On 23 June 2020, the Cabinet approved the amendments to certain provisions of the Civil and Commercial Code (CCC) with an aim to increase flexibility and improve efficiency and competition of doing business in Thailand. The proposed amendment is currently being proposed for consideration by the National Assembly for approval and enactment.
This amendment will simplify various aspects of corporate conduct for private companies in Thailand. The proposed changes include:

1. Company’s Formation – A number of promoters required is to be reduced from at least three to two individuals. This is to facilitate small businesses and start-ups.
2. Dissolution – Corresponding to the above amendment in respect of the company’s formation, the court may order the company’s dissolution if a number of its shareholders is reduced to one, instead of three.
3. General Meeting – Whilst the current law does not specify a minimum number of the shareholders required to attend the general meeting of the shareholders in order to transact business of the company but rather sets out a minimum capital represented by the shareholders which is one-fourth, the draft amendment requires at least two shareholders or proxies in addition to the shareholding requirement to constitute a quorum of the general meeting. This proposed  amendment is consistent with the legal opinion given by the Council of State, which indicates that the term “meeting” refers to an occasion when people come together to discuss or decide certain matters (i.e. at least two persons are required).
4. Dividend Payment – In 2017, the National Council for Peace and Order issued its Order No. 21/2017 which prescribes, amongst others, a period on which the dividend shall be paid by a private company to its shareholders to be within one month from the date of approval, either by the board or shareholders meeting. The proposed amendment reaffirms this practice by incorporating it into the CCC. This amendment will protect the right of shareholders to receive dividend in due time and it also conforms with the practice for the public company under the Public Company Limited Act.
5. Merger – The current law only recognises the concept of amalgamation where two companies combine and create a new entity, the two amalgamating companies will be automatically dissolved as a result of the law. This new company would assume the existing rights and obligations of the amalgamating companies. The draft amendment introduces a new concept of “merger” where the two or more companies are merged into a single company, thus, no new company is created. In light of this, more choices in terms of the companies’ combination are available to better respond with commercial needs.

Given this draft amendment imposes significant development in respect of corporate matters, it is crucial to pay close attention to any further development on its enactment process. Please contact authors for further information about the proposed amendment or any corporate laws related matters.
 

This document is solely intended to provide an update on recent development in Thailand legislation and is not purported to provide a legal opinion, nor a legal advice to any person.