The establishment of
a limited company
May May Chan
Chief Executive Officer
of ZICO Insource
DOING BUSINESS IN THAILAND
The establishment of
a limited company
May May Chan
Chief Executive Officer
of ZICO Insource
The limited company is governed by the Thai Civil and Commercial Code (the “CCC”). The following provides a brief overview of establishment procedures and timelines.
1) Promoter
At least two natural persons (not necessarily Thai citizens) must act as promoters to establish a private limited company, with each promoter holding at least one share, thus becoming a shareholder upon incorporation. Promoters must execute a Memorandum of Association (the “MOA”), which includes the company’s name and location, objectives, registered capital, number of shares, and details of the promoter.
2) capital and Share
For capital in general, there are no “minimum capital” requirements. However, the par value of a share of a private limited company is at least THB 5, and each share must be at least 25 percent paid-up. Hence, it means the minimum requirements shall be THB10 for capital with THB2.5 paid-up.
Shares are divided into 2 types, as follows:
I. Ordinary share (common shares): have the right to be present at any general meeting and have one voting right for each share the shareholder holds, and the ordinary shareholders are entitled to receive dividends when the company has gained profits in proportion to the amount paid upon each fully paid share, but may be only after the dividends have been paid to the preference shareholder.
In the case that the company is dissolved, the initial investment will be returned to ordinary shareholders in proportion to the amount of each share held when assets exceed the debts and liabilities, and after being paid to the preferred shareholders depending on the preferential rights accruing to such shares.
II. Preference share (preferred shares): A preference shareholder has the right to be present at any general meeting after the statutory meeting and may have the same, fewer, or more voting rights than an ordinary shareholder, depending on the company’s articles of association.
Subject to the company’s articles of association, the preference shareholder is entitled to receive dividends regardless of whether they paid their shares up or not before ordinary shareholders when the company has profits. If the company is to be dissolved, preference shareholders are entitled to their shares once all the creditors have been paid.
*In principle, the rights in voting and/or dividends attached to the preference share are preferential, but it is not necessarily the case. However, such preferential rights and other different details between ordinary share and preference share must be stipulated in the company’s articles of association which cannot be amended if the company has issued the preference shares.
3) Procedures for Establishing a Limited Company
In summary, the process for establishing a limited company involves:
- reservation of the company’s name;
- registration of the memorandum of association;
- subscription of shares;
- holding of a statutory meeting;
- payment for shares (in accordance with the statutory meeting but not less than 25 percent)
- registration of a company and
- incorporation of the company.
*While the registration of the memorandum of association and a company can be proceeded within one day, the entire process for incorporation of a private limited company must be completed before that.
The limited company is governed by the Thai Civil and Commercial Code (the “CCC”). The following provides a brief overview of establishment procedures and timelines.
1) Promoter
At least two natural persons (not necessarily Thai citizens) must act as promoters to establish a private limited company, with each promoter holding at least one share, thus becoming a shareholder upon incorporation. Promoters must execute a Memorandum of Association (the “MOA”), which includes the company’s name and location, objectives, registered capital, number of shares, and details of the promoter.
2) Capital and Share
For capital in general, there are no “minimum capital” requirements. However, the par value of a share of a private limited company is at least THB 5, and each share must be at least 25 percent paid-up. Hence, it means the minimum requirements shall be THB10 for capital with THB2.5 paid-up.
Shares are divided into 2 types, as follows:
I. Ordinary share (common shares): have the right to be present at any general meeting and have one voting right for each share the shareholder holds, and the ordinary shareholders are entitled to receive dividends when the company has gained profits in proportion to the amount paid upon each fully paid share, but may be only after the dividends have been paid to the preference shareholder.
In the case that the company is dissolved, the initial investment will be returned to ordinary shareholders in proportion to the amount of each share held when assets exceed the debts and liabilities, and after being paid to the preferred shareholders depending on the preferential rights accruing to such shares.
II. Preference share (preferred shares): A preference shareholder has the right to be present at any general meeting after the statutory meeting and may have the same, fewer, or more voting rights than an ordinary shareholder, depending on the company’s articles of association.
Subject to the company’s articles of association, the preference shareholder is entitled to receive dividends regardless of whether they paid their shares up or not before ordinary shareholders when the company has profits. If the company is to be dissolved, preference shareholders are entitled to their shares once all the creditors have been paid.
*In principle, the rights in voting and/or dividends attached to the preference share are preferential, but it is not necessarily the case. However, such preferential rights and other different details between ordinary share and preference share must be stipulated in the company’s articles of association which cannot be amended if the company has issued the preference shares.
3) Procedures for Establishing a Limited Company
In summary, the process for establishing a limited company involves:
- reservation of the company’s name;
- registration of the memorandum of association;
- subscription of shares;
- holding of a statutory meeting;
- payment for shares (in accordance with the statutory meeting but not less than 25 percent)
- registration of a company and
- incorporation of the company.
*While the registration of the memorandum of association and a company can be proceeded within one day, the entire process for incorporation of a private limited company must be completed before that.
