|On July 1, 2008 a number of changes to the law related to corporations and other juristic entities will come into effect. Below is a discussion of the most important of these changes and how they will affect the formation and management of juristic entities here in Thailand.
Reduction in the Required Number of Promoters for Limited Companies
The number of promoters required under section 1097 for the formation of a limited company will be reduced from seven to three. Promoters are entrusted with signing the application for the registration of the memorandum of association and promise to subscribe to at least one share of the company. They are essentially the founders of the company. This amendment will simplify the registration procedure for limited companies.
Reduction of the Required Number of Shareholders for Limited Companies
Consistent with the change to Section 1097, the required number of shareholders of a limited company under Section 1237(4) has been reduced from seven to three. Previously if the number of shareholders fell below seven the company could be dissolved. This amendment will reduce the need for companies to locate shareholders simply for the purpose of meeting the requirements of Section 1237(4).
Simultaneous Registration of the Company and the Memorandum of Association
Under the old provisions of Section 1111, applicants had to wait seven days to register the company following the registration of the memorandum of association. The amended provision has done away with this interim period and now this can be done on the same day.
Revised Procedure for Passing Special Resolutions
Thai law requires a special resolution of the shareholders in order to effect major corporate actions, such as an amendment of the Articles of Association or an increase in capital. Previously under Section 1194, to pass a special resolution there had to be two separate meetings. At the first meeting the resolution had to pass by no less than three-fourths of the votes. Then between 14 days and six weeks after the first meeting, the resolution had to be passed again by two-thirds of the votes at another meeting. Under the new procedure a special resolution can be passed at a single meeting by a majority vote of not less than three-fourths of the shareholders present at the meeting.
Increased Notice Requirement for General Meetings
Under the revised Section 1175 notice of a general meeting of shareholderswill have to be both published in a local newspaper and sent by post with acknowledgement of receipt to every shareholder listed in the register. This must be done no later than seven days before the meeting, and in the case of a general meeting for consideration of a special resolution, no less than 14 days in advance. Under the old provision the company could choose to either publish the notice twice in a local newspaper or send the notice by post, without acknowledgement of receipt.
This amendment will also affect a company's ability to backdate corporate changes. Under the old provisions, the minutes of the meeting and the letters of notice could be backdated to give the changes retroactive effect.
It should also be noted that the notice for a general meeting for a special resolution must include the substance of the proposed resolution whereas previously this was not required.
Criteria for Converting Partnership to a Limited Company
A provision under the amendment outlines the requirements for converting a partnership into a limited company. Until the addition of this provision there was no efficient way to transform a partnership into a limited company without dissolving the partnership and creating a new entity.