Sign up for tax alert emails GTNU homepage Tax newsroom Email document Print document Download document
December 16, 2022
Thailand amends provisions of Civil and Commercial Code related to business combinations
Amendments to provisions of the Civil and Commercial Code governing limited companies published in the Government Gazette on 8 November 2022 (the Amended Code) include changes and additions to the provisions relating to business combinations.
Under the current law, the only method of business combination recognized is an amalgamation, where a new company is formed and all amalgamating companies are automatically dissolved by law. However, under the Amended Code, mergers are introduced as another method of business combination, where one merging company survives and the other merging companies cease to exist. The Amended Code will become effective 90 days after its publication in the Government Gazette (i.e., 7 February 2023)
This Alert summarizes the key changes to the provisions of the Civil and Commercial Code relating to business combinations.
Method of business combination
The concept of merger has been added.
The Amended Code now recognizes two methods of business combination as follows:
Rights of dissenting shareholders
A new provision addresses shareholders who disagree with the business combination.
Notification to creditors
The Creditors’ objection period has been reduced from 60 days to one month.
Timing of joint shareholders’ meeting
There is a new provision on timeframe for holding a joint shareholders’ meeting to approve the amalgamation/merger.
Conditions of joint shareholders’ meeting
A new provision has been added regarding agenda, quorum and voting requirements.
Period to transfer business and documents
This is a new provision.
This is also a new provision.
Companies planning a merger should monitor for the issuance of relevant guidance by the Thai Revenue Department to confirm whether this merger will be qualified for a concession tax regime similar to an amalgamation However, it is anticipated that both methods of business combination (i.e., amalgamation and merger) will be eligible for the existing tax exemption scheme, with the merging company exempted from income tax and indirect tax (i.e. value added tax, specific business tax, and stamp duty) on the transfer of its business, assets, and liabilities to the surviving entity and the shareholders of the merging company are also exempted from income tax upon receiving shares in the surviving company.
For additional information with respect to this Alert, please contact the following:
EY Corporate Services Limited, Bangkok
Ernst & Young LLP (United States), Thai Tax Desk, New York
Ernst & Young LLP (United States), ASEAN Tax Desk, New York
Ernst & Young LLP (United States), Asia Pacific Business Group, New York
Ernst & Young LLP (United States), Asia Pacific Business Group, Chicago