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Thailand Business Law: Formalities Regarding Shareholders

Transcript of the above video:

In this video, we're going to be briefly discussing issues associated with the legal formalities pertaining to shareholders and the number thereof on Thai corporations. In the past, it was required that Thai companies had seven shareholders in order to be incorporated and in fact,  needed to maintain seven shareholders throughout the life of the company as part of the legal formalities inherent in Thai corporate law. In more recent years about the past 12 or 13 I think if I'm not incorrect, it's now required that there only be three shareholders on a Thai company.

And as has been previously discussed on this channel, there's even some talk of actually having single shareholder companies in Thailand. But for purposes of this video, basically I just kind of wanted to go over the general formalities. I think the thinking in the past was that a company is a company in like, kind of the traditional sense of the term. It's a group of people coming together, throwing together some capital in order to get an enterprise up and going.

This used to be the case in the United States. For example, INC company so-called incorporated entities required a number of formalities that are very similar to those associated here in Thailand. Depending on the jurisdiction various formalities associated with how many individuals need to be shareholders etc with a company. With the advent of so-called limited liability companies or LLC's in the United States or “LTDs" in the U.K. - I'm not a UK licensed lawyer and I'm not a Thai licensed attorney. Our Thai attorneys deal with corporate matters.

This is just sort of an informational overview. With the advent of LLC's in the United States, now you can basically just have limited liability in an incorporated entity pretty much overnight and it only needs to be one person associated with it. So called member managed LLC where there's just one member of the LLC and that member manages it. That's perfectly acceptable under many jurisdictions in the United.

Here in Thailand, again these formalities persist. They've done some things to sort of streamline doing business and facilitate business here, most notably going from a 7-shareholder framework to a 3-shareholder framework and possibly in the near future we may see a single shareholder framework.

But that being said as of the time of this filming, it is required that there be three shareholders and three shareholders remain on the company for the duration of the company's existence in order to be in line with the formalities inherent in Thai corporate law.