A limited company may reduce its capital either by lowering the amount of each share (not less than 5 THB per share) or by reducing the number of shares by special resolution of the meeting of shareholders. The capital of the company can not be reduced to less than one-fourth of its total amount.
When a company proposes to reduce its capital, there are 2 steps in registration to reduce the capital; registration of special resolution to reduce the capital and registration of reduced capital and change on the Memorandum of Association (Section 5). The company must comply with the following procedures;
- Holding shareholders’ meeting
The company shall hold the meeting of shareholders by special resolution in order to discuss regarding the reduction of its capital and be allowed to change or add the related information on the Memorandum of Association (Section 5). The majority must not be less than three-four of all shareholders.
The notice of shareholder’s meeting shall be published at least one time in a local newspaper and send it to all shareholders by returned receipt registered mail at least 14 days before the date of meeting.
- Notifying creditors
The company shall publish an advertisement on the local newspaper at least one time and send to all creditors known to the company a notice of particulars of the proposed reduction, requiring the creditors to present any objection within 30 days from the date of such notice. If no objection is raised within the mentioned period, none is deemed to exist.
However, if objection is raised, the company cannot proceed with the reduction of its capital unless it has satisfied the claim or given security for it first.
Registration of special resolution to reduce the capital; the authorized special resolution of shareholder’s meeting must be registered within 14 days after the date of meeting at the Department of Business Development, Ministry of Commerce.
Registration of reduced capital and change on the Memorandum of Association (Section 5); after there is no objection raised within 30 days from the date of such notice, the company can register the reduced capital and change on the Memorandum of Association (Section 5).
In case, the company wishes to reduce more of the remaining capital, it can re-do the whole process right away but the capital of the company cannot be reduced to less than one-fourth of its total remaining amount.
Contact ThaiLawyers for assistance to reduce capital.