1. Business Registration Edited copy.pdf

Business Registration LAW1201 ASSUMPTION UNIVERSITY, THAILAND Type of Business Organization Businesses may be operated in various types from individual as the owner or by investing with other individuals as the group. In order to decide to choose any type of businesses, the entrepreneurs m...

Business Registration LAW1201 ASSUMPTION UNIVERSITY, THAILAND Type of Business Organization Businesses may be operated in various types from individual as the owner or by investing with other individuals as the group. In order to decide to choose any type of businesses, the entrepreneurs must realize various components of business operations such as nature of businesses, capital, business capability, etc, in order for the success of businesses and maximization of profit and benefits. Commercial Registration Person who Have the Duties for Commercial Registration Person who have Commercial Registration Businesses that must conduct Commercial Registration The Minister of Commerce issues the notification that person who conducts the businesses must conduct commercial registration as follows : (1) Persons who conduct the rice mill businesses and saw factories using the machine Commercial Registration (4) Persons who conduct any one kind or several kinds of handicraft or industrial businesses and can sell the products for more than 20 Baht per day or such items have total value of 500 Baht or above in any days (5) Persons who conduct marine, transportation businesses via steam launch or motor launch , transportation businesses via rail or tram, transportation via bus, sale by auction, land trading, lending, foreign exchange, note trading, banking, gambling, pawn businesses, and hotel businesses Commercial Registration (2) Persons who conduct sales businesses of any one kind or several kinds of items with the income of more than 20 Baht per day or such items have total value of 500 Baht or above (3) Agent who conducts the businesses of any one kind or several kinds of products and such products can be sold for more than 20 Baht per day Commercial Registration (6) Sale, rent, manufacturing of CASSETTE TAPES, CD, VDO, DVD or digital VDO for only the entertainment (7) Sale of jewelry or accessories decorated with jewelry (8) Trading the products or services by electronics via internet system, internet service, renting the areas for server, being the market for sale of products or services by electronics via internet system Commercial Registration (9) Internet Cafe service (10) Karaoke service and service regarding listening to the song (11) Game service (12) Song booth service (13) Factory for processing, craft, handicraft, retail and wholesale of ivory and products from ivory Businesses under the Exemption of Commercial Registration Some commercial businesses are exempted from commercial registration are (1) Stall businesses (2) Businesses for religion or charities. (3) Juristic Person’s businesses established by Act or Royal Decree Businesses under the Exemption of Commercial Registration (4) Businesses of any Ministries / Sub-Ministries / Departments (5) Businesses of any foundation / association / cooperative (6) Commercial businesses that the Minister notifies in the Royal Gazette Where to Register 1. Bangkok At Office of Finance, Bangkok Metropolitan Administration or Bangkok District Office according to the place of business conducted. (For more information please contact Bangkok Metropolitan Administration 02 224 1916, 02 225 1945 or Bangkok District Office in your area) Where to Register 2. Sub-district (Tambon) , Pattaya City At Municipality, Sub-district Administration Office, or Office of Commercial Registration Office (Pattaya City) according to the place of business conducted. When to Register - The registration of new commercial businesses must be within 30 days from the starting date of business - The change of registered transactions according to (1) must be within 30 days from the changing date - The liquidation of businesses must be within 30 days from the liquidation date - The loss of commercial registration certificate must submit the request for replacement within 30 days from the date of loss Duties of Persons who Conduct the Businesses (1) Must submit the request for registration within the specified period, depending on the case (2) Must demonstrate the commercial registration certificate or the replacement at the office in any public place (3) Must provide the sign of the business’s name in front of the head office and branches in public place within 30 days from the commercial registration date / The sign must be in Thai letters and can be easy to read and may have foreign letters in the sign, and must be in compliance with the registered name. If it is the branch, must have the word "branch” in the name. (4) Must offer the fact regarding the registration transaction according to the registrar’s order (5) Must facilitate the registrar and officers for auditing the office of the person who conducts the businesses. Penalties (1) Conducting the business without registering, demonstrating false transactions, not giving statement, and not accepting the officers to audit the office shall the fine penalty for no more than 2,000 Baht. In case of not registering, this is the continuous offense and must have the fine for no more than 100 Baht a day until such businesses perform the action according to the Act. (2) If the commercial registration certificate is lost and do not submit the request for the replacement or do not demonstrate the commercial registration certificate in any public place, do not prepare the sign shall have the fine penalty for no more than 200 Baht. If it is the continuous offense, must have the fine for no more than 20 Baht a day until such businesses perform the accurate action. Penalties (3) The entrepreneurs who perform deceitful actions towards the people, mix the product with dishonest intention, counterfeit the products, or perform other serious dishonest actions, the commercial registration certificate shall be repealed. When the commercial registration certificate is repealed, they cannot conduct the businesses further, except the Minister of Commerce orders to register the commercial businesses again. (4) The entrepreneurs whose commercial registration certificate is repealed and who still conduct the businesses further shall have the fine penalty for no more than 10,000 Baht or obtain the imprisonment of no more than 1 year or both. Commercial Registration Fee The request for performing according to the Commercial Registration Act shall pay the fee according to the type as follows : (1) New commercial registration of 50 Baht (2) Registration for the change of registered transaction for 20 Baht per time (3) Registration of the business liquidation of 20 Baht (4) Request for issuance of replacing license of 30 Baht per copy (5) Request for verifying the documents of person who conducts commercial businesses for 20 Baht per time (6) Request for the officer to copy and certify the copy of document for 30 Baht per copy Partnership Registration Partnership Registration According to the Civil and Commercial Code Type of Partnership According to the Civil and Commercial Code, the partnership can be divided into 2 types as follows : (1) Ordinary Partnership (register and non-register) (2) Limited Partnership Ordinary Partnership Is that kind of partnership in which all the partners are jointly and unlimitedly liable for all the obligations of the partnership The ordinary partnership shall register as the juristic person or not. Therefore, the ordinary partnership can be divided into 2 types as follows : (1). Non-registered Ordinary Partnership with no legal status as the juristic person (2). Registered Ordinary Partnership with legal status as the juristic person Limited Partnership Is that kind of partnership in which there are : 1. One or more partners whose liability is limited to such amount as they may respectively undertake to contribute to the partnership, and 2. One or more partners who are jointly and unlimitedly liable for all the obligations of the partnership. Establishment of a Partnership When two persons or above agree to invest in the ordinary partnership in one of the abovementioned type, the managing partner who is appointed from every partner must be responsible for requesting for the registration of such partnership to the officer at the commercial registration office that the head office of the partnership is located on. A limited partnership must be managed only by the partners with unlimited liability. (general partner) Registration of the Change. Modification, or Liquidation of Partnership In case that partners of such partnership agree to change or modify any registered transactions, or the partners aim to liquidate the businesses, they shall request the registration of the change or modification of such transactions or registration of business liquidation at the commercial registration office that the head office of the partnership is located on. The registration for the establishment, change, modification, or liquidation of businesses shall perform according to the method and criteria specified by the law and government  Registered Transaction that the Partnership must register to Modify or Change (1) Name of partnership (2) Location of head office and / or branches (3) Objective of Partnership (4) Partners (5) Managing Partner  Registered Transaction that the Partnership must register to Modify or Change (6) Limitation of Managing Partner’s Power (7) Partnership’s Seal (8) Other transactions that should be publicized (9) Merging the partnership (10) Transforming the partnership to company limited Information Used for the Registration of Partnership’s Establishment Document Article of Partnership (1) Name of partnership (2) Objective of Partnership (3) Location of head office and / or branches (4) Name, Address, Age, Nationality, Occupation and items that are invested (5) Name of Managing Partner (must be partner without limit) (6) Limitation of Managing Partner’s Power (If so) (7) Partnership’s Seal Place for Registration If the head office that is in Bangkok, it must submit the registration at the Central Business Registration Division, Department of Business Development, 9th Floor Nonthaburi 1 Road, Nonthaburi Province or at any of 7 Business Development Offices. For other provinces, shall submit the registration at the provincial business development office and can submit the request via internet at www.dbd.go.th. Registration Procedure 1. Submit in person can perform according to the following : (1) In case of registering for the establishment or changing the partnership’s name, the partners or managing partner shall request for verifying and reserving the partnership’s name to confide that such name is not duplicated or similar to other names pervious registered. Upon reserving the name, shall request for the registration within 30 days by reserving the name in person or via internet at www.dbd.go.th. (2) Purchase the request and form from the Department of Business Development or any of 7 business development office or provincial business development office or download from internet from www.dbd.go.th. Registration Procedure (3) Prepare the request for registration and other attachments to the registrar for consideration. (4) Pay the fee according to the officer’s order (5) If aiming to issue the certificate of registered transactions, shall submit the request and pay the fee to the officers. (6) Receive the certificate of registration. 2. Steps for registering partnership and company via internet ***** Criteria of Signing the Signature on the Request for Registration (1) The signature in the request and the attachments, the person shall sign by him / herself. (2) The signature in the request, the person shall sign in front of the registrar and demonstrate the ID card to the registrar for verification. In case that the person cannot sign the name in front of the registrar, the person who request shall sign the name in front of the following person : In case of signing in the country (1) Administration Officer or Senior Police in the area of the person who requests. (2) Member of Thai BAR or (3) Other persons as notified by the central registrar are - Certified Public Account - Committee member or officer of the Thai chamber of commerce or provincial chamber of commerce who can certify the signature of persons who request for the registration of partnership / company with the head office located in the province that the Chamber is located according to the notification of the Central Partnership Registration Office. In case of signing in foreign countries (1) Authorized officer of the Thai embassy or consulate, or head of the office under the Minister of Commerce responsible for the operations in any country or other officers authorized to perform on behalf of such abovementioned person (2) Person who can completely certify according to the law of that country and (3) Reliable persons who can certify in front of the registrar that the signature is such person’s signature. Duties of Partnership Limited Partnership and Ordinary registered partnership according to the Civil and Commercial Code shall be responsible for preparing yearly financial statement and submitting to the business information service office, department of business development or any provincial business development office within 5 months from the closing date although such businesses have not yet been started or have not ceased temporarily; otherwise, they shall have the fine penalty of no more than 50,000 Baht. In case that the limited partnership or the ordinary registered partnership does not submit the annual financial statement as specified by the law, the managing partner or authorized person on behalf of the partnership will be liable to a fine like the partnership. Businesses that the Law specifies the period of submitting the registration (1) Request for registering the change of managing partner shall be submitted within 14 days from the changing date. (2) Request for transforming to the company limited shall be submitted within 14 days from the date of the previous managing partner submit the business, property, document, and other evidences to the company’s board of directors. (3) Request for registering the partnership’s liquidation shall be submitted within 14 days from the liquidation date (4) Request for registering the change of liquidators must be submitted with 14 days from the changing date Businesses that the Law specifies the period of submitting the registration (5) Request for registering the change or modification of liquidators’ authority and power shall be submitted within 14 days from the date the meeting has the resolution or the date that the court has the decision. (6) Request for registering the completeness of partnership’s liquidation shall be submitted within 14 days from the date the meeting has the resolution (7) The submission of the report of partnership’s liquidation shall be submitted every 3 months and the liquidator shall submit the report within 14 days from the date that the 3-month period expires. Company Limited Is that kind of company which is formed with a capital divided into equal shares, the liability of the shareholders being limited to the amount unpaid on the shares respectively held by them. Establishment of Company Limited To establish the company limited, shall process according to the following : ***1. Must have at least 2** persons signing together in order to prepare Memorandum(memorandum of association) and then register. Upon receiving the amount of shares, the director must register as the company within 3* years from the date of company’s meeting to establish the company. The promoters must have the following qualifications : (1) Be ordinary person, not juristic person (2) Be 12 years old or more (3) Must reserve to buy at least 1 share The Memorandum of Association Information used to register the Memorandum (1) Company’s name (the same as the name reserved) (2) Location of head office (located at which province) (3) Objective of the company (4) Registered capital must be divided into each share with the same value (share’s value must be at least 5 Baht) (5) Name, address, age, occupation and number of shares that persons who start up the company reserve to buy the shares) (6) Name, address, age of 2 witnesses Memorandum of Association ***2. When the Memorandum has been registered, shall perform the following : (1). Every promoter manage to reserve and buy all the shares (2). When all the shares are reserved, the promoters must with out delay hold a general meeting of subscribers which shall be called the statutory meeting. Statutory Meeting (First meeting) ***3. Meeting agenda. (1) The adoption of the regulations of the company, if any. (2) The ratification of any contracts entered into and any expenses incurred by the promoters in promoting the company. (3) The fixing of the amount, if any, to be paid to the promoters. (4) The fixing of the number of preference shares, if any, to be issued, and the nature and extent of the preferential rights accruing to them. Statutory Meeting (First meeting) (5) The fixing of the number of ordinary shares or preference shares to be allotted as fully or partly paid-up otherwise than in money, if any, and the amount up to which they shall be considered as paid- up. The description of the services or property in return for which such ordinary shares or preference shares shall be allotted as paid-up shall be expressly laid down before the meeting (6) The appointment of the first directors and auditors** and the fixing of their respective powers. No resolutions of the statutory meeting are valid unless passed by a majority including at least one half of the total number of subscribers entitled to vote, and representing at least one half of the total number of shares to such subscribers. Establishment of Company Limited (continue) 4. The promoters shall hand over the business to the directors. 5. The directors shall thereupon (immediately) cause the promoters and subscribers to pay one forth with upon each share payable in money such amount, not less than twenty-five percent of the share's value. 6. When the collection of share’s price is complete, the authorized director shall prepare the request for the registration of company’s establishment and submit to the registrar. Regarding the submission for registration, the authorized director shall sign the name on the request and must submit to register within 3 years from the date of company statutory meeting. If not registered within the specified period, the company statutory meeting shall be void and if would like to register to establish the company, shall arrange the meeting for persons who reserve to buy the shares again. Regarding the company establishment, if can perform every step as follows within the same day Regarding the company establishment, if can perform every step as follows within the same day that the promoters prepare the Memorandum, and the director can request to register the Memorandum and register the company within the same day. (1) Shall have the persons reserve to buy all the shares that the company can be registered. (2) Arrange the meeting to establish the company to consider various affairs according to the Civil and Commercial Code, section 1108, and all the persons who start up the company and all the persons who reserve to buy the shares shall attend the meeting, and all of them shall agree in the affairs in the meeting. (3) Persons who start up the company assign all the affairs to the director. (4) The director call the person who reserves to buy the shares to pay the shares according to the Civil and Commercial Code, section 1110, section 2 and such share’s price has already been paid. Registration Process The Company Limited's registration shall be divided into 2 steps as follows : 1. Registering the Memorandum. 2. Registering the company Limited's establishment The registration of the modification / change or liquidation of the company limited In case that the company limited agrees to modify or change any registered transactions or the shareholders would like to liquidate the business, shall request for the registration of the modification / change of such transactions or registration of the company’s liquidation at the company and partnership registration office that the head office of the company is located on. The registration to establish and modify any transactions shall be performed according to the method and criteria specified by the law and the government’s rules. Registered Transaction that the Company has to register to Modify or Change 1. The modification or change of 6. Capital decrease memorandum before the company’s 7. Regulations’ modification establishment 8. Director 2. Extraordinary resolution to 9. Number or name of authorized directors (1) Increase capital 10. Location of head office and / or branches (2) Decrease capital 11. Company’s seal (3) Merge the company 12. Other transactions that should be 3. Company’s merger publicized 4. The modification or change of memorandum of association after the company’s establishment 5. Capital increase Place for Registration (the same as partnership) Registration Procedure 1.Submit in person can perform according to the following : (1) In case of registering for the establishment or changing the company’s name, the persons who start up the company or company’s director shall request for verifying and reserving the company’s name to confide that such name is not duplicated or similar to other names pervious registered. Upon reserving the name, shall request for the registration of memorandum of association within 30 days by reserving the name in person or via internet at www.dbd.go.th. (2) Purchase the request and form from the Department of Business Development or any of 7 business development office or provincial business development office or download from internet from www.dbd.go.th. Or www.moc.go.th (3) Prepare the request for registration and other attachments to the registrar for consideration. (4) Pay the fee according to the officer’s order Steps for registering partnership and company via internet (1) The signature in the request and the attachments, the person shall sign by him / herself. (2) The signature in the request, the person shall sign in front of the registrar and demonstrate the ID card to the registrar for verification. In case that the person cannot sign the name in front of the registrar, the person who request shall sign the name in front of the following person 1. In case of signing in the country (1) Administration Officer or Senior Police in the area of the person who requests. (2) Member of Thai BAR or (3) Other persons as notified by the central registrar are - Certified Public Account ***** - Committee member or officer of the Thai chamber of commerce or provincial chamber of commerce who can certify the signature of persons who request for the registration of partnership / company with the head office located in the province that the Chamber is located according to the notification of the Central Partnership Registration Office. 2. In case of signing in foreign countries (1) Authorized officer of the Thai embassy or consulate, or head of the office under the Minister of Commerce responsible for the operations in any country or other officers authorized to perform on behalf of such abovementioned person (2) Person who can completely certify according to the law of that country and (3) 2 Reliable persons who can certify in front of the registrar that the signature is such person’s signature. (Notary public Lawyer*) Businesses that the Law specifies the period of submitting the registration 1) Request for registering the company’s establishment shall be submitted within 3 months from the date of company’s establishment. 2) Request for registering the appointment of new directors or the resignation of directors shall be submitted within 14 days from the date of appointment or date of resignation 3) Request for registering the extraordinary resolution of capital increase or capital decrease of the company limited or the company’s merger shall be submitted within 14 days from the extraordinary resolution date 4) Request for registering the new regulation or modification of the company limited’s regulation must be submitted with 14 days from the extraordinary resolution date 5) Request for registering the company’s merger shall be submitted within 14 days from the date of merger Businesses that the Law specifies the period of submitting the registration 6) Request for registering the company’s liquidation shall be submitted within 14 days from the liquidation date 7) Request for registering the change of liquidator shall be submitted within 14 days from the date of change 8) Request for registering the modification of liquidator’s authority shall be submitted within 14 days from the date that the meeting has the resolution or the court has the decision 9) Request for registering the completeness of the company’s liquidation shall be submitted within 14 days from the date that the meeting has the resolution 10) The submission of the report of partnership’s liquidation shall be submitted every 3 months and the liquidator shall submit the report within 14 days from the date that the 3-month period expires. Rights of Shareholder *****As investors in a business, company shareholders must be aware of their rights in order to protect that investment. Due to the limited rights of shareholders under Thai law, it is advised that investors consult with competent legal counsel in order to understand those rights. Under Thai law, the shareholders of a limited company are its legal owners and are entitled to certain rights according to the Civil and Commercial Code. Nevertheless, due to the nature of a limited company, the ownership rights of shareholders are not absolute and, for Rights of Shareholder example, are not the same as those of the partners of a registered ordinary partnership or a limited partnership. The most important rights of the shareholders are as follows: the right to receive the assets of a company upon liquidation in proportion to their shares subject to the superior right of any creditors of the company to be paid first, the right to vote at general meetings and extraordinary meetings in order to pass resolutions on such matters as appointment and dismissal of company directors and adoption of the annual company balance sheet. ****Furthermore, shareholders are allowed to file suit against the company directors for any damages that they may cause to the company. However, one important issue is whether the shareholders have the right to inspect company books and accounts upon demand or whether they have the right to inspect the business activity of the company. Rights of Shareholder Sections 1206 and 1207 (Thai civil and commercial code) relate to the requirement of the directors to keep accounts and books of the company respectively. The second paragraph of Section 1207 states that “Any shareholder may at any time during business hours demand inspection of the above documents.” A strict reading of the text would mean that the above clause applies only to Section 1207 (referring to company books) since it is located in that section and not Section 1206 (referring to company accounts). Nevertheless, arguments have been made that shareholders have the right to inspect company accounts, including the business activity of the company, upon demand. However, in Thai Supreme Court Decision No. 2098/2525, the Court settled the matter and held that the shareholders’ right of inspection is limited. Specifically, the Court held as follows: “An order of the Court granting shareholders the right to inspect various company documents according to Section 1207 means only the inspection of records of company meetings and resolutions. It does not mean that the shareholders have the right to inspect company accounts or have the right to inspect the business activity of the company in any way whatsoever.”