The shares of Thailand limited companies are divided into the following two types :
1. Ordinary Shares or Common Shares
Ordinary shareholders have common rights according to THE CIVIL AND COMMERCIAL CODE, CHAPTER IV LIMITED COMPANIES and CHAPTER V LIQUIDATION OF REGISTERED PARTNERSHIP, LIMITED PARTNERSHIP AND LIMITED COMPANIES which are as follows:
1.1 Every ordinary shareholder has the right to be present at any general meeting (section 1176) and on a poll every ordinary shareholder shall have one vote for each share of which he is the holder for controlling the company (section 1182)
1.2 The ordinary shareholders shall get dividends when the company has profits only which are in proportion to amount paid upon each share (section 1200, 1201 paragraph 3) and after the dividends has been paid to preferred shareholders.
1.3 When the company is dissolved, initial investment in the company will be returned to every ordinary shareholder in proportion to the amount of each held share if the assets exceed the debts and liabilities and after being paid to every preferred shareholder.
2. Preferred Shares or Preference Shares.
Preferred shareholders shall have rights according to THE CIVIL AND COMMERCIAL CODE, CHAPTER IV LIMITED COMPANIES ANS CHAPTER V LIQUIDATION OF REGISTERED PARTNERSHIP, LIMITED PARTNERSHIP AND LIMITED COMPANIES. Nevertheless, the preferred shareholders have some special rights which prevail over the ordinary shareholders which are as follows:
2.1 Every preferred shareholder has the right to be present at any general meeting (section 1176). A preferred shareholder may have the same, less or more voting right than that of an ordinary shareholder, for example, they have one vote for each share of which they are the holder, one vote for five shares or five votes for each share which depend on the Articles of Association of the company.
2.2 The preferred shareholders shall get dividends when the company has profits and declares dividends. Depending on the clauses in the Articles of Association of the company, the dividends received by the preferred shareholders can be more or less than those received by the ordinary shareholders and it can be cumulative or not, Furthermore, the dividends shall be paid to the preferred shareholders before the ordinary shareholders.
2.3 When the company falls into liquidation, the company must first pay any debts and if there is any money left over to reimburse the shareholders for their investment, the preferred shareholders will be repaid before the ordinary shareholders.
Please note the following further information :
1. The fixing of the number of preferred shares which will be issued , the nature and extent of the preferential rights accruing to them has to be done at the statutory meeting (the meeting where all the promoters meet for the first time to discuss setting up the company) and described in the Articles of Association (in some countries, known as bylaws or operating agreement) (section 1108(4)). However, the company will be able to issue preferred shares later which is the same as issuing ordinary shares by having a special resolution from shareholders’ meeting for increasing its capital by issuing new preferred shares (section 1220). A special resolution is one passed by the majority of not less than three-fourths of the votes of the present shareholders who are eligible to vote (section 1194). After obtaining a special resolution, the company must register it with the Department of Business Development (DBD) within fourteen days (section 1228).
2. If preferred shares have been issued, the preferential rights attributed to such shares cannot be altered (section 1142). That means the rights of preferred shares cannot be changed. However, some conditions of preferred shares can be changed such as par value per share.
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