Corporate Law in Thailand
Corporate Law in Thailand governs the formation, operation, and dissolution of companies and other business entities within the country. It provides the legal framework for corporate governance, business transactions, shareholder rights, and dispute resolution among companies, shareholders, and other stakeholders.

The primary legal framework for corporate law in Thailand is the Civil and Commercial Code, which outlines various business structures, and specific laws governing public companies, foreign investments, taxation, and intellectual property. Corporate law also involves other laws that regulate competition, labor relations, bankruptcy, and securities.

Corporate Governance

• Corporate governance in Thailand governs the structure, operation, and management of companies. The key principles include the rights of shareholders, duties of directors, and responsibilities of management. Major laws and regulations governing corporate governance in Thailand include:
• Corporate Governance Code for Listed Companies: This code, published by the Securities and Exchange Commission (SEC), provides guidelines on best practices for the management and governance of publicly listed companies in Thailand.
• Company Act: Governs how companies are run, including shareholders’ meetings, director duties, capital management, and financial reporting.
• Securities and Exchange Act: Regulates the securities market and sets out the obligations of public companies and listed entities.
• Public Company Act: Specifies the formation, management, and dissolution processes for public limited companies.

Under corporate governance principles, directors are required to act in the best interest of the company and shareholders, avoiding conflicts of interest. They must also ensure transparency in decision-making and financial reporting.

Shareholders’ Rights: Shareholders in Thailand enjoy several key rights under corporate law:

• Voting Rights: Shareholders have the right to vote on key matters at general meetings, including electing directors, approving financial statements, or approving changes to the company’s charter.
• Dividend Rights: Shareholders are entitled to receive dividends from the company’s profits, as approved by the shareholders during general meetings.
• Inspection Rights: Shareholders may request to inspect corporate books and records.
• Right to Sue: Shareholders may file lawsuits against the company’s directors or management if they believe their rights are being violated, such as in cases of breach of fiduciary duty or corporate mismanagement.

Director’s Duties and Liabilities: Directors in Thailand are required to fulfill certain responsibilities:

• Duty of Care: Directors must act with reasonable care and diligence in the best interests of the company.
• Duty of Loyalty: Directors must avoid conflicts of interest and act in good faith for the benefit of the company.
• Financial Reporting: Directors are responsible for ensuring that financial statements are accurately prepared and disclosed in accordance with Thai accounting standards.
• Liabilities: Directors may be held personally liable for breaches of their duties, fraud, or mismanagement that cause harm to the company or its shareholders.

Corporate Taxation: Corporate taxation in Thailand is governed by the Revenue Code, and companies are subject to several forms of taxation:

• Corporate Income Tax (CIT): Companies operating in Thailand are subject to CIT on their worldwide income. The standard corporate tax rate is 20%, although there are various tax incentives for small businesses, BOI-approved companies, and foreign investors.
• Value Added Tax (VAT): Most goods and services in Thailand are subject to 7% VAT, which companies must charge and remit to the government.
• Withholding Tax: Companies must withhold taxes on payments made to employees, contractors, or other businesses. The rates vary depending on the type of payment.

Intellectual Property: Intellectual property (IP) is crucial for protecting the business assets of a company. Thailand has various laws in place to protect patents, trademarks, copyrights, and trade secrets. These protections are provided under:

• Patent Act: Protects inventions, designs, and utility models.
• Copyright Act: Protects original works of authorship, including literary, artistic, and musical works.
• Trademark Act: Protects distinctive logos, names, and symbols used in trade.
• Trade Secrets Protection: Trade secrets, such as business formulas, processes, and customer lists, are also protected by law.

Mergers, Acquisitions, and Corporate Restructuring:

• Mergers and Acquisitions (M&A): Corporate law in Thailand regulates M&A transactions, including how companies can acquire other businesses or merge with other entities. Public companies must adhere to the Public Company Act, Securities and Exchange Act, and Takeover Act in M&A transactions.
• Corporate Restructuring: Companies may opt to restructure their operations or business model to improve efficiency, comply with regulations, or address financial difficulties. Corporate restructuring processes often require approval by shareholders, creditors, and relevant regulatory bodies.

Foreign Investment:

• Foreign investors wishing to establish businesses in Thailand must adhere to the Foreign Business Act, which restricts foreign ownership in certain sectors. However, certain incentives and exceptions exist for foreign businesses that invest in areas promoted by the Board of Investment (BOI). The BOI offers tax incentives, land ownership rights, and other benefits to foreign companies that invest in certain industries.
• Joint Ventures: Foreign companies may also enter Thailand through joint ventures with Thai partners, where the foreign partner holds a minority stake (up to 49%) in the company.

Bankruptcy and Liquidation:

• Bankruptcy: Thailand has specific laws governing bankruptcy and insolvency, under which companies facing financial difficulties may file for reorganization or liquidation. These proceedings are governed by the Bankruptcy Act and are managed by the Central Bankruptcy Court.
• Liquidation: When a company is dissolved, its assets are sold off to pay creditors, and any remaining funds are distributed to shareholders.

Practice Areas:
Our law firm responsibility includes providing companies with legal advice in matters concerning intellectual property rights, regulatory processes, taxation, contracts, and patents. Some of the key responsibilities of a business lawyer include: 

• Ensuring that the business fully comprehends pertinent laws, including the potential outcomes if the laws are broken.
• Helping businesses during the development of policies, procedures, objectives, and structures that are essential for optimum operation.
• Assisting corporations in resolving, navigating, and preventing any potential legal issues.
• Reporting qualifying legal issues to the authorities 
• Helping in the resolution of legal conflicts that affect the company through in-depth research and collection of relevant evidence.
• Taking a key role in the negotiation of settlements, contracts, and transactions.
• Reviewing and understanding the business strategies and processes to ensure that they abide by the pertinent federal, state, international, and local laws.