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Thai Company Law FAQs (EP.2): Calling a Board of Directors Meeting and Determining Its Venue

11 March 2025  ·  2 min read 

1. Can a director summon a board of directors meeting at any time?

Yes. Unless the company’s articles of association state otherwise, a director may summon a board of directors meeting at any time. The Civil and Commercial Code (CCC) does not prescribe a specific process or method for doing so.

2. Must the board meeting be held at the company’s office?

No. The CCC does not require meetings to be held at the company’s office unless stipulated in the articles of association. Therefore, the meeting location is at the director’s discretion, provided it is a place where, given its condition and location, the invitees can attend the meeting.

3. Can board meetings be conducted electronically?

Yes. In 2022, the CCC was amended to allow board meetings to be conducted electronically. Directors are no longer required to attend in person unless the company’s articles of association prohibit virtual meetings. Directors participating electronically are considered present, counted toward the quorum, and entitled to vote.

4. Are there specific legal requirements for electronic board meetings?

Yes. Virtual board meetings must comply with the Emergency Decree on Electronic Meetings B.E. 2563 (2020), which imposes the following key requirements:

• Participants must verify their identities before joining the meeting.

• The system must allow both open and secret voting.

• Minutes of the meeting must be documented.

• Audio or audiovisual recordings of all participants must be maintained throughout the meeting, except for confidential meetings.

• Electronic traffic data of all participants must be recorded as evidence.

By understanding these rules, directors can effectively convene and conduct board meetings while ensuring compliance with Thai company law. Whether held in person or electronically, proper procedures help maintain transparency, legality, and good corporate governance.

If you have any queries on this topic, please feel free to contact us.

Prescription Periods in Thailand: What Every Creditor and Debtor Should Know

18 December 2024  ·  2 min read 

What is prescription, and why is it important? Under Thailand’s Civil and Commercial Code, prescription is the time period “fixed by law” during which a creditor can enforce their claim. This means it cannot be extended or shortened by agreement. Once the prescription period expires, the debtor has the right to “refuse” to perform under the claim.

On the other hand, the debtor can choose to waive this right by voluntarily fulfilling their obligation after the prescription has lapsed. If they do so, the debtor cannot demand the return of what has been performed. Notably, the Court can dismiss a claim based on prescription only if the debtor raises it as a defense.

The period of prescription varies depending on the type of claim. The standard prescription period, which applies when no specific period is provided by law, is 10 years. This also applies to claims by the government for taxes, claims established by a final judgment, and claims arising from a contract of compromise.

A 5-year prescription period applies to specific types of claims, including arrears of interest, rent or hire of property (except for movable property), as well as arrears of public official’s salaries, annuities, pensions, and allowances.

A 2-year prescription period applies to claims such as:

• Merchants’ claims for the delivery of goods or performance of work.

• Carriers’ claims for transporting passengers or goods, and messengers’ claims for fare and freight.

• Employees’ claims (including permanent, temporary, or day laborers and apprentices) for wages, other remuneration, or disbursements.

• Professionals’ claims (e.g., doctors, dentists, nurses, lawyers, engineers, architects, auditors, or similar independent professionals) for services rendered, including disbursements.

• Claims of those who provide services for remuneration, including disbursements, such as commercial banks issuing credit or debit cards.

Understanding the rules of prescription is essential for protecting your rights and avoiding legal pitfalls—whether you’re a creditor, debtor, or professional involved in claims. Always keep these timelines in mind, as they could make the difference between enforcing your rights or losing them altogether. 

If you have any queries on this topic, please feel free to contact us.

Must Employers Reimburse Employees for Unused Annual Leave?

25 November 2024  ·  1 min read 

With the long holidays just around the corner, it’s a good time for employers and employees to revisit annual leave entitlements and understand their rights under the law. 

Under Thailand’s Labour Protection Act B.E. 2541 (A.D. 1998), as amended, employees are entitled to a minimum of 6 working days of annual leave after completing 1 year of uninterrupted service. Employers may offer more days in subsequent years or grant pro rata leave for employees with less than a year of service. Both parties can agree in advance to carry unused leave into future years.

But what happens if an employee doesn’t use their annual leave? Does the employer need to pay for it?

The answer is YES. If the employer does not provide the statutory annual leave or provides fewer days than required, they must compensate the employee with Holiday Pay and, if applicable, Holiday Overtime Pay. These payments are calculated as if the employee had worked on a holiday.

Importantly, employers have a legal duty to designate annual leave in advance or as agreed with the employee. Even if the employee does not request leave, it is the employer’s responsibility to ensure the employee takes the statutory minimum. Failure to arrange this leave obliges the employer to pay compensation at the holiday pay rate.

Employers should proactively manage annual leave entitlements to comply with the law and avoid unnecessary financial liabilities.

If you have any queries on this topic, please feel free to contact us.

Thai Company Law FAQs (Ep.1): Proxies and Voting Rights

2 October 2024  ·  1 min read 

1.  Can a company director assign a proxy to attend and vote at a Board meeting?

No, serving as a director is a personal responsibility that must be carried out by the individual director. Directors cannot delegate their duties to another person to act on their behalf as a director. Therefore, a director cannot appoint a proxy to attend or vote at a Board meeting. Additionally, a company’s Articles of Association cannot include provisions allowing directors to assign others to attend Board meetings in their place.

2. Can a company director be appointed as a proxy to attend and vote at a shareholders' meeting?

Yes, a shareholder can appoint any individual, including a company director, as their proxy.

3. Can the same proxy represent two or more shareholders?

Yes, there is no legal provision preventing shareholders from appointing the same proxy to attend and vote at a shareholders' meeting. However, according to the amended Section 1178 of the Thai Civil and Commercial Code (CCC), at least two shareholders or proxies must attend the meeting, and the total shares represented must account for no less than one-fourth of the company's capital in order for the shareholders to vote on any matter. While the same proxy can represent multiple shareholders, each shareholder must complete a separate proxy form.

If you have any questions, please feel free to contact us.

Necessary, Urgent, or Ad-Hoc Work Not Requiring a Work Permit—Only Notification Required

27 September 2024  ·  2 min read 

Under the Foreigners’ Working Management Emergency Decree B.E. 2560 (2017), as amended, foreigners temporarily entering Thailand are allowed to conduct necessary, urgent, or ad-hoc work that can be completed within 15 days, provided they notify the competent authority in writing. If the work is not completed within this timeframe, an extension for an additional 15 days can be requested by submitting a request form before the original deadline.

Starting from 25 June 2024, only the following 17 types of work are recognized as necessary, urgent, or ad-hoc:

1. Job selection for overseas employment

2. Organizing meetings, training sessions, seminars, exhibitions, or trade shows

3. Mechanical repair or installation work

4. Electrical train system technician work

5. Aircraft or aircraft equipment technician work

6. Production process inspection or improvement

7. Product quality inspection

8. Technical problem tracking and resolution

9. Occasional internal audits

10. Inspection or repair of machinery and electrical production systems

11. Film and photography work

12. Consulting for machinery repair or control systems

13. Work for events supported by government agencies, such as mega events, international festivals, or concerts

14. Skill testing for craftsmen for overseas employment

15. Special academic lectures

16. Demonstration and testing of machinery

17. Aviation management

These notifications incur no official fees, and foreigners may grant an attorney the authority to file the notification on their behalf using a power of attorney. Once the notification is submitted, the authorities will issue a receipt confirmation form.

If you need assistance with this process, please contact us for legal support.

Tax Implications of Employer-Paid Medical Expenses for Employees

9 August 2024  ·  2 min read 

Generally, employees must include all forms of income derived from employment in their assessable income, whether received as cash, property, or any other benefit which can be converted into a monetary value. However, pursuant to Ministerial Regulation No. 126 and Section 42 (17) of the Revenue Code, if the employer covers medical expenses for the employee and certain other individuals related to the employee, these expenses will be exempt from the employee’s personal income tax.

Medical expenses covered by the employer or paid on behalf of the employee are exempt from personal income tax if they pertain to:

(a) The employee, their spouse, parents, or descendants who are under the employee's care and support, provided that the medical treatment occurs in Thailand.

(b) The employee, in cases where medical treatment is necessary abroad while performing duties in a foreign country on an occasional basis.

Regarding corporate income tax for the company (employer), if medical expenses are provided as part of employee welfare, these expenses are considered business-related and can be deducted from assessable income. However, if the company covers medical expenses that exceed the limits specified in its regulations or welfare policies, the excess amount is deemed a personal expense rather than a business expense. Subsequently, the company cannot include this excess amount as a deductible expense when calculating net profit for corporate income tax purposes.

Should you have any questions, please feel free to contact us.

Order No. 1/2567: Updated Registration Rules for Companies in Thailand

9 August 2024  ·  2 min read 

Starting 1 July 2024, a new order from the Office of the Central Company and Partnership Registration (Order No. 1/2567) is in effect, replacing the previous 2023 order. These rules require partnerships and limited companies with registered capital exceeding THB 5 million to provide additional supporting documents along with their incorporation registration application.

Additional Required Documents for Cash Payments:

1. Bank Certification: A document from the bank certifying that a managing partner or director has received the payment for the capital contribution or share capital.

2. Confirmation Letter: A letter from the managing partner or director confirming that the amount stated in the bank document (item 1) is the actual payment received.

3. Explanatory Letter (if the specified conditions are met): If the documents mentioned in items 1 and 2 cannot be provided promptly with the registration application, and if all managing partners or directors are foreigners, or if the business has received promotion or authorization from agencies like the Board of Investment Office (BOI) or the Industrial Estate Authority of Thailand (IEAT), an explanatory letter can be submitted. Once the registrar accepts the registration, the bank certification and confirmation letter must be submitted within 15 days from the registration order date.

Order No. 1/2567 also outlines supporting document requirements for cases where the capital is paid in property or labor, and for cases involving capital increases where the total capital exceeds THB 5 million. This includes situations where limited companies merge and increase capital simultaneously.

For more information or assistance with your registration, feel free to contact us.

Is a Contract Made via Email Legally Enforceable?

14 June 2024  ·  2 min read

Under Thai law, the legality of electronic transactions is governed by the 2001 Electronic Transactions Act. This Act recognizes the validity and enforceability of data messages, including those initiated, sent, received, stored, or processed by electronic means, such as email correspondence.

According to the Act, a contract must not be denied its legal effect solely because an offer or acceptance is made in the form of a data message. Similarly, the admissibility of a data message as evidence in legal proceedings must not be denied solely on the grounds that it is a data message.

However, it's important to note that the legal principles governing contract formation or validity remain applicable. For example, according to Thai CCC, a hire of immovable property is not enforceable unless there is written evidence signed by the party liable. If the hire is for more than three years, it is enforceable only if it is made in writing and registered by a competent official.

The Act provides that where the law requires that any transaction be made in writing or evidenced by writing, if the information is generated in the form of a data message accessible and usable for subsequent reference without altering its meaning, it shall be deemed as meeting the writing requirement.

Transactions relating to family and succession are excluded from the application of this Act; thus, they must be made in compliance with Thai CCC.

Essential Information regarding a Loan of Money in Thailand

14 May 2024  ·  2 min read

In Thailand, loan agreements fall under two main categories according to the Civil and Commercial Code: (i) loans for use and (ii) loans for consumption. A loan of money is classified as a loan for consumption.

• For a loan of money exceeding THB 2,000, there must be written evidence of the loan signed by the borrower for it to be enforceable in court. For loans of THB 2,000 or less, written evidence is not required for enforceability.

• It is sufficient for the written evidence to show that a loan agreement exists, even if it does not correctly name the lender. As long as the amount and the borrower’s signature are included, the lender can use this as evidence to enforce the loan agreement in court.

• A loan agreement signed by both the lender and borrower is a document that must be duty stamped at the rate prescribed in the Revenue Code, or the court will not accept it as evidence. However, if it is just written evidence of the loan with only the borrower’s signature, it can still be used as evidence without requiring a duty stamp. (Note: “Duty stamped” generally refers to the payment of duty made by affixing a stamp on the paper, before or immediately when an instrument is executed, in an amount not less than the duty payable, and canceling such stamp.)

• Written evidence of the loan can be created at the time of the loan or afterward.

• Conversations through mobile applications between the lender and borrower are considered electronic data under the Electronic Transactions Act B.E. 2544 (2001) and serve as written evidence of the loan with the borrower’s signature. However, the conversation must clearly indicate that it is about a loan for it to be used in a lawsuit.

If you have any questions or need assistance with a customized loan agreement, 3LEGIT is here to help. contact us.

How Do Foreigners Living in Thailand Pay Tax?

30 April 2024

On 24 April 2024, the Revenue Department released a helpful mini guide about personal income tax, which foreigners residing in Thailand might need to know about. Download it here.

Interest Rates under the Thai Civil and Commercial Code

26 April 2024  ·  2 min read

According to the Civil and Commercial Code (“CCC”), as amended by the Emergency Decree amending the Civil and Commercial Code B.E. 2564 (2021), effective from 11 April 2021, interest rates can be summarized as follows:

Statutory Interest Rate: If the interest rate is not fixed by a juristic act or an explicit legal provision, it shall be 3% per year. (Note: The Ministry of Finance will review the rate every three years.)

Statutory Default Interest Rate: For money debt, the default interest rate is 5% per year. (Note: The default interest rate is based on the statutory interest rate plus 2%. Thus, any change in the statutory interest rate will impact the statutory default interest rate.)

Indeed, the creditor has the right to set the default interest rate higher than the statutory one based on any other legitimate ground, e.g., by stating the default interest rate in the contract.

Interest Rate for Loans: The interest rate must not exceed 15% per year. If the lender demands a higher rate of interest, the agreement on the interest will be void since it is considered contrary to the Act Prohibiting the Charging of Excessive Interest Rates B.E. 2560 (2017). (Note: Charging interest at a rate higher than the rate specified by law is a criminal offense.) 

For further clarification or inquiries, please feel free to contact us.

Changes in Thai Personal Income Tax: Residency Rule and Foreign Income Considerations

12 March 2024  ·  2 min read

It had long been interpreted that the Thai personal income tax's residence rule, outlined in Section 41, paragraph two of the Revenue Code, means that individuals living in Thailand for 180 days or more are liable for personal income tax on assessable income derived from employment, business conducted abroad, or property located overseas only if the income is brought into Thailand in the same year it was earned.

However, a significant change has been introduced with the implication of the Revenue Department Order No. Por. 161/2566 and Por. 162/2566, issued in 2023. According to these orders, foreign-source income earned by individuals residing in Thailand for 180 days or more from 1 January 2024 must be included in their assessable income for personal income tax calculation in the tax year it is brought into Thailand – whether it’s in 2024 or any subsequent year.

If foreign-source income brought into Thailand has already been taxed in another country, taxpayers can seek tax relief by using the tax paid in the foreign country as a tax credit against their Thai tax liability, following the terms outlined in the double taxation agreement between that country and Thailand.

For further clarification or inquiries, please feel free to contact us.