This guide outlines the types of shares in Thailand.
There are two types of shares in Thai companies which grant the holders different rights and duties to the company under the Civil and Commercial Law.
Below is a breakdown of the type of shares in Thailand.
Two types of shares in Thailand
Under Thai law, shares are categorised into two types:
- Ordinary shares (common shares)
- Preference shares (preferred shares)
Ordinary shares
Holders of the ordinary shares, known as ordinary shareholders, have the right to be present at any general meeting and has one voting right for each share the shareholder holds.
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 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.
Preference shares
A preference shareholder has the right to be present at any annual general meeting and may have the same, less or more voting rights than an ordinary shareholder, depending on 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.
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Transfer of shares
According to section 1129 of the Civil and Commercial Code, shares are transferable without the assets of the company unless, in case of shares entered in a name certificate, it is otherwise provided in the regulations of the company.
For the transfer of shares to be valid, the share transfer instrument must be made in writing and signed by the transferor and transferee and certified by at least one witness.
The share transfer instrument is not submitted to the Ministry of Commerce; therefore, it does not need to be prepared in Thai. The names of the transferor and transferee, share numbers and number of shares transferred must be included.
For the share transfer to be valid against the company and third person, the transferee’s name and address must be entered into the shareholder’s register.
Share certificates
Private companies are required to issue share certificates which act as an evidence certificate that proves certain issues regarding shares.
Every share certificate is to be signed by one of the directors and must have the company seal.
The certificate must include the following:
- The name of the company
- The number of shares to which the certificate applies
- The amount of each share
- If the shares have not been paid in full, the amount paid on each share
- The name of the shareholder or a statement that the certificate is issued to a bearer
Conclusion
The two main types of shares in Thailand are the ordinary shares and preference shares, and holders of the shares are entitled to different rights in a company. To ensure you have an accurate understanding of shares in Thailand, we recommend contacting Acclime for advice.
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