Foreign investors in Thailand usually establish a Thai limited company which is equivalent to the western countries’ corporation. This means the foreign investor will have local Thai counterparts for the limited company to legally exist.
When the time comes to dissolve the limited company, for bankruptcy or other reasons, Chapter V of the Thai Limited Company and Partnership Liquidation Law shall apply. For instance, Section 1247 of Chapter V states that the “liquidation of a bankrupt registered partnership, limited partnership, or limited company shall be made as far as practicable, in accordance with the provisions of the Law of Bankruptcy for the time being in force.
Under the provisions of the Liquidation Law, a company is deemed to continue after its dissolution as long as it is necessitated by the process of liquidation. Liquidators are bound to settle the affairs of the company, pay its debts and distribute its assets. A reliable accounting firm can help liquidating assets. In cases where a company is dissolved other than being bankrupt, the directors or shareholders become liquidators unless otherwise provided by the regulations of the company. In some cases, where no person is named as liquidator, the Court will appoint one upon the application of the Public Prosecutor or any other interested party.
The following liquidation rules shall apply:
When all properties and assets have been sold, proceeds of such sale shall be used to pay for all costs, charges and expenses incurred in the liquidation process before paying other verified creditors. If a creditor does not apply for payment, the liquidator will still have to pay the creditor by depositing the amount due to the creditor in accordance with the provisions of the Code concerning Deposits in lieu of performance.
If the liquidated assets are not sufficient to cover the liability of the company to creditors, etc., the liquidators may require the shareholders to pay part of their share or contributions which are still unpaid and must be paid at once. If after collecting the unpaid share and assets are not sufficient to meet the liabilities, the liquidators must apply with the Court for bankruptcy. A limited amount of the company’s property may be divided amongst the shareholders as it is not required for performing all the obligations of the company.
As soon as the company affairs are fully liquidated and settled, the liquidators shall make up an account of the liquidation to show the details of the liquidation proceedings including how the liquidation was conducted and which property of the company has been sold. And for the purpose of informing the liquidation details with proper explanation, a general meeting may be called in.
If the account is approved, the proceedings of the meeting will be registered within 14 days from its date by the liquidators. This will be taken as the end of the liquidation.
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