Company shares in Thai companies.

There are two types of shares in Thai companies – ordinary and preference shares. While both types grant shareholders rights and duties to the company under the Civil and Commercial Code, their power differs significantly. Below is a breakdown of the two share types and what makes them different:

Ordinary shares

Holders of ordinary shares – ordinary shareholders – will receive share of any profits in respect to those shares that are 100% paid up (in the form of dividends) and should they sell the shares, their initial investment will be returned. This will also occur if the company falls into liquidation and the assets outweigh any debt or liabilities. Furthermore, having ordinary shares grants shareholders one vote per share.

Preference shares

Preferential shareholders have a couple of tricks up their sleeves. Firstly, possessing this type of shares puts preferential shareholders into a dual position of a shareholder and “debtor.” What this means in practices is that if the company gets liquidated, they get reimbursed before ordinary shareholders do (provided there is money left). Secondly, they are able to receive share of the profits regardless of whether they paid their shares up or not. Moreover, company documents drafted upon registration may increase their voting power at a shareholder meeting from one to ten votes per share.

Companies are not limited to determining their share structure only during the initial registration. Public limited companies complying with the Public Company Limited Act are permitted to do so freely at a later stage, however, private limited companies complying with the Civil and Commercial Code cannot. They can only alter their share structure by either increasing or decreasing their registered share capital. This change would, moreover, have to be permitted in the company’s Articles of Association.

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