- In Thailand, as in any country, if a company is unprofitable or unable to sustain business operations because of economic factors or strong competition, it may be necessary to close the business. Other reasons to close a company may be an intention of shareholders to set up a new company, or to permanently cease doing business in Thailand.
- Liquidation and dissolution of a limited company in Thailand is mandated by Sections 1247 through 1273 of the “Civil and Commercial Code of Thailand” which contains provisions in the event of voluntary liquidation and dissolution of a private limited company in Thailand by its shareholders. If a business in Thailand is to be dissolved, particularly a Thai limited company, procedures must be followed to legitimately and efficiently close down the company.
PROCESS FOR VOLUNTARY DISSOLUTION OF A THAI LIMITED COMPANY
- A Board of Directors’ Meeting – should be held to adopt and approve the proposed liquidation of the company and to fix the dates for two separate General Meetings of the shareholders to consider the issue. Any of the directors or a person authorized by the directors may issue notices calling for such shareholders’ meetings, unless required otherwise by the Articles of Association of the company.
- The First General Shareholders Meeting – should be held to adopt a special resolution to liquidate and dissolve the company. A liquidator and an auditor shall be appointed by the meeting for such purpose. The resolution must be accepted by at least 75% of the shareholders. Once the resolution has passed, the shareholders will elect one or more liquidators who have no liability to represent the shareholders.
- The Second General Shareholders Meeting – should be held to confirm the special resolution adopted in the first meeting. The second meeting must be held not less than fourteen days and not more than six weeks from the date of the first meeting, unless a longer notice period is required by the Articles of Association of the company.
- Newspaper Advertisements – two successive advertisements should be placed in a local newspaper announcing the liquidation of the company to alert creditors (if any) so they can claim for debts owed to them by the company.
- Letter to Creditors – Send all creditors a letter by registered mail requesting them to file a claim for debts owed to them by the company.
- Application for Company Dissolution – Relevant application documents should be filed together with copies of the special resolutions with the “Company and Partnership Registration Office”, “Commercial Registration Department”, “Ministry of Commerce”, “Business Development Department” (BDD), no less than fourteen days from the date of the second shareholders’ meeting.
- Audited Financial Statements – The appointed auditor should prepare and certify the financial statements (Balance Sheet and Accounts) as of the date of dissolution. The date of these financial statements must be the date of the second shareholders’ meeting (i.e., the confirming meeting).
- Liquidation of Assets – Liquidation of the company’s assets begins after the dissolution date. Company’s bank accounts will be closed. All debts of the company will be paid. Any remaining capital will be divided to shareholders in accordance to the percentage of their share. If dissolution is voluntary, severance pay must be allocated to each employee. Visa of foreign employees should be cancelled at the Immigration Bureau and work permits returned to the Ministry of Labor.
- Liquidator’s Reports – Submit liquidator’s reports to the Ministry of Commerce every three months until completion of the liquidation process.
- Shareholders Approval Meeting – Hold a shareholders’ meeting to approve the financial statements prior to submission to the Ministry of Commerce.
- Final Shareholders Meeting – Once the liquidator has cleared the assets and liabilities and has called on debtors for payment of debts to the company, the liquidator must call a final shareholders meeting to approve the final liquidation of the company. The minutes of the meeting must be submitted to the Ministry of Commerce within fourteen days from the date of the meeting. – Application to Revenue Department – Submit application to the Thai Revenue Department for liquidation of the company and return the original Value Added Tax Certificate and original Tax Identification Card in the name of the company. With regards to VAT, the liquidator has to apply for a VAT dissolution. VAT filing forms for the past 2 years need to be sent to revenue department. VAT registration certificate needs to be returned.
- Application to Ministry of Commerce – Once the Revenue Department grants approval, the liquidator must notify and submit a copy of the approval to the Ministry of Commerce in order to obtain final approval from the Ministry.
- Informing the Registrar’s Office – The liquidator has the duty to deposit all the company’s books of accounts with the Registrar’s office, where they shall be kept for a period of ten years from the date of final approval of the liquidation. (In practice, the Ministry does not keep the books of accounts, but asks the liquidator to keep the books and notify the Registrar in a formal letter).
- Dissolution Timeframe – The company dissolution process takes approximately one to two years to complete, depending on the number of years the company has operated and whether its books were properly maintained and tax returns filed as required by law.
DO YOU NEED A LAWYER
- Dissolving a company in Thailand can be very complicated if you have not done it before. At TSL, our experienced lawyers (Expats and Thai) have the language and expertise to communicate in Thai on your behalf and efficiently liquidate your company.
Notes:
- Choosing a Thai law firm specialising in international law to assist you with your company dissolution in Thailand will ensure that the business is properly liquidated and avoid having legal difficulties in the future.
- If you would like assistance with closing your business in Thailand please consult TSL.