Thailand’s legal protection system for foreign shareholders and directors

Corporate legal protection, defense and recovery in Thailand

Corporate legal protection, defense and recovery in Thailand

The underestimated strict requirements under Thailand’s corporate laws

Thailand’s regulatory framework for the formation and operation of a corporation is strict, full of formal requirements and not easy to handle in practice. This statement is not only applicable to the public company (PLC), but also for the small corporation, the Company, Limited (Co., Ltd.).

The land of smile has a certain tradition to neglect the legal requirements for corporate and business arrangements between shareholders, directors and the company. To follow the law is often erroneously regarded as too annoying, costly and time-consuming, especially when documents have to be prepared which are not initially required by the authorities for the registration.

This perspective is encouraged by misapprehended provisions of the law. Under Section 1195 CCC, certain errors and misconducts of a shareholders meeting do not result in the ineffectiveness of the shareholders’ resolutions, if certain conditions are met. As explained in the article “The irregular shareholders’ resolution of the Thai Co., Ltd.“, this clause of the law has a very limited area of applicability and should not at all be generalized.

Registration instead of accomplishment

It had become a bad industry practice to avoid the prudent accomplishment of formal requirements, as the factual holding of a shareholders meeting including invitation letters and publication in the newspaper. Also, share transfer instruments are not factually signed. Instead, only the registration of such ghost tasks is done.

In most cases, such registration is invalid, will not be healed by time and is open to attacks without time limitation. The assumption, that the consensus between shareholders and directors will be forever, is obviously an illusion. The durability of the wrong registration bases merely on the ill-advised misconception, that the disadvantaged participant has no tools and weapons to fight back.

Experience shows, that a disadvantaged shareholder or director can enforce his rights powerful by determined actions in the negotiations of his lawyers with the opponents, by applications at the Department of Business Development (DBD), and even in civil and criminal litigation.

For some time already, complains about irregularities are not at all ignored by the authorities. Instead, an investigation is started, the full scope of documentation has to be provided, and any suspicious findings are shared with the police.

The application and the registration of wrong statements are punished under Thailand’s Criminal Code as follows:

  • Section 137 Penal Code: Whoever, giving any false information to any official, and is likely to cause injury to any person or the public, shall be punished with imprisonment not exceeding six months (or fined, or both).
  • Section 267 Penal Code: Whoever causes officials in the execution of their duty to make any false entry in the public or official document for the aims to be used as evidence, shall be imprisoned up to three years (or fined, or both).

Convicted foreigners will typically lose their residence permit and might be blacklisted in Thailand. As a consequence, ignoring the law makes the foreigner highly vulnerable and gives his Thai or foreign opponent a toolbox of robust defense capabilities. 

Legal advice and support by the Bangkok investment law firm

PUGNATORIUS Ltd. is the Bangkok-based specialist provider of transactional legal and tax advice on foreign investments in Thailand’s manufacturing and service industries as well as property developments and acquisitions. The law firm

  • provides legal opinions on the legality of current and former corporate actions of Thai Co., Ltd., PLC, and partnerships.
  • develops the strategy to enforce and recover client’s rights as a foreign shareholder, director or another participant,
  • negotiates on behalf of the client with the other participants and authorities,
  • prepares and files applications at the DBD or other authorities,
  • represents clients in civil or criminal litigation – as the case may be together with partner law firms.

Corporate structuring and the set-up of protected company structures are one of the law firm’s areas of competence, long-standing experience, and unique market reputation. The scope of services cover these seven main activities:

  • Advice on corporate structuring
  • Company formation services (including BOI, Treaty of Amity, etc.)
  • Special business licensing
  • Company acquisitions and disinvestments
  • Corporate due diligence examination
  • Corporate restructuring
  • Legal opinions and professional statements

Details are described at “Legal advice and assistance on corporate and investment laws“.


Disclaimer: A little knowledge is a dangerous thing. This low-resolution high-level outlook constitutes neither legal advice, nor an attorney-client relationship, nor equips with the insights, tools or skills to do this without the law firm.

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