Amendments to Thailand’s Civil and Commercial Code introduce new schemes for corporate governance

This contains provisions surrounding minority shareholders, the validity interval of Memorandums of Affiliation, in addition to the variety of shareholders required to type a quorum throughout common conferences.

The modification, which was promulgated in late September, is anticipated to take impact erly in 2023.

Corporations can now bear mergers

As soon as the modification takes impact, companies in Thailand may have two choices for consolidating corporations, one being an amalgamation, the place the amalgamating corporations will likely be dissolved to type a brand new entity on the finish of the method, and one other being a merger, the place the consolidated entities are merged with solely one of many merging corporations surviving the method. Previous to the modification, companies searching for consolidation had been solely allowed to bear amalgamation as mergers weren’t a legally viable possibility.

As soon as corporations have been merged, all properties, money owed, rights, obligations, liabilities, and duties from every of the merged corporations will robotically be transferred to the surviving firm within the case of a merger or the newly shaped firm within the case of an amalgamation.

The brand new merger launched by the modification will likely be thought of another possibility for M&A transactions within the Thai market. Beneath this scheme, it’s anticipated that closing transactions that contain enterprise transfers will likely be simpler the place sure working licenses are non-transferable.

Minority shareholders who disagree with any movement to merge or amalgamate their firm will likely be given the choice of promoting their shares to the purchaser. If a value can’t be decided, an appraiser will decide the promoting value. If the dissenting shareholder rejects a purchase order supply proposed by the appraiser after 14 days, they may robotically change into a shareholder of the merged or new entity.

What are the opposite adjustments to company governance launched by this modification?

Aside from the introduction of mergers as an possibility for consolidation, the modification may even change the minimal variety of promoters required to type an organization from three people to 2. Likewise, Memorandums of Affiliation registered on the Division of Enterprise Improvement can be utilized to include an organization as much as three years from the date it was registered. Nonetheless, the modification would require a share certificates to be affixed with the corporate’s seal.

Furthermore, until in any other case banned beneath the corporate’s Articles of Affiliation, administrators’ conferences might be performed electronically, so long as the digital platform meets the minimal requirements upheld by the legislation for holding such conferences electronically. Newspaper publications are not obligatory when calling a common assembly of shareholders apart from conferences the place share certificates are to be distributed to bearers; though notices of conferences nonetheless must be delivered to all shareholders of an organization by registered mail. Because of this conferences nonetheless must be organised prematurely.

To achieve a quorum throughout a common shareholder assembly, there must be at the very least two shareholders current, and people representing at the very least 25% of the entire share capital have to be current for a decision to be adopted.

What to look out for

Corporations, administrators, and shareholders ought to keep conscious of potential rules concerning procedures for appraisal of buy costs for shares that belong to shareholders who don’t want to bear a merger or amalgamation.

The Income Division will probably problem a information on whether or not there will likely be new tax preparations for transactions beneath the brand new merger scheme or if these related to amalgamations will apply. Additional updates will likely be offered on this.

By Dr Paul Crosio 

Paul Crosio is a Companion at Silk Authorized & founding companion of Silk Advisory. He’s a working towards Australian lawyer with over 20 years of company expertise in turn-around administration in Thailand and overseas.

For extra details about the updates or every other issues round company governance, e-mail data@silklegal.com or utilizing the contact type offered at SilkLegal.com

Silk Authorized is a boutique legislation agency that focuses on complicated authorized issues in Thailand. We’re a full-service industrial legislation agency with devoted observe areas in company and industrial, restructuring and insolvency, mergers and acquisitions, and regulatory issues.