Things to know when being a limited company for business owners.

What is a limited company?

A limited company is a group of 3 or more people working together with the purpose of seeking profit from the operation to share. The limited company will divide its capital into shares and the value of each share is equal. Investors in the company are called “shareholders”, and the shareholders are liable for not more than the amount that they have not fully paid for the value of the shares they hold. When a limited company is registered, it will be a legal entity separate from its shareholders.

How to name the limited company?

To name a company to be used in a seal, nameplate, book, letter, or other documents relating to the business of the company, the word “company”, and “limited” must be followed by the name of company. In the case of wishing to use foreign characters, must use a word that means Company Limited in the name, for example, if the name is in English letters, the word “Company Limited” or “Co., Ltd.” or “Limited” or “Ltd.” must be used in the name, etc.

Things to know when it is a limited company for business owners.

The fact that the company is a juristic person under the law gives the right to responsibilities to comply with the law, including the Civil and Commercial Code, The Act on Offenses relating to registered partnerships, limited partnerships, limited companies, Associations and Foundations B.E. 2499, Accounting Act B.E. 2543, including complying with financial reporting standards as follows:

General duties

  1. The company must have an office location which is the domicile of the company that can be contacted. If the office is relocated from the registered address, must submit an application for registration of the office location to the Company Partnership Registrar.
  2. The company need to prepare a shareholder register from the date of registration as a limited company to record information of shareholders, number of shares, and entry-exit from being a shareholder, including details about the transfer of shares and changes in various transactions and must be kept at the company’s office. The shareholder register book must be open to shareholders during business hours for at least 2 hours per day without collecting a fee.

In addition, share certificates must be issued to all shareholders as evidence to show ownership of shares and fees may be collected, but not exceeding 10 baht. The details in the share certificate must contain the name of the company, number of shares, value of the share. After paying for shares, the name of the shareholder and the share certificate need to be issued to the holder and have at least 1 director affix their signatures.

  1. After that, within 6 months from the date of registration as a company, the first general meeting of shareholders must be held. And after that, in every 12-month period, at least one such meeting must be held. The other meeting is called the Extraordinary General Meeting of Shareholders.

For the method of holding the shareholders’ meeting of the company, shareholders must be held by placing an advertisement in a local newspaper and sending a notice of the meeting via postal reply to all shareholders at least 7 days prior to the meeting date, except for the meeting to consider matters that require a special resolution to be done as follows mentioned above at least 14 days before the meeting date, with the contents in the notice of the meeting must specify the place, date, time and matters to be considered with the text to be presented for a special resolution. The matters required by law to require a special resolution are capital increase, capital reduction, amendment to the articles of association, merger, amendment to the memorandum of association, company dissolution and transformation to a public limited company, before making appointment for a shareholders meeting, the board of directors need to determine the date, time, place and matters to be proposed to the shareholders’ meeting for consideration first. Anytime there is a meeting, the minutes of the meeting must be properly recorded in the notebook. The minutes of the meeting must be kept in a notebook at the company’s office.

  1. The company need to submit a copy of the list of all shareholders and non-shareholders on the day of the general meeting must be sent to the Company Partnership Registrar at least once a year but not later than 14 days from the date of the Annual General Meeting of Shareholders.
  2. The company must call an extraordinary general meeting of shareholders immediately when the company loses half of the registered capital to inform the shareholders or within 30 days when there are shareholders holding shares in aggregate of not less than one-fifth requested to call a meeting.
  3. The company need one or more auditors to audit the financial statements. Then, the audited financial statements must be presented to the shareholders’ meeting for approval within four months from the closing date. A copy of the financial statements must be sent to the shareholders at least 3 days in advance of the meeting date and a copy of the financial statements must be disclosed in the company’s office.

Bookkeeping

Limited companies are responsible for accounting, the company’s directors shall act on their behalf. The duties and responsibilities of those responsible for accounting according to the Accounting Act B.E. 2543 are as follows:

  1. Daily Accounting Ledgers, inventory accounts and other types of accounts as necessary for bookkeeping starting from the date of registration as a company.
  2. Provide an accountant who is fully qualified by law to be responsible for the accounting of the company. This may be an employee of the company, independent contractor or an office for hiring an accountant who graduated with at least a bachelor’s degree in accounting or its equivalent as a bookkeeper, except for limited companies with registered capital of no more than 5 million baht, total assets of no more than 30 million baht and total income of no more than 30 million baht, those who have completed at least a diploma or a high vocational certificate (high vocational certificate) in accounting or equivalent to be an accountant. The company must supervise the bookkeeper to make the accounting accurate and in accordance with the financial reporting standards.
  3. Documents required for accounting entries, such as records, books or any documents used as evidence for accounting entries, must be delivered to the bookkeeper completely and accurately in order for the accounts prepared to show the results of operations, financial position or changes in the actual financial position according to financial reporting standards.
  4. The first account must be closed within 12 months from the start of the account and close the account every 12 months from the previous account closing date. Unless permission from the Chief Accounting Inspector or the Accounting Inspector has been granted to change the accounting year, the account may be closed before the 12 month anniversary.
  5. Prepare financial statements, consists of a statement of financial position, a statement of income, a statement of changes in equity, notes to financial statements and financial statements compared to the previous year. The financial statements must be audited and commented by a certified auditor.
  6. Submit the financial statements approved by the general meeting via electronic system (DBD e-Filing) to the Department of Business Development within one month from the date the financial statements are approved by the general meeting.
  7. Keep accounts and documents required for accounting entries at the workplace or the place used for production or storage of goods on a regular basis or a place used as a regular workplace for at least 5 years from the closing date. Unless permitted by the chief accounting inspector or the accounting inspector to keep it at another place but if the account or document supporting the account is lost or damaged, the company must notify the Chief Accounting Inspector or the Accounting Inspector within 15 days from the date that it is known or should be known. By all means, submit the application through the work authorization system (DBD e-Permit).

Change in registration

When a limited company would like to change the registration of the company, directors authorized to act on behalf of the company to apply for registration of amendments that may require a resolution of the Board of Directors’ meeting or the shareholders’ meeting. If it is an important item, it must be changed by shareholders to have a special resolution, such as capital increase, capital reduction, amendment to the Articles of Association, amendment to the Memorandum of Association, merger, dissolution of the company and transformation into a public limited company. Some changes in the law stipulate the deadline for filing a registration which must be done within the specified time, including:

  1. Change in company capital (Capital increase/decrease), registration must be filed a special resolution to increase capital or to reduce capital within 14 days from the date of resolution.
  2. Changes in the Articles of Association of the Company, registration must be filed within 14 days from the date of voting.
  3. Change of director in/out, registration must be filed within 14 days from the date of change.
  4. The amalgamation must register a special resolution for the amalgamation within 14 days from the date of resolution and submit the registration of the amalgamation within 14 days from the date of the amalgamation.

Dissolution and Liquidation

When the company would like to dissolve the company, the company need to hold a shareholders’ meeting to have a special resolution to dissolve the company and set up a liquidator in order to settle the assets and liabilities of the company, then the liquidator has the following duties:

  1. Make an application to register the company’s dissolution within 14 days from the date of dissolution and had to advertise in the newspaper that the company broke down along with sending registered mail to all creditors.
  2. Prepare financial statements to submit to the auditor to verify and certify their accuracy. Then call a shareholders’ meeting to certify the liquidator as the next liquidator or appoint a new liquidator and approve the financial statements.
  3. If there is a change of the liquidator or the amendment of the liquidator’s power or modify the office address of the liquidator, must submit an application for registration of change as well. Registration of change of liquidator or amendment of liquidator’s power must be registered within 14 days from the date of change or resolution date.
  4. Prepare a liquidation report submitted to the registrar every 3 months to show the progress of the account being settled and this report must be disclosed to shareholders and creditors to be able to inspect without charging a fee but if the liquidation takes longer than one year, the liquidator must call a meeting shareholders at the end of every year from the date of the liquidation and report to the meeting how it was handled along with informing the progress of the account in detail.
  5. When the liquidator has completed the liquidation of the company must make a report summarizing the liquidation proceedings from the beginning. Then call a general meeting to present a report and clarify the business to the meeting. When the meeting has approved the report, make a request for registration to complete the liquidation within 14 days from the date of the meeting approving the report. When registration is completed, and is considered that the liquidation has ended, and that company would cease to exist juristic person.

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