Registration with the MOF is an “entre ato” operation, and when it comes to closing a business down, a similar process should be followed. Closing down a business in Thailand is a legal process with clear steps and requirements. Properly navigating these processes and legal concepts becomes all the more important to comply with and avoid potential exposure for the company and its beneficial owners. This serves as a complete guide on how to dissolve a company in Thailand.
Causes of Dissolution of a Company in Thailand:
A Thai company can be liquidated for a number of reasons, including:
- Voluntary Dissolution:
- o By special resolution of the shareholders. Register company in Thailand
- After the duration fixed in the company’s MOA.
- If the company was established for a particular action, and it has been done.
- Compulsory Dissolution:
- By court order, due to reasons such as bankruptcy or insolvency.
In this article, we will concentrate on what we can call voluntary dissolution, as it is the most frequent case for solvent companies.
The Steps to Voluntarily Dissolve Your Business: A Detailed Guide
The method to voluntarily dissolve a company in Thailand generally would require the following steps:
- The Board of Directors will hold a meeting to recommend to dissolve the company be dissolved and propose an EGM (Extraordinary General Meeting) to approve the resolution.
- Extraordinary General Meeting of shareholders (EGM):
- Shareholders must be given notice of the EGM within the statutory required period.
- The EGM shall, by special resolution, vote for the resolution to liquidate the company behind a specific majority (often not less than three-fourths of the number of votes attached to the shares held by the shareholders who vote in this respect).
- The resolution will usually also designate a liquidator(s) to facilitate the winding up.
- Registration of Dissolution Resolution to DBD: Within 14 days from the date of dissolution resolution by EGM, the Company needs to register the dissolution resolution with the Department of Business Development (DBD), Ministry of Commerce.
- Dissolution Notification Requirements: The corporation must publicize its intention to dissolve in the local newspaper and reach out to its known creditors with written notices. This enables creditors with claims to lodge their claims with the company within a specified time (normally at least two months from the date of the last publication).
- Duties of the Liquidator: The liquidator or liquidators, when appointed, are responsible for the management of the companies, to bring the business to an end. The duties they have to fulfill are:
- Seizure of all company assets.
- Drafting a balance sheet of the company.
- Collecting every claim of the company.
- Pay all debts and obligations of the Company.
- Acting as the company's representative in bankruptcy processes involved in the liquidation.
- After all the debts and costs are paid, any of the remaining assets are distributed to the shareholders in proportion to their shareholdings.
- Final Shareholder Meeting: The liquidator will also call a shareholders' meeting after all the formalities have been completed before the end of the winding up so that he can report the liquidation and how it has been distributed. This meeting ratifies the liquidator's acts and embodies the final stage of the winding-up process.
- Filing of the Liquidation Completed with the DBD: Within 14 days after the last shareholders’ meeting date, the liquidator shall file the liquidation completed with the DBD. This is a formal dissolution of the company.
Legal Implications and Considerations:
Legal Procedures: The dissolution of a corporation is governed by the rules and regulations of the Civil and Commercial Code of Thailand. It is extremely important to follow the necessary procedures and times responsibly.
- Shareholder Consent: Shareholders must approve the special resolution passed at the EGM.
- Creditors Protection: The statute provides for the protection of the creditors of the company, both through the public notice and the period for filing claims.
- Liquidator’s Duties and Liabilities: A liquidator has serious obligations and is liable for any default, negligence, and deviation in fulfilling their duties while winding up the company.
- Taxes: There are also potential tax consequences of unwinding or dissolving a corporation, both for the corporation itself and its shareholders, including the distributions and sales of assets. All tax issues need to be met during the liquidation.
- Books of Accounts and Documentations: There must be kept proper books of accounts at all times during the liquidation, and the liquidator has to prepare financial statements.
- Deregistration with Other Agencies: In addition to the DBD, the company may also need to dose down registration with other government agencies, such as the Revenue Department (for tax registration) and the Social Security Office.
- Professional Help: As the process is complex, you should consider seeking the help of professional law and accounting firms in Thailand to walk you through the company dissolution process and to ensure everything complies with the requirements.
There are certain procedures and legal thoughts upon which Thai law is built that must be followed when dissolving a company in Thailand. With the help of professionals, you will correctly step through these stages from the very first shareholder resolution until the last liquidation registration, and the legal structure of the company will remain safely and sound, without claims from any of the side, protecting the interests of all the parties and staying away from legal danger.
