Tag Archive: company

  1. Company Dissolution in Thailand

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    Dissolution is the process of de-registering a company from the company registry at the Department of Business Development („DBD“). When considering the life cycle of a business operation, the voluntary dissolution by the shareholders appears to be the usual way to end the company’s operations. There are several circumstances that will lead companies to the dissolution and subsequently, the liquidation process. Under Sections 1236 and 1237 of the CCC, a limited company may be dissolved by the following causes:

    1. By a special resolution (voluntary dissolution by shareholders);
    2. Company’s regulations set forth doing so;
    3. If a company is formed for a specified period of time, by the expiration of such period;
    4. If it is established for a single undertaking, by the termination of the undertaking;
    5. The company becoming bankrupt and
    6. Dissolution by the Court.

    Special Resolution (above item 1): With regards to dissolution by using a special resolution, a general shareholders‘ meeting shall be summoned by the director(s) or shareholders. Invitations to the meeting have to be sent to shareholders and published in at least one local newspaper at least 14 days before the meeting date. At the meeting, one-fourth of the total shares must be present to achieve a quorum. The special resolution for the dissolution requires a majority of not less than three-fourths of votes present voting in favor, per the requirements under Section 1194 of the CCC. The required period for an invitation, a quorum, and the voting may differ depending on the articles of association (by law) of the company. Apart from the dissolution, shareholders will also get to appoint a liquidator(s) and auditor(s). The dissolution and the name of auditor(s) should be registered at the Ministry of Commerce within 14 days after the meeting.

    Dissolution by Court (above item 6):  On the other hand, under Section 1237 of the CCC, companies can also be dissolved by the Court if the business of the company can only be carried on at a loss with is no prospect of generating profit. The Court will only adjudge the company’s dissolution in cases where the company has been continuously experiencing losses. However, this will not be the case if the company occasionally suffers losses. A restructuring process may be possible under certain circumstances and such a procedure has been introduced to save certain businesses with viable business plans. A party with a vested interest (e.g., minority shareholder) may be eligible to file such motion to the Court.

    If you have any questions regarding the Company Dissolution in Thailand, feel free to contact us at [email protected] or call us at +66 (0)2 117 9131-2.

  2. Liquidation of a Thai company

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    At the end of a life cycle of a private limited liability company in Thailand it is necessary to liquidate and dissolve the company by resolution of its shareholders. The procedure, has to follow the rules of the Sections 1247 – 1273 of the Civil and Commercial Code of Thailand (CCC). To proceed with the dissolution and liquidation of the company under the provisions of the CCC, the shareholders are required to do the following:

    • The Board of Directors shall hold a meeting to adopt a resolution related to the planned liquidation of the company. Then, two shareholder meetings need to be summoned, to give the shareholders the opportunity to discuss the matter. the formality of such meetings will follow the company’s bylaws.
    • In the first General meeting, a special resolution of shareholders to liquidate and dissolve the company shall be set up. Therefore, the shareholders need to appoint a liquidator and an auditor.
    • In the second meeting of shareholders, the resolution of the first meeting – to liquidate and dissolve the company – needs to be confirmed. This second meeting has to be held between 14 days and 6 weeks after the first meeting if not a more extended period is required by the articles of association of the corporation.
    • The company shall place two succeeding advertisements in a local newspaper and send letters to all creditors by registered letter to announce the liquidation of the company. So, the creditors can settle their claims with the company before the dissolution.
    • All relevant documents need to be submitted within 14 days from the date of the second company meeting to the Commercial Registration Department, Company and Partnership Registration Office and Ministry of Commerce.
    • The financial statement (Balance Sheet, accounts) prepared and certified by the appointed auditor needs to be approved by a further meeting of shareholders and submitted to the Ministry of Commerce.
    • The liquidator is required to provide a report to the Ministry of Commerce every three months until all assets and liabilities are cleared, and all debtors are urged to settle their debts. At the end of this process, the liquidator shall set up a final meeting of shareholders to approve the liquidation of the company. Meeting minutes shall be forwarded to the Ministry of Commerce within 14 days from the date of the meeting.
    Liquidation of a Thai company
    • After the final assembly, an application for liquidation of the company must be sent to the Thai Revenue Department and the original Value Added Tax Certificate as well as the original Tax Identification Card needs to be returned in the company’s name.
    • In order to obtain the final approval of the company’s liquidation by the Ministry of Commerce, a copy of the approval of the liquidation by the Thai Revenue Department has to be sent to the Ministry.
    • It is the Liquidators duty to deposit all the company’s books at the Registrar’s office, where they shall be stored for 10 years, beginning from the date of the final approval of the liquidation. In practice, the liquidator is asked to archive the books by himself and confirm this to the Registrar in writing.

    The entire process of liquidation process takes about 1 – 2 years, depending on the period, the company was operating, the condition of the books and whether tax returns were all duly submitted as required by law.

    If you have are any questions regarding company liquidation, feel free to contact us at [email protected]

  3. Company Stamp

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    A company stamp or company seal is the official seal used by a company. Company seals are not used in every country, but they are predominant in certain common law jurisdictions and in many jurisdictions of Asia. In Thailand, a company seal is used by practically every registered company.

    Affixing the seal has a specific legal significance. Affixing a company seal signifies an act of the company and is a clear indication of authorization under the company’s bylaws. While Thai law (in particular the Civil and Commercial Code) does not force a company to use a company seal, the company may set this forth during the registration of the company, and this may then be stipulated in the company affidavit. Registered companies in Thailand frequently specify in the company affidavit that the the company is legally bound by affixing the director’s signature along with the company seal.

    If the company has set forth such a method of authorization, but the document e.g. has only the signature of the director and is lacking the company stamp, then the document is not binding for the company.

    The appearance of the seal must follow laws and regualtions as well: it should include the company name in Thai (and additionally in English or another language if that is desired). Furthermore, it must show any suffixes related to the form of the company (such as Co., Ltd. or Company Limited). It may include a picture or symbol as well, but this is not a requirement.

    Feel free to contact us if you have any questions: [email protected]

  4. Extension of Capital Expenditure Corporate Tax Deduction

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    Under the Royal Decree No. 604 of 2016 (B.E. 2559), tax benefits were given to companies or partnership’s expenses of domestic investment. On 24th January 2017, the cabinet approved a one year extension of this tax measure, that is for the period from 1st January 2017 until 21st December 2017.

    It should be noted that the privileges have been amended, in particular the multiple for the calculation of tax expenditure deduction has been reduced from 2 to 1.5.

    Accordingly, under this tax measure, expenses can be deductible 1.5 times if they were incurred for the investment in these following assets: –

    • Machinery, parts, equipment, tools, appliances, decorations and furniture;
    • Computer programs;
    • Vehicle except less than 10 seater cars; and
    • Permanent building which lands and housing are included.

    Eligible for deduction are the following assets:

    • New assets which are invested in 2017 and will be ready for use within 31st December 2017 (but not including machinery and permanent buildings which may be ready for use afterwards).
    • Assets which already obtained the 2 times deduction from the Royal Decree no. 604, ifthe assets’ expenses for investment have not been completed and are still carried on in 2017. The multiple of 1.5 will then apply for the deduction under this tax measure.

    Please be informed that the company or partnership which applies for this benefit must prepare investment project and expense plans and present these to the Revenue Department.

    Find out more about our corporate and commercial services

  5. First Frank Legal MeetUp – Establishing a Company in Thailand

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    FRANK Legal & Tax’s first MeetUp on Establishing a Company in Thailand was held successfully on February 10th, 2017 at the company office in Athenee Tower, Bangkok. We plan for the forum to take place once a month, covering a range of subjects related to corporations in Thailand. The next event „Company Formation In Thailand“ will take place on March 9th from 18.15-19.45 at our Bangkok office.

    Frank Legal, Meetup, bangkok

  6. FRANK Legal Tax represents fun park company during market entry in Thailand

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    FRANK Legal & Tax advises and represents a foreign company in legal matters related to establishing fun parks in Bangkok, with a total investment value of approximately 200 Million THB. Our services include the incorporation of a group of companies, license applications and other related matters.

    Find out more about our corporate and commercial services

  7. Dormant Company

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    This article summarizes the rules which apply in case of a company stopping its operation temporarily:

     

    1. Notification Requirements

     

    According to Section 85/12 of Revenue Code, if the company wishes to stop its operation for longer than 30 days, the company must submit a notification to that effect to the Revenue Department where the company is located. Such notice shall be filed within fifteen (15) days from the date of stopping the operations. If the company fails to notify regarding the temporary business cessation with the Revenue Department, the company shall be fined in an amount of not more than at 2,000 THB under Section 90 Revenue Code.

     

    As regards to notification of the Social Security Office, the company shall submit an application related to the stoppage of operations temporarily with local Social Security Office within the date of 15th on the next month from the date of stopping operation. The company is also obligated to notify the Social Security Office to remove all existing employees from the company.

     

    There is no minimum period specified for stopping the operation temporarily.

     

    2. Filing Requirements after Notification

     

    After the Revenue Department has been notified, the company is still obligated to submit monthly and annual tax returns for the Revenue Department, but the returns may show nil amounts. Furthermore, the company shall continue filing annual company financial statements with the Department of Business Development.

     

    3. Forced De-Registration

     

    If the company stops the operation for a period of three (3) years or more without any notification and submission the respective government offices, it shall be deemed that the company no longer carries on any business. By exercising the powers stipulated in Section 1273/1 of CCC, the Company Registrar is authorized to remove the name of the company from the register. The effect would be subject to Section 1273/3 of CCC. The status of the company as a juristic person shall come to an end after the registrar has struck the name of such company off the register.

     

    It should be noted that the liability of directors and shareholders remain and may be enforced as if the status was still that of a juristic person.

     

    If the company feels aggrieved with that result, the company is entitled to submit an application to the court in order to restore the name of company within ten (10) years from the date of removing the company name, according to Section 1273/4.

  8. FLT advises Malaysian construction company in major arbitration case

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    FRANK Legal & Tax advises a Malaysian construction company in a 30 Million THB arbitration case in Thailand. The opposing party is the developer of a palm oil plant in Southern Thailand. The case is currently pending at the Thai Arbitration Institute (TAI).