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On 24 May 2016, the Royal Thai Government has approved a draft of a Civil and Commercial Code Amendment Act. This Amendment Act will introduce changes with regards to the registration of limited liability companies, amalgamation of companies, dividend distribution, and other matters, and aims at making corporate legalities more efficient and in line with international standards.
Regarding the formation of limited liability companies, the new laws propose a change regarding the number of company founders and shareholders.
Currently, the Civil and Commercial Code states in Section 1097: “Any three or more persons may, by subscribing their names to the memorandum and otherwise complying with provisions of this Code, promote and form a limited company.”
The draft new law proposes the following wording: “Any two or more persons may, by subscribing their names to the memorandum and otherwise complying with provisions of this Code, promote and form a limited company.”
The reduction of the minimum amount of shareholders is seen as practical and would certainly have its impact on corporate structures going forward.
However, it is important to note that this Amended Act is still in process of legislation and has not taken effect as yet. The next step of the process is that the national legislative assembly approves and then the secretariat of the senate will consider. If it approves as well, His Majesty King Bhumibol will sign. Then the act will be published in the Government Gazette before it takes effect.