Company Registration: Shareholder Meetings
Shareholder meetings form an important element of Thai company law, as Section 1144 of the Civil and Commercial Code states that “Every limited company shall be managed by a director or directors under the control of the general meeting of shareholders and according to the regulations of the company.” Therefore, shareholders play an important, albeit indirect, role in the management of the company. However, an important legal issue in regards to shareholder meetings is the issue of who is allowed to call a meeting of the shareholders. According to the Civil and Commercial Code, a meeting of the shareholders may be called by the following people:
- The authorized director of the company (Section 1172)
- Shareholders whose combined shares constitute no less than one out of five of the combined total of all shares (Section 1173)
Nevertheless, it is important to note that if the company’s own regulations set rules for a meeting of the shareholders that is more stringent than that of the Civil and Commercial Code, the company’s regulations will override, unless they would otherwise be prohibited by law:
- In Thai Supreme Court Decision No. 452/2518: Defendant-company’s regulations declared that “Extraordinary meetings may be called at any time whenever the board of directors sees fit or when shareholders representing at least one out of five of all shares of the company make a request in writing calling for an extraordinary meeting.” The Court held that the company regulations authorized the board of directors to call for extraordinary meeting, not any one director acting alone. Even if the shareholders were to make a request in writing calling for an extraordinary meeting, it must be presented to the board of directors, who must then call the meeting.
- The Court stated: “It appears that M., a company director, acting by himself, called for a meeting of the shareholders of the Defendant-company on 22 February 1970, without presenting a request from the shareholders to the board of directors according to the company regulations on the date of the meeting. S., the chairman of the board of directors ordered that the meeting be cancelled. M. agreed to the order, but nevertheless proceeded to violate it and held the meeting regardless. At the meeting, T. was appointed as chairman of the meeting although T. lacked the qualifications according to the company regulations. The aforementioned meeting was therefore in violation of the company regulations. The board of directors appointed according to the resolution passed at that meeting was therefore unlawful and lacks authority to manage the company. That board of directors also lacked authority to call the shareholder meeting on 11 October 1970. All resolutions passed at that meeting on 11 October 1970 have no force.”
Thai corporate law is complex. Foreigners who are managing Thai companies are advised to consult with competent Thailand lawyers.
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