When a company needs to be shut down because of various reasons, like poor profitability, inability to engage in business operations, or various economic conditions, the company liquidation in Thailand has to be undertaken under certain rules and regulations according to the Civil and Commercial Code.
Individuals who wish or have to liquidate a company in Thailand can be assisted by our Thai company formation experts in order to commence the dissolution procedure.
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Understanding company dissolution and liquidation in Thailand
As detailed below by our team, company owners can choose to close a business entity by following two separate procedures. These are the dissolution and the liquidation, and they take place according to the Civil and Commercial Code.
Quick Facts | |
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Voluntary company dissolution in Thailand | A company may be dissolved for different reasons, such as a special resolution or when it reaches its term for functioning. |
Compulsory company dissolution in Thailand | When it is ordered by Court; can apply in bankruptcy cases. |
Company liquidation in Thailand | This is the process of settling the company’s debts before its dissolution. |
Dissolution by special resolution | Needs to be approved by the majority of the shareholders. |
Director duties during liquidation | Can act as liquidators in certain cases |
Appointed liquidator | Can be appointed separately, needs to be registered to perform this role. |
Liquidator’s main duties | Settle the debts and affairs of the company. |
Public company dissolution advertisement | Yes, required. Submitted by the liquidator. |
Conditions in which the company is declared bankrupt during liquidation | When its assets are insufficient to pay all of its debts. |
Liquidation report | Issued as soon as the process is complete, provides a transparent insight into how the property was disposed of. |
Liquidation conclusion | Once the final general meeting is convened and its conclusions are registered with the Department of Business Development. |
Company ceases to exist after liquidation | Yes |
Tax liability during liquidation | The company will need to satisfy any outstanding tax liabilities to the Revenue Department. |
Severance payments as a result of liquidation | According to the employees’ years of service within the company at the time of its liquidation. |
Liquidation process duration | Several months |
Working with an experienced team is advisable during these two stages, as it will streamline (and sometimes even expedite) the closure of the company.
Company liquidation in Thailand, and the dissolution of the legal entity that comes with is often decided by the company’s shareholders through a special meeting. However, in other cases it can be ordered by court when the company is no longer able to pay its debts.
You can read more about the essential steps for dissolution below, as well as the general process to liquidate a company in Thailand.
If you would like to receive personalized answers to your questions about the dissolution of a Thai company, please do not hesitate to reach out to our Thailand company formation agents who also have the knowledge and expertise to provide you with relevant answers in these cases.
Court company dissolution in Thailand
A limited company can be dissolved by court order under the following cases briefly listed below by our Thai company formation experts:
- The company does not commence its business activities after registration within a prescribed time limit;
- The business does not comply with the condition to have a minimum number of shareholders (their number is reduced below this minimum);
- The company can no longer carry out its business for profit, as ascertained by court and there is no prospect of improvement;
- For other reasons concluded by the Court.
The Court is also involved in a voluntary company liquidation in Thailand if, during the course of this process, the liquidator finds that the legal entity is not able to meet its liabilities even after all its assets were retrieved. In this case, the Court will declare the company bankrupt.
We invite you to watch a video about the process below:
Dissolution of a limited company in Thailand
If the business which is about to be closed down is a Thai limited company, the first step that needs to be taken is to audit the accounts of the company. This will offer a summation of all liabilities and assets of the business. In case there are any legal proceedings or ongoing tax issues, they need to be sorted out.
In order to begin the company liquidation process in Thailand, the shareholders must hold a meeting to vote the resolution for dissolving the business. This resolution has to be voted on by the majority of the shareholders. After the resolution has been voted, the shareholders choose one or several liquidators with no liability for representing the shareholders.
After making the dissolution decision, an application of closure has to be filed with the Business Development Department (BDD) from within the Ministry of Commerce. All the company creditors have to be notified and a final audit has to be forwarded to the BDD.
The liquidator must apply for a VAT dissolution, at which point the VAT filing forms for the previous couple of years must be submitted to the revenue department in Thailand. The VAT registration certificate has to be reverted by Thai company formation professionals.
General information about the company liquidation procedure presented by our experts in company registration in Thailand
To liquidate a company in Thailand, the managers have to publish in a newspaper the fact that the company shareholders will gather to set out the conditions under which the business will be closed. The announcement in the newspaper targets the creditors of the company, who will also be notified on the status of the company by mail.
The company liquidation procedure in Thailand takes place in two stages:
1. The first stage is represented by the dissolution of the company: this is a procedure through which the company is legally ended;
2. The second stage is the company liquidation itself: during this process, all the debts must be paid and the assets – distributed.
Enlisting the assistance and the services offered by a local team of accountants in Thailand, such as our own, is also useful during the company’s liquidation. A specialist will be able to provide guidance, review the financial situation of the company, prepare reports and statements as needed, and oversee the distribution of assets to creditors. Reach out to us if you are in need of these services.
Company closures in Thailand
The closure of an unprofitable business may be required from time to time. According to Reuters, several manufacturing companies and factories have closed down. The data shows that:
- more than 1,000 factories closed their doors in 2023;
- factory closures between July 2023 and June 2024 increased by approximately 40%;
- according to a different source, 12 of the closed factories were involved in plastic manufacturing.
Our team can help you with all aspects of doing business in Thailand, whether you wish to open a company in Thailand, or are considering ending the activities of an existing business.
If you need further advice on how to close a Thai company, we invite you to get in touch with our experts in company registration in Thailand for guidance.