Filling in key roles and drafting up the Memorandum of Association (MOA) are only a fraction of the requirements to setting up a Thai company as an Australian. Every company needs a statutory meeting wherein the Articles of Association (AOA) will be drafted.
This is the third entry in our series of posts detailing the company registration process in Thailand. Here, we will examine what you need to successfully hold a statutory meeting and a shareholders meeting, what they both entail, and what the AOA consists of.
Organizing a Statutory Meeting
You must hold a statutory meeting (which is often known as the First Annual General Meeting) before you can fully register your company. This is a mandatory meeting for all your promoters and directors, and you will need to submit written minutes to the Department of Business Development as evidence that it took place. The meeting can be held after selecting the shareholders of your company and finalizing the share structure.
The following actions will need to be taken by your team during the meeting:
- Preparation of the Articles of Association
- Drafting and approval of documents for the company registration application
- Laying out the responsibilities of the Board of Directors
- Assigning an auditor to audit the company’s financial statements
- Arranging an amount to be paid to the promoters
- A decision on the amount of ordinary and preferred shares to be distributed
- Issuance of share certificates to the shareholders
The final decisions on each of these actions will be determined by a majority vote of all those present. After the meeting, the initial shareholders (“promoters”) must transfer all responsibility to the directors, giving them full reign over the company. Once the statutory meeting has been held, you will have 3 months to establish the company.
Organizing a Shareholders Meeting
Shareholder meetings are an essential component of every business. These meetings are held to discuss the overall performance of the company as well as address any urgent issues. You need to organize these meetings with shareholders in your company, setting the appropriate date, time, and agenda while also adhering to the requirements that need to be met. These are differentiated into two types: Ordinary and Extraordinary shareholder meetings.
Ordinary Meetings: Also known as the General Meeting of Shareholders, ordinary meetings are annual gatherings organized to discuss ways to improve the business, propose resolutions for unresolved problems, and vote on standard company matters. Discussions revolve around:
- Assessing the company’s most recent performance
- Appointing and replacing directors in the company
- Deciding on and appointing the auditors for the company
- Evaluating and approving the company’s financial statements and balance sheets
- Analyzing capital, dividends, and shares and how they should be distributed
- Coming up with resolutions to any of the company’s main shortcomings
Extraordinary Meetings: These are held if there are pressing matters or problems that need to be tended to that were not raised in the ordinary meetings. Unlike ordinary meetings, these can be held at any time during the financial year. Shareholders attending these meetings will discuss and come to a consensus on what should be done to resolve these issues. These meetings are often called under the following circumstances:
- If the Articles of Association need to be urgently amended
- If the company’s address needs to be changed
- If the board of directors needs to be altered
Guidelines for these two types of meetings are to be documented in the AOA.
Drafting up Articles of Association (AOA)
This is a document that must be completed during the statutory meeting. The AOA provides all the guidelines and restrictions your business needs to abide by. You must comply with all these regulations to ensure your company is operating within a legal space. There are 6 sections tied to the AOA, each with its own set of rules.
General Provision
- All directives established by the Thai Civil and Commercial Code must be followed.
- If you want to amend the AOA, you must authorize it at a shareholder’s meeting.
Shares and Shareholders
- A registration certificate needs to be created and showcase all the shares that have been fully paid up.
- Every registration certificate must be stamped and verified by at least 1 company director.
- To transfer shares, a written agreement signed by the transferor and transferee and verified by a witness must be prepared. All transfers become valid the moment your company registers the transaction.
- Your company cannot hold or leverage its own shares.
Directors
- The number of directors needed and their payment is arranged at the General Meeting of Shareholders.
- The Board of Directors assigns directors to fill vacancies and sets an attendance threshold. If lacking a certain threshold, the minimum number of attendances must equal 3 (if there are more than 3 directors).
- The Board of Directors also takes responsibility for managing the company.
Shareholder’s Meeting
- A General Meeting of Shareholders has to be launched within 6 months of registering your company and will be held once every year after that.
- Extraordinary Meetings can be hosted by a director or at the request of a shareholder (who owns at least 1/5th of the shares).
- Shareholders who cannot attend the meeting can cast a proxy vote instead, provided they issue this request in writing.
- The Chairman of the Board of Directors must host the meeting. If absent, shareholders can elect a substitute in the Chairman’s place.
- A meeting can only begin if shareholders who hold at least 25% of the business’s capital are attending. If this threshold isn’t met within an hour of the start time, the meeting is canceled.
Balance Sheets and Audits
- A company balance sheet highlighting the assets, liabilities, and profit and loss account has to be prepared on an annual basis.
- The balance sheet must be audited and the auditor is responsible for presenting it at the General Meetings of Shareholders within 4 months.
Dividends and Reserve Funds
- You must ensure that all dividends are allocated in proportion to the investment of each share (excluding preference shares).
- When distributing dividends, the business needs to set aside 1/20th of its profits into reserve funds until said funds approach 1/10th of the company’s share capital.
Seeking Assistance for Thai Company Registration
To streamline your company registration experience, it’s best to consult a corporate lawyer in Thailand to assist you in completing each step and answering your questions. Without legal counsel, going in blind you might miss something, leading to a rejection of your registration and wasted time, or even legal trouble.
Contact Siam Legal for expert support from our corporate law team. We’ve been helping foreign clients, including many Australians, start their dream businesses in Thailand for over 20 years now. Our skilled attorneys will assist you in organizing your statutory meeting as well as ensuring the Articles of Association are fully drafted in the most efficient and quickest manner possible, putting your company on the fast track to success.
Stay tuned for our next entry in the series which will focus specifically on completing the registration of your company and opening a business-wide bank account.
