This guide provides an overview of a Thai company’s articles of association.
The articles of association is an essential corporate document required for all Thai companies, and its content is determined at the statutory meeting.
Let’s learn more about the articles of association in Thailand.
What are the articles of association?
The articles of association is a document that concerns the company’s objectives and regulations for its operations.
Provisions included in the articles of association
Thai private limited companies may choose to either adopt their own articles of association or refer to the relevant provisions of the Thai Civil and Commercial Code.
The chapters include, but are not limited to:
- Chapter 1: General provision
- Chapter 2: Shares and shareholders
- Chapter 3: Directors
- Chapter 4: Shareholders’ meeting
- Chapter 5: Balance sheet
- Chapter 6: Dividend and reserve fund
Chapter 1: General provision
- The provisions of the Thai Civil and Commercial Code concerning private limited companies shall apply in all respects.
- According to the law, the amendment or modification of the articles of association must be referred to the shareholders’ meeting for consideration.
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Chapter 2: Shares and shareholders
- The types of shares must be entered into the name certificate, and the shares must be fully paid-up. Every certificate of shares must be signed by at least one director and bear the company seal.
- The transfer of shares must be made in writing and signed by the transferor and transferee, and certified by at least one witness.
- The transfer of shares is valid when the company registers the transfer.
- The company cannot own its own shares or take them in pledge.
Chapter 3: Directors
- The number and remuneration of the directors will be fixed by the general meeting of shareholders.
- Any vacancy occurring in the board of directors must be filled up by the directors appointed by the board of directors. Any person appointed shall retain their office for such duration only as the vacating director was entitled.
- The director may fix the quorum necessary for the transaction of business at their meetings and unless so fixed, the quorum shall be three when the number of directors exceed three.
- The board of directors is responsible for the company’s management.
Chapter 4: Shareholders’ meeting
- The general meeting of shareholder shall be held within six months after the company registration, and held at least every 12 months. This meeting is called an ordinary meeting. Other general meetings are called extraordinary meetings.
- Directors may summon an extraordinary meeting whenever they think is suitable or in response to a request made in writing by shareholders holding not less than one-fifth of the shares.
- Any shareholders unable to attend the meeting may vote by proxy, provided that the power given to the proxy is in writing.
- The chairman of the board of directors shall preside at every general meeting of shareholders. If there is no chairman or the chairman is not present within 15 minutes after the appointed time of holding the meeting, the shareholders may elect one of their members to be the chairman.
- A general meeting may not transact any business unless shareholders representing at least one-fourth of the company’ capital are present. If within an hour the minimum shareholders are not present, the meeting shall be dissolved.
Chapter 5: Balance sheet
- A balance sheet containing a summary of the company’s assets and liabilities and a profit and loss account must be made at least once every financial year from 1 January to 31 December.
- The balance sheet must be examined by at least one auditor and submitted at the general meeting for approval within four months from the date the balance sheet was finalised.
Chapter 6: Dividend and reserve funds
- The distribution of dividends must be made in proportion to the amount paid upon each share, unless decided with regards to preference shares.
- The company must place in a reserve fund at the time of distribution of dividends, at least one-twentieth of the profits arising from the company’s business, until the reserve fund reaches one-tenth part of the capital of the company or such higher proportion thereof.
Conclusion
Companies in Thailand are required to draft their articles of association at the Statutory Meeting when establishing the company to outline its operations and aims.
Do not hesitate to contact Acclime for guidance on your company’s articles of association or the process of setting up a company in Thailand.
