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Hughes Krupica: Do corporate governance rules exist for Thai Companies?

Many businesspeople, investors, entrepreneurs and even clients seeking to purchase land or a property using a limited company in Thailand seek legal advice before acquiring existing Thai companies or setting up new ones.

  Boat Lagoon

Most of these enquiries relate to new businesses being formed as small or medium enterprises. But in th Thailand’s resort markets, there are many cases where a Thai company acquired or newly set-up will be for the purpose of holding land only.

Although I personally do not usually recommend clients use a Thai limited company to acquire property in Thailand in most circumstances, there are cases where clients insist and therefore we are obliged, as legal counsel, to advise of all the implications before going forward.

I will leave the merits of using a Thai limited company to hold land to a future article. For this piece, I’ll focus on providing some basic legal principles of corporate governance under the Civil and Commercial Code of Thailand (CCC) for those who do go ahead with acquiring an existing Thai company, or setting up a new one.

I can say without reservation that, although directors/shareholders of Thai companies may have been informed of the basic rules, there is a serious lack of adherence to the rules of corporate governance in practice in Thailand, especially where Thai companies are used solely to hold land. Therefore, I thought I should state unequivocally in this article that all Thai companies have legal requirements of corporate governance, whether such company is conducting business operation or only holding land. This means that the rules I have set forth below apply effectively to each and every case.

Naturally, my firm always recommends that any person who intends to be a director or shareholder of a Thai company should get to know all the requirements before proceeding into the world of Thai corporate law.
On that note, I set out below some of the most basic, standard – but ever-so-important – Thai company governance principles under Thai law.

Do I need a registered office for my Thai company?
Yes. Section 1148 of the CCC requires that every Thai company have a registered office in Thailand, to which all communications and notices may be addressed. Usually this office should be one of the places of business of the company. Any change of the address must be recorded with the registrar at the Department of Business Development.

How do we appoint a new director?
If the company is new, it must initially have at least 1 director to manage the company, in addition to a total of 3 shareholders at the time of incorporation. Following incorporation, Section 1151 of the CCC permits appointment of a new director (or removal of an old one) by resolution of the shareholders at a general meeting. Thus, a meeting must be held in most cases.

 

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GPS coordinate: 7.962140, 98.385884

 Contact info:

Hughes Krupica Consulting

PHUKET (HEAD OFFICE)
Hughes Krupica Consulting Co. Ltd
23/123-5 Moo 2 Kohkaew Plaza
The Phuket Boat Lagoon
T. Kohkaew Amphoe Muang
Phuket 83000 Thailand
Tel: (0) 76 608 468

BANGKOK (SERVICED OFFICE)
Hughes Krupica Consulting (Bangkok) Co. Ltd
29/41 Soi Ladprao 22
Ladprao Road
Chankasem, Chatuchak
Bangkok 10900 Thailand
Tel: (0) 20 771 518

enquiries@hugheskrupica.com
www.hugheskrupica.com

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