of the company's articles of association may render the convening of
a meeting and the resolutions passed thereat void. The court has the power to
set aside the extraordinary general meeting and all resolutions adopted at such
meeting.
