The Civil and Commercial Code Amendment Act (No. 23) B.E. 2565 (2022) (the “Act”) was published in the Government Gazette on November 18 th , 2022. The Act will come into force ninety (90) days after its publication in the Government Gazette. This falls on February 16, 2023.
The act makes several changes, some of them quite significant, to the existing Civil and Commercial Code (“CCC”). The interesting changes include the following:
✓ The minimum number of promoters and shareholders (“SHs”) required for private limited companies (“companies”) has been reduced from three (3) to two (2).
✓ The CCC now allows directors to attend Board of Director (“BOD”) meetings remotely via video conferencing systems.
✓ The CCC now recognizes the concept of a “merger,” whereas, prior to the amendment, it only recognized the concept of an “amalgamation.” While an amalgamation of two or more companies results in a new company (A + B = C), with the amalgamating companies being dissolved, a merger results in one of the merging companies (either A or B) surviving the transaction. In this scenario, the surviving company will take over the absorbed company’s assets, rights, and liabilities.
Figure 1. Amalgamations vs mergers.
✓ Acquisitions by contract remain unaltered:
(a) Asset deals, whereby Company B sells or transfers parts or all its assets and liabilities to another Company A (and Co B may or may not dissolve);
(b) Share deals, whereby Company A acquires all or most of the shares of Company B, thereby acquiring control over Company B.
The main amendments to the CCC as summarized below.
Now, companies will have to specify, in the articles of associations (“AOA”), resolution procedures for deadlocks amongst directors or shareholders. Under the previous provision, there was an option to stipulate this in the AOA.
Previously, Section 1128 required that the company seal be set on share certificates, implying that companies were required to have a company seal to issue share certificates to shareholders (Section 1127).
“Section 1162/1: A board of directors meeting may be conducted by any means of technological communication, where the directors are not required to appear in person at a meeting, except when prohibited by the articles of association of the company.
A board of directors’ meeting held by means of technological communication under paragraph one shall be in accordance with the law* governing electronic meetings.
Now, the CCC explicitly allows directors to attend BOD meetings remotely via video conferencing systems* etc.
*See “Emergency Decree on Electronic Meetings B.E. 2563 (2020)”
Stricter dividend payment timeframe
Paragraph four (4) of Section 1201
Mergers now recognized
“Section 1238: Limited companies may be amalgamated by a special resolution. Two or more companies may be amalgamated under any one of the following descriptions:
(1) Amalgamation as a new company and the amalgamating companies shall lose their juristic person status.
(2) Amalgamation whereby one company still retains its juristic person status and other amalgamating companies lose their juristic person status.
Now, one company will be able to merge with (and absorb) another company (e.g., A + B → A). This means that A will be entitled to the assets, rights, and liabilities of B.
Protection of objecting SHs
“Section 1239/1: Upon there having been passed a special resolution for amalgamation of companies, but a shareholder attending the meeting raised an objection to the amalgamation, the company must arrange for the buying of shares of the said shareholder at an agreed price, or in the event an agreement thereto cannot be reached, the price fixed by an appraiser shall apply. If said shareholder refuses to sell shares within fourteen (14) days from the date of receiving the buying offer, the company may continue proceeding with the amalgamation, and it shall be regarded that said shareholder is a shareholder of the amalgamated company.
Objecting SHs can now sell their shares.
“Section 1240: Upon there having been passed a special resolution for amalgamation, the company must notify the creditors of said resolution in writing within fourteen (14) days from the date of the resolution, as per the names appearing in the list of the company as of the date of the meeting of shareholders for passing the amalgamation resolution, stating therein the period of sending an objection thereto within one (1) month from the date of receipt of said notice of the resolution, and the company shall publish said resolution on a daily wide-circulation newspaper within the period of fourteen (14) days as well.
“Section 1240/1: Upon the proceedings under Sections 1239 and 1240 having been carried out, the directors of the amalgamating companies shall summon meetings of shareholders of their companies to consider the following matters jointly:
(1) The name of the amalgamated company, which may be a new name or the old name of any of the amalgamating companies.
(2) The objectives of the amalgamated company.
(3) The share capital of the amalgamated company, which share capital must not be less than the share capital of the old companies duly amalgamated.
(4) The allocation of shares of the amalgamated company to the shareholders; however, the provisions of Section 1222 shall not apply thereto.
(5) The memorandum of association of the amalgamated company.
(6) The articles of association of the amalgamated company.
(7) The election of directors of the amalgamated company.
(8) The appointment of the auditor of the amalgamated company.
(9) Other matters necessary for the amalgamation, if any.
Joint SH meeting:
“Section 1240/2: The meeting for joint consideration of matters under Section 1240/1 shall be held at a locality where the principal business office of any amalgamating company is located or at a nearby province of the location of the principal business office of any amalgamating company, whereby:
(1) there must be shareholders holding shares altogether not less than one-half of the total number of shares of each amalgamating company to form the quorum;
(2) the shareholders attending the meeting shall elect one among them to chair the meeting;
The voting method in item (2) is interesting in that the vote count will be equal amongst attending SHs even if they hold different numbers of shares.
“Section 1242: Upon the registrar having accepted the registration of amalgamation, they shall make notes of the following in the register:
(1) In the case of amalgamation as a new company, it shall be noted that the old companies duly amalgamated shall lose their juristic person status.
There is no automatic transfer of licenses or permits to C
(2) Under the new option:
· This table does not present all the changes to the CCC.
[1] The entire section means: CCC, Title 22, Chapter 4, Part IX, Sections 1238, 1239, 1240, 1241, 1242, and 1243.
