Dissolution of Company in Thailand

Dissolution of Company in Thailand. Dissolving a Thai company is a legal process tightly governed by the Civil & Commercial Code and supervised by the Department of Business Development (DBD) and the Revenue Department (RD). Getting the sequence, notices and tax work right is what separates a clean, timely wind-up from months (or years) of hold-ups, unexpected liabilities and regulator queries. This guide explains the legal grounds, the two routes (solvent voluntary liquidation vs insolvent/court processes), the step-by-step mechanics a liquidator must follow, timing traps (tax and social-security clearance), and an actionable closing checklist you can hand to counsel or your company secretary.

Legal framework & the two broad routes

Thailand’s statutory liquidation provisions live in the Civil & Commercial Code (sections dealing with dissolution and winding-up). A company can be dissolved by law (expiry of its term, completion of the object, special shareholders’ resolution) or by court order (insolvency, statutory breaches). A solvent company normally winds up under the Code by shareholders’ special resolution and appointment of liquidator(s). An insolvent company may only be liquidated via bankruptcy/court proceedings; if a liquidator discovers insufficiency of assets they must apply for bankruptcy immediately.

Who acts as liquidator and the 75% rule

A special resolution (commonly a 75% majority unless the articles say otherwise) is normally required to dissolve a private limited company; the board proposes, shareholders pass the special resolution, and the meeting appoints liquidator(s) and an auditor for the winding-up. By default the directors become liquidators unless the meeting appoints others.

Immediate formal steps (Day 0 → Day 14)

1. Shareholders’ EGM & resolution — adopt the special resolution and appoint liquidator(s) and an auditor.

2. Register dissolution with the DBD within 14 days of the dissolution date and register the liquidator’s name(s). This registration changes the company status to “in dissolution” and starts the statutory notice and reporting timeline.

3. Notice to creditors & public advertising (within 14 days). The liquidator must publish a dissolution notice in a local newspaper at least once and send registered-letter notices to creditors listed in the company books, inviting them to submit claims. This triggers the statutory claims-window and preserves the liquidator’s priority powers.

The liquidator’s duties (what actually must be done)

The liquidator’s statutory duties are extensive and practical:

• Make an audited balance sheet as soon as possible and summon a general meeting to adopt it.

• Collect and realize assets; sell stock, collect receivables and convert assets to cash.

• Settle liabilities in priority order (liquidation costs; secured creditors; preferential employee claims; unsecured creditors). Liquidation costs and the liquidator’s remuneration have priority.

• Quarterly progress reports to the DBD if the liquidation extends beyond the first year; annual general meetings and reports are required for longer liquidations.

• If assets prove insufficient, the liquidator must apply immediately to the Bankruptcy Court to declare bankruptcy. Failure to do so can create personal exposure.

Tax, audited statements and the 150-day rule

Once dissolution is registered the liquidator prepares Liquidation Financial Statements (LFS) covering the current fiscal period up to the EGM or dissolution registration date. The LFS must be audited and filed with the Revenue Department within 150 days from the dissolution registration date. The RD may (and commonly does) perform tax checks; in practice the RD often requests additional information and can ask the DBD to withhold final completion if tax liabilities remain under review. Expect the RD’s clearance process to be the critical path that can extend completion.

Ending the liquidation and document retention

When the affairs are wound up, the liquidator calls a final general meeting to present the liquidation account and audited LFS. After shareholder approval the liquidator must register the completion with the DBD within 14 days; that registration is treated as the end of the liquidation. The company’s books and documents must be kept in Thailand for 10 years after the end of the liquidation for inspection by interested persons or authorities. Also note: claims by creditors typically become time-barred two years after the end of liquidation.

Employee, social security and license issues (practical compliance)

Don’t forget:

• Employee termination & severance: statutory severance must be paid, and employment records settled.

• Notify and deregister with the Social Security Office (SSO) and cancel work permits for foreign staff.

• Cancel VAT and other tax registrations — VAT certificates should be returned and the RD notified (typically within 15 days of DBD dissolution registration).

Foreign branches, BOI projects and regulated licenses

Branches, representative offices and BOI-promoted companies follow parallel but distinct processes: branches require deregistration steps at the DBD after tax clearance; BOI incentives often involve additional closing notifications and potential drawbacks if conditions are breached. Regulated licenses (finance, telecom, food, land) must be cancelled with the issuing authority — don’t assume DBD deregistration alone clears sectoral obligations. Engage the issuing agencies early.

Common practical pitfalls & how to avoid them

• Underestimating tax clearance time. RD checks are the most frequent cause of extended liquidations; prepare audited LFS carefully and expect follow-up queries.

• Failing to notify creditors correctly. Proof of newspaper publication and registered letters is essential to bar later claims.

• Ignoring employee entitlements and social security de-registration. These can produce administrative fines and stop-orders.

• Continuing to trade after dissolution — directors who continue business knowing insolvency exists risk personal liability; liquidators must apply for bankruptcy if shortfall exists.

Practical closing checklist (operational)

1. Board minutes proposing dissolution; EGM special-resolution (≥75% unless articles specify otherwise).

2. EGM minutes appointing liquidator(s) & auditor; file dissolution with DBD within 14 days.

3. Publish dissolution notice in local newspaper and send registered letters to creditors (within 14 days).

4. Prepare audited balance sheet and LFS; file audited LFS with RD within 150 days.

5. Quarterly liquidation progress reports to DBD (if extended); keep full records.

6. Final general meeting to approve liquidation account; register completion with DBD within 14 days and retain records for 10 years.

Final practical advice

Start liquidation planning months before the EGM: clear bank accounts, cancel non-essential licenses, reconcile payroll and tax returns, and prepare a funding plan for severances and winding-up costs. Use a matrix (DBD deadlines / RD deliverables / SSO de-registration / license cancellations) and assign a named owner for each item. If there is any risk of insolvency, instruct insolvency counsel early — the line between voluntary liquidation and mandatory bankruptcy can be thin and the consequences for directors are significant.