Dissolution of Company
In a company dissolution, the company may be dissolved either By Law or By Court order.
A company is dissolved by law under the following scenarios:
- In the cases, if any, provided by its regulations;
- If formed for a period of time, by the expiration of such period;
- If formed for a single undertaking, by the termination of that undertaking;
- By a special resolution to dissolve; and
- By the company becoming bankrupt.
A limited company may also be dissolved by the Court on the following grounds:
- If default is made in filing the statutory report or in holding the statutory meeting;
- If the company does not commence its business within a year from the date of registration or suspends its business for a whole year;
- If the business of the company can only be carried on at a loss; and
- If the number of the shareholders is reduced to what has been prescribed by law.
Company dissolution from special resolution is a ground for dissolving the company By Law. The steps involve in registering such special resolution to dissolve the company are as follows:
Registering the Company's Dissolution
The shareholders meeting shall be held in order to have a special resolution of three-quarters (3/4) of the vote of shareholder in the meeting room and can be voted to dissolve the company.
Once the first meeting to dissolve the company is held, the second shareholders meeting will be held to affirm such resolution and appoint the liquidator and its compensation.
Therefore, upon this registration, the liquidator will be appointed. Unless specified otherwise in company's Article of Incorporation, the liquidator shall be director of the company. In case there is more than one liquidator, all liquidators will jointly act. However, it could be specified differently by a general meeting or court order.
However, even the first step is registered; the company is still existed for the purpose of liquidation. The liquidator shall ie. gather all company' assets, sell the assets, request for unpaid amount of shares from shareholders, settle the obligation to company's creditor, compensate the reserve and expenses to the director whose pay for the company in advance etc.
In case, the assets are not enough to settle the debt, the liquidator shall request the court to order the bankruptcy to the company.
Upon the leftover of the asset, it will be average returned to each shareholder as the capital and profit.
In case the liquidator cannot complete the liquidation, the liquidator has to submit the report to the officer of every 3 months. However, if the liquidation cannot be completed within 1 year, the liquidator has to hold the shareholders' meeting every year to report the movement of the going on liquidation.
Registering the Completion of Liquidation
A company is deemed to continue after its dissolution as far as it is necessary for the purpose of liquidation. The duties of the liquidators are to settle the affairs of the company, to pay its debts and to distribute its assets.
Once the liquidation is completed, the liquidator shall hold the shareholders' meeting in order to approve the result of the liquidation. Upon the resolution, the liquidator has to proceed with the second step of registering the completion of liquidation within 14 days. Upon registering the second step, the company is now dissolved.
Finally, the Civil and Commercial Code requires that the books, accounts, and documents of the company be deposited at the Department of Business Development within the aforementioned fourteen-day deadline and that such documents shall be open for public inspection for the period of ten years.
What Siam Legal can do for you?
We provide the following assistance:
- Review strategy to close business at minimal financial cost
- Prepare and draft meeting minutes for dissolving the business
- Negotiate lawful settlements with staff within the Labor Law
- Negotiate with landlord with payment plan for early exit from lease
- Draft agreements with suppliers if required
- Prepare Audit Report for Thai company closing with DBD
- Close VAT and tax accounts with Thai government agencies
- Provide legal help with insolvency/bankruptcy issues and court supervised restructuring due to insolvency
If you have questions or in need of assistance in properly closing down your company, please contact us.