Proposals to amend the Civil and Commercial Code
On 9 June 2020, the Thai cabinet approved a draft act amending the Civil and Commercial Code (“CCC”) regarding partnerships and limited companies.
Keywords: Mazars, Thailand, Legal, Civil and Commercial Code, Department of Business Development, Memorandum of Association, Board of Directors, Shareholders’ meetings
21 July 2020
The key amendments proposed in the draft act are as follows:
Issues | Current provisions | Proposed changes |
1. Place of registration
| A partnership and limited company can submit an application for registration to the office of the Department of Business Development (“DBD”) which has jurisdiction over the area in which the entity’s registered office is located. For instance, XYZ Co., Ltd. has its registered office in Samutprakarn Province. Therefore, XYZ Co., Ltd. must submit its application for registration to the office of the DBD in Samutprakarn Province. | A partnership and limited company can submit an application for registration to any office of the DBD, regardless of whether its registered office is located in the same province as the office of the DBD.
|
2. Period of validity for the Memorandum of Association (“MoA”)
| The CCC does not prescribe the period of validity for the registered MoA of a company. However, under the regulations of the Central Partnership and Company Registration Office, the registered MoA of a limited company shall be valid for 10 years from the date of registration. Therefore, if the incorporation of an entity cannot be completed within 10 years of the date on which the MoA is registered, the MoA shall automatically become invalid. | The period of validity for the registered MoA of a company is reduced to 3 years, and this should be clearly stated in the CCC. As a result, if the incorporation of an entity cannot be completed within 3 years of the date on which the MoA is registered, the MoA shall automatically become invalid. |
3. Issuing a company’s share certificates
| A share certificate must be signed by at least 1 director, with the company seal affixed. | A share certificate must bear the company seal if a limited company has registered a company seal with the DBD. |
4. Holding Board of Directors meetings
| The CCC does not clearly state whether Board of Directors meetings can be held electronically, such as by video call or web conference.
| Board of Directors meetings can also be held electronically unless otherwise prohibited by the Articles of Association of the company. As a result, the directors do not need to be present in person in order to form a quorum for a meeting. |
5. Calling shareholders’ meetings
| Notice of calling a shareholders’ meeting must be published at least once in a local newspaper and sent by registered post with acknowledgement of receipt to shareholders at least 7 days in advance of the meeting date.
| Notice of calling a shareholders’ meeting must be sent by registered post with acknowledgement of receipt to shareholders at least 7 days in advance of the meeting date, unless the company has issued bearer shares. In this case, notice must also still be published in a local newspaper. |
The draft act will be presented to the House of Representatives for consideration.
Want to know more?