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Chaninat & Leeds
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Chaninat & Leeds Co., Ltd.
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Business Organizations

The principal forms of business organization under Thai law are sole proprietorships, partnerships, limited companies and public limited companies. In addition, branches of foreign corporations are recognized, and may be required to be registered to do business in many economic sectors. "Representative" or "liaison" offices of foreign companies are not recognized as distinct legal entities, and may be treated as branch offices for tax and other purposes.

1. Limited Companies

Limited companies provide for, among other things, a flexible joint venture structure, and are generally, the form of business organization preferred by many foreigners doing business in Thailand.

Formation. Seven people must be present to sign and witness a duplicate copy of a memorandum of association to form a limited company, and the following details must be provided:

Personal information such as names, addresses, and occupations of the promoters and the number of shares which they control. It should be noted that at least one share must be promoted by each promoter.

acknowledgement that the shareholders' liability is subject to limitations.

the company's objectives.

the number of shares and average value thereof . This is to represent the capital structure of the company.

the name (the word "limited" must be included in the title) and registered location of the company. The company name must be translated into the Thai language, but transliterations into other characters may be registered also.

Upon approval of the memorandum, rules and regulations within the company must be discussed and implemented at the first shareholder meeting. This is in regard to the election of directors and auditors, and other duties regulated by statute must be done at this meeting as well.

A vital step in forming a limited company is adopting the articles of association. This is done to outline the way in which a company will be managed and organized.  

Capital contributions must not fall below 25 % of the average value of the shares, and must be collected by the directors. Shareholders are liable for the unpaid capital amount of their shares.

Once this has been done, an application for registration of the company must be submitted. Beyond containing all statutory requirements, the application must be submitted along with a statement regarding the director's powers, and which director's signature is legally binding in respect to the company. This statement is made public knowledge by appearing on the company's certificate.

A company's registration must be completed within three months of the statutory meeting. There is however, no time limit in regards to when the meeting will take place.

Structure of Limited Companies:

Limited companies are required to have a minimum of seven shareholders.

When a company has been officially formed the directors are responsible for management of the company. Directors may be re-elected, but a minimum of one-third are required to retire annually. However, this requirement of mandatory retirement may be overruled by a shareholder resolution.

Unless a poll is demanded, every person holding shares or proxy, and is present at a shareholder meeting has an equal vote. This is the case regardless of the amount of shares owned or represented by any given shareholder. In order for a poll to take place it must be demanded by at least two voting shareholders. How the articles of association have been written will determine the way in which votes are counted. In some cases the articles may insist that only a block of shares with a minimum amount be required for a vote. Cases such as this may require that those holding shares under the amount specified be required to pool together with other shareholders in order to vote.

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