Additional amendments of provisions of the Civil and Commercial Code

A draft act to amend additional provisions of the Civil and Commercial Code (“CCC”) was approved by the Cabinet on 23 June 2020 for further enactment.

Keywords: Mazars, Thailand, Legal, Civil and Commercial Code, NCPO

17 November 2020

The key amendments related to limited companies are as follows:

Issues

References

Current provisions

Amendments

1. Minimum number of promoters for establishing a limited company

Section 1097

At least three persons subscribing to the Memorandum of Association can establish a new limited company.

At least two persons subscribing to the Memorandum of Association can establish a new limited company.

2. Reasons for requesting the court to order a limited company to be dissolved

Section 1237

The CCC sets out four reasons that the court may order a limited company to be dissolved, as follows:

  • The company fails to file its statutory report or hold a statutory meeting.
  • The company does not commence business within one year of incorporation or ceases doing business for one year.
  • The business of the company can only be carried out at a loss without the prospect of recovery.
  • The number of shareholders is reduced to fewer than three.

A company can ask the court to order it to be dissolved if the number of the shareholders is reduced to one, or for any other reasons affecting the existence of the company’s business.

3. Minimum number of attendees of shareholders’ meetings

Section 1178

The CCC requires that shareholders representing at least 25% of the share capital can form a quorum for a shareholders’ meeting, but there is no explicit provision requiring a minimum number of attendees of sharehold

At least two shareholders or their proxies must attend shareholders’ meetings.

4. Prescribed period for paying dividends to shareholders

Section 1201

By the Order of the National Council for Peace and Order (“NCPO”) No. 21/2560, the NCPO temporarily set out prescribed period in the CCC for paying dividends.

A limited company must pay out dividends to its shareholders within one month of the date of a resolution to this effect passed by a board of directors meeting or shareholders’ meeting.

The 1-month time limit for the payment of dividends has been made a permanent provision of the CCC.

There will be penalties imposed by the Act Prescribing the Offences Related to Registered Partnerships, Limited Companies, Associations, and Foundations, 2499 B.E. (1956) if a company fails to comply with this requirement.

5. Amalgamation / merger

Section 1238 to Section 1243

Currently, amalgamation is allowed only where two or more limited companies are combined to form a new limited company.

The CCC will allow amalgamation to take place in the following cases:

  • Where two or more limited companies are combined to form a new limited company.
  • Where one or more limited companies are merged into an existing limited company.