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Transferring shares for a Thai Limited Company
25/10/2022
The transfer of shares in a Thai Limited Company requires the completion of a share transfer instrument and the signature of one of the authorised directors to register the change with the Ministry of Commerce. However, specific restrictions may be set out in the company’s Articles of Association and the Shareholders Agreement which may have an impact on any share transfer process.
Key points
- Transferring shares for a Thai Limited Company requires the signature of an authorised director.
- A share transfer instrument must be used. The share transfer instrument can be completed in English and signed online.
- All shares transfer have to be recorded in a Register of Shareholders (Shareholder book).
Why would someone want/need to transfer their shares?
The most common scenarios for the transfer of shares are as follows:
- A shareholder leaves or retires.
- A director who is also a shareholder resigns or is removed from the company.
- Transfer of shares between existing shareholders in terms of group reorganisation.
- Changing the existing allocation of shares between shareholders because of new profit sharing or ownership arrangement.
- Selling the company.
- A shareholder wishing to sell their shares for a monetary gain.
Things to consider before transferring shares
It is important to consider the following key conditions before transferring the shares in a company:
- Check for any limitations or restrictions on the transfer of shares in the company’s articles of association. In the event of a right of first refusal clause, the existing shareholders will have to sign a waiver of their rights to purchase the transferred shares.
- Review the company’s shareholders’ agreement for any limitations or restrictions.
Is it necessary to have a Share Purchase Agreement?
A Share Purchase Agreement (SPA) is a document which is used to set out the terms and conditions relating to the sale and purchase of shares in a company. SPAs often contain many components, which are typically divided into two sections: one to specify the responsibilities and rights of the seller (the transferor), and one for the buyer (the transferee).
SPAs are not a mandatory requirement, but it is recommended to use them as they offer protection to both the seller and the buyer.
In practice, for the sale of shares to an investor or a buyer, an SPA will always be requested by the buyer.
What is contained in an SPA?
SPAs will typically address the following issues:
- Warranties. An example of a typical warranty that may be included in an SPA is ensuring that both parties are entitled to enter into the sale and have the authority to do so.
- Restrictive covenants. Restrictive covenants are included to prevent the seller from undertaking certain commercial activities which they would otherwise be free to undertake, and typically include: restrictions on participating in a competing company; restrictions on soliciting or dealing with customers / clients of the business or restrictions on hiring staff from the company in question.
- Details of any post completion requirements, for example, the payment of stamp duty and the completion of the relevant compliance procedures.
Transfer of shares
In order to complete the transfer of shares, a share transfer instrument must be completed in writing and be signed by the transferor and transferee. Furthermore, the share transfer instrument must also be signed by at least one witness.
Share transfer instruments do not need to be submitted to the Ministry of Commerce, therefore, they do not need to be prepared in Thai. However, they do need to contain the names of the transferor and transferee, the number of shares to be transferred, the share numbers, the price and the date.
Finally, the transferee’s name and address must be entered into the shareholder’s register and the list of shareholders (Bor Jor 5) updated with the Ministry of Commerce. The updated list of shareholders can be filed online on the Department of Business Development (DBD) platform.
Failure to register the transferee into the shareholders register will invalidate the transfer.
Share certificates
Upon the completion of the share transfer, Private Limited companies in Thailand are required to issue share certificates to the transferee.
Each share certificate must be signed by one of the company directors and contain the company seal.
Share certificates must include the following:
- The name of the company.
- The number of shares to which the certificate applies.
- The amount of each share.
- If the shares have not been paid in full, the amount paid on each share.
- The name of the shareholder or a statement that the certificate is issued to a bearer.
What is the process for transferring company shares?
1. Completion of a Share Transfer instrument
In order to start the process, a transferor has to execute a ‘Share Transfer Instrument’ with the transferee. A share transfer instrument needs to clearly state the names of the transferee and transferor, the number of shares being transferred and the share numbers. Finally, the instrument must be signed by both parties and at least 1 witness.
2. Update the Shareholders Register and register the change with the Ministry of Commerce
Once the transaction has been completed, the company’s Shareholder Register must be updated accordingly and the change registered with the Ministry of Commerce. Failure to do so will invalidate the transfer.
3. Issuing a new share certificate
As mentioned above, Thai Limited Companies are required to issue a share certificate to the transferee.
4. Payment of Stamp Duty
In Thailand, the transfer of shares is subject to the payment of Stamp Duty. The rates are as follows, for every 1,000 Baht or fraction thereof of the paid-up value of shares, Stamp Duty at the rate of 1 Baht will be applied.
How can Belaws help?
If you need more information about transferring your company’s shares in Thailand, you can talk directly with one of our experts.
Please note that this article is for information purposes only and does not constitute legal advice.
Our consultations last for a period of up to 1 hour and are conducted by expert Lawyers who are fluent in English, French and Thai.
Consultations can be hosted via WhatsApp or Video Conferencing software for your convenience. A consultation with one of our legal experts is undoubtedly the best way to get all the information you need and answer any questions you may have about your new business or project.
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Frequently asked questions
Can a foreigner open a company in Thailand?
Yes it is possible for a foreigner to open a company in Thailand. There are also options available which allow 100% foreign owned companies as well.
How much does it cost to set up a company in Thailand?
The official fees for registering a company in Thailand are THB 7,500.
How do I start a limited company in Thailand?
- Step 1: Choose and register a company name.
- Step 2: Draft and file the Memorandum of Association.
- Step 3: Call and hold a Statutory Meeting of the shareholders
- Step 4: Register the Company with the Ministry of Commerce.
- Step 5: Register the company for Value-Added Tax (VAT) and Income Tax
Is it good to start a business in Thailand?
Thailand is an attractive option for those wishing to start a business. Thailand has a great infrastructure in place and scheme such as the BOI provide great incentives for companies to take advantage of.
How much money do you need to start a business in Thailand?
Typically, it costs between THB 40,000 to THB 60,000 (excluding VAT and Government fees) to start a business in Thailand.The official fees for registering a company in Thailand are THB 7,500.
How can a foreigner start a small business in Thailand?
Yes, foreigners can start a business in Thailand. However, certain business activities are restricted by the Foreign Business Act and in order for businesses to undertake them they must obtain a Foreign Business Licence/Certificate which can be time consuming and complicated.
What is the biggest problem in Thailand?
The biggest problem facing foreign owned companies is being able to undertake their desired business activity as a 100% foreign owned company. Many business activities are protected by the Foreign Business Act and in order for a company to operate in these protected industries, they will be required to be majority owned by Thai Shareholders (unless a BOI promotion has been obtained).
Why is it hard to do business in Thailand?
The Foreign Business Act limits to the business activities a 100% foreign owned company can undertake. This means Thai Shareholders will need to be sought or a BOI promotion obtained in order for a company to legally operate.
Can I own a company in Thailand?
Yes, foreigners can start a business in Thailand. However, certain business activities are restricted by the Foreign Business Act and in order for businesses to undertake them they must obtain a Foreign Business Licence/Certificate which can be time consuming and complicated.
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