Several reasons can exist for closing a business in Thailand, such as low profitability, unable to sustain business operations, economic condition, or maybe tough competition. Additional reasons could also be the shareholders want to open a new company, or that the shareholders seeks to permanently cease doing business in Thailand. In the event of a Thai company dissolution, closing down a business in Thailand needs to be done legitimately and efficiently.
Liquidation and dissolution of a limited company in Thailand is mandated by Sections 1247 through 1273 of the Civil and Commercial Code of Thailand which contains provisions in the event of voluntary liquidation and dissolution of a private limited company in Thailand by its shareholders.
When a business in Thailand has to close, particularly a Thai limited company, there are procedures to follow before legitimately closing down the company.
Process of voluntary dissolution of a Thai Limited Company:
In the event that a Thai Limited Company is closing down, the first step would be auditing of the company’s accounts. This will give summation of all assets and liabilities of the company. If there is any legal proceedings and current tax issues, the company has to fix that.
To place a company in liquidation, duly convened shareholders’ meeting will be held. The shareholders need to pass a resolution of dissolving the company. The resolution must be accepted by at least 75% of the shareholders. Once the resolution has passed, the shareholders will elect one or more liquidators who has no liability to represent the shareholders. When the decision of the dissolution of the company is final, application of the closure will be filed at the Business Development Department (BDD). All the company’s creditors must be notified, and a final audit needs to be submitted to BDD as well.
With regards to VAT, the liquidator has to apply for a VAT dissolution. VAT filing forms for the past 2 years need to be sent to revenue department. VAT registration certificate needs to be returned.
At this point, the company’s assets are ready to be liquidated. Liquidation begins after the dissolution date. Company’s bank accounts will be closed. All debts of the company will be paid. The remaining capital will be divided to shareholders in accordance to the percentage of their share. If the dissolution is voluntary, severance pay must be allocated to each employee. Visa of foreign employees needs to be cancelled at the Immigration Bureau and work permits will be returned to the Ministry of Labor.