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16 December 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. Amalgamation: A completely new company is formed, and all amalgamating companies cease to exist by law. Any dissenting shareholders are entitled to sell their shares at an agreed price or the price determined by an appraiser, if a price cannot be agreed. In the event that a dissenting shareholder refuses to sell the shares within 14 days from the date of the offer to purchase the shares, they will become a shareholder of the new company (in case of amalgamation) or the surviving company (in case of merger).
There is a new provision on timeframe for holding a joint shareholders’ meeting to approve the amalgamation/merger. A joint shareholders’ meeting to approve the business combination must be held within six months (extendable up to one year with the approval of a joint shareholders’ meeting) from the date of the resolution to proceed with the amalgamation/merger. The directors of the amalgamating/merging companies must call the joint shareholders’ meeting in order to consider the new (amalgamation) or surviving (merger) company’s name, objectives, share capital, allocation of shares, memorandum of association, articles of association, directors, auditor and other appropriate matters. The quorum for the joint shareholders’ meeting is shareholders representing in total at least half of the number of shares of each amalgamating/merging company. The resolution must be passed by a majority vote of the shareholders attending the meeting unless agreed otherwise. The boards of directors of the amalgamating/merging companies must transfer the business, assets, accounting records, documents, and other evidence of the amalgamating/merging companies to the new company (amalgamation) or the surviving company (merger) within seven days from the date of the joint shareholders’ meeting. The boards of directors of the amalgamating/merging companies must register the amalgamation/merger and submit the memorandum of association and articles of association of the new company (amalgamation) or the surviving company (merger) within 14 days from the date of the joint shareholders’ meeting. 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.
Document ID: 2022-6233 | |
