Thailand: Proposed single shareholder company regime

Thailand: Proposed single shareholder company regime

Legislation allowing for a single shareholder company is pending in Thailand.

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Under the current commercial code in Thailand, there must be at least three shareholders to form a limited company. The new measures are expected to add to the number of registered companies in the system given the proposed changes to the requirements for registering a company.

Under the proposal:

  • The single shareholder company would be a separate legal entity from the shareholder’s personal assets. In addition, the single shareholder’s liability would not exceed the amount of the company registered capital. 
  • The company’s name would have to include a designation that it is a single shareholder (as a suffix to the single shareholder company’s name or the abbreviation of single shareholder company would have to be indicated prior to the actual name of the single shareholder company).
  • Only one person would be allowed to establish a single shareholder company, and that person would have to be an individual. A juristic person could not be a shareholder of the single shareholder company so that a single shareholder could not register another company at the same time.
  • In case of significant change to the company, such as change to the Articles of Association, instead of the approval from shareholders’ meeting, an approval letter from single shareholder would be required.
  • The registered capital of the single shareholder company could consist of both money and other assets. However, if the capital is money, it would have to be fully paid up. On the other hand, if the capital is other assets, it would have to be appraised and transferred to the company within 90 days from the registration date.
  • The single shareholder would be entitled to transfer or pledge his or her “Certificate of Contribution” (the document representing the single shareholder’s right over the single shareholder company) subject to the provisions stipulated by the proposed law.
  • The single shareholder could serve as a manager of the company and be able to appoint another person or more to be managers of the company. 
  • The single shareholder company would be required to prepare financial statements that then would have to be examined by a certified public auditor.
  • A dividend could not be distributed if the company is in a deficit position. Also, at the time of dividend distribution, the single shareholder company would have to have legal reserve not less than 5% of the annual net profit until this reserve reaches 10% of the registered capital.  
  • The single shareholder company could be converted to a limited company under the commercial code.

Read a January 2021 report prepared by the KPMG member firm in Thailand

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