Revocation of foreign land ownership benefits, new BOI benefits and amendments related to company regulations in the Thai Civil and Commercial Code
Land ownership by foreigners for residential purposes
On the 25th of October 2022, the Prayut Cabinet approved a draft ministerial ordinance providing for the ownership of land for residential purposes by promising foreigners (Long Term Resident Visa holders) in order to attract promising foreigners to invest in Thailand and restore the economy, which has been weakened by the coronavirus outbreak. A draft ministerial ordinance has been approved (provided that the permission is granted for residential purposes and for the purchase of land not exceeding 16 million square metres at a price of not less than 40 million baht). It is also conditional on investment in Thailand in the form of bonds, mutual funds and investment incentive projects).
However, the Cabinet subsequently withdrew its approval of the draft decree after receiving a lot of criticism from the public, including political parties, and government agencies such as the Land Department, who considered it a traitorous act. The reason for the withdrawal was reportedly that Thai citizens also face the problem of land for housing and livelihood, and that foreigners, who can invest without having to pay taxes, have much more financial and economic power than Thai citizens, so land prices are expected to soar, making it difficult for them to acquire land. In fact, for example, condominium prices have skyrocketed as a result of foreigners being granted the right to purchase a 49% share, and this situation also appears to be a cause for concern regarding the partial liberalisation of foreigners’ land purchases.
It should be noted that on the 8th of November 2022, the Prime Minister Prayut, in response to questions from the media on the proposed ministerial decree, said that he would hold a hearing including the public to analyse the impact of the limited liberalisation of land ownership to some foreigners and consider the matter again.
New BOI benefits
On the 4th of November 2022, the Investment Committee meeting chaired by the Prime Minister Prayut approved the new investment incentive measures in the five-year investment incentive strategy progression for the new economy. The investment incentives will apply from the 3rd of January 2023. The approved investment incentive measures and the categories of investment to be defined will grant the following additional benefits.
Existing production base retention and expansion programme
Companies that have been operating three or more Business Incentives (BOI) projects over the past 15 years with a total investment of at least THB 1 billion (approximately US$265 million) and have applied for and received approval for a new BOI project or expansion of a BOI project worth at least THB 500 million, are eligible for a corporate income tax exemption of up to three years or 50 per cent of the corporate income tax for up to five years (2023-2027) depending on the industry of the BOI project. Depending on the type of BOI business, the company will be granted special benefits such as corporate income tax exemption for up to three years or corporate income tax reduction at the 50% rate for up to five years (2023-2027).
Incentive programme for relocation of business
Companies that have relocated their production sites and regional headquarters to Thailand are granted corporate income tax exemption benefits for an additional three years. On the other hand, companies that have relocated their research and development centres (R&D) are granted corporate income tax exemption for an additional period of one to five years, depending on the type of industry.
New industry categories
In order to progress to the new economy, the Board of Investment has approved new incentive projects, particularly for stable activities for which special exemptions can be obtained. New categories include hydrogen vehicles, electric vehicle battery exchange stand projects, new food products and organic food products. Renewable energy projects for which new incentives are approved include hydrogen production and related activities such as green ammonia, electricity generation from hydrogen or the generation of water vapour.
New generation technology
Investment in upstream industries with advanced innovation and technology, such as biotech, nanotech and advanced materials on technology transfer and cooperation with higher education and research institutions in Thailand, will be granted premium benefits and exempt from corporate income tax for an unlimited period of 10 to 13 years. However, it depends on the type of industry of the incentivised project. Wafer manufacturing is transferred to this category and the corporate income tax exemption benefit period is increased from 10 to 13 years.
New economic corridors
In addition to the existing Eastern Economic Corridor (Chonburi – Provincial Industrial Area), the Board of Investment approved the New Economic Corridor as a special investment zone in four provinces in Thailand. The four zones are the Northern Economic Corridor, the Northeast Economic Corridor, the Central-Western Economic Corridor and the Southern Economic Corridor.
Amendments to the Civil Code of Commerce
On 8 November 2022, the Law Amending the Civil and Commercial Code of Buddhist calendar year 2565 (2022) of (No. 23) was issued. The Amendment Act will apply 90 days after 9 November 2022. The company-related articles of the Civil Code of Commerce are amended mainly as follows.
| Article 1016 | |
|---|---|
| Old provisions | The registration of a partnership or company, changes in registered matters after registration and other registrations provided for in Part 22 (Partnerships or companies) shall be made to the registrar attached to the office of the partnership and company registry as determined by the competent minister. |
| New provisions | Registration of partnerships or companies, changes in registered matters after registration and other registrations provided for in Part 22 (Partnerships or companies) shall be made at the partnership and company registration office that has jurisdiction over the area where the headquarters of the company is located or that is specified by the competent minister. |
| Article 1017 | |
|---|---|
| Old provision | If the contents of the registration or advertisement arise abroad, the deadline for registration or advertisement of the contents shall be calculated from the time when the administrative district in which the registration or advertisement is made is notified. |
| New provision | If the registered or advertised content occurs abroad, the deadline for registering or advertising the content shall be calculated from the time when the registered partnership or the headquarters of the company is notified. |
| Article 1020/1 | |
|---|---|
| Old provision | The Minister is authorised to reduce or waive the fees provided for in sections 1018 and 1020. |
| New provision | The Minister is authorised to reduce or exempt the fees provided for in Articles 1018 and 1020. |
The Ministerial Order provided for in paragraph 1 may determine the rate of the fee according to the form of the transaction.
| [Number of founders] Article 1097 | |
|---|---|
| Old provision | A joint stock company may be established by three or more persons acting as founders, drawing up and signing the basic articles of association and performing other acts in accordance with the provisions of this Code. |
| New provision | A joint stock company may be established by two or more founders who draw up and sign the articles of association and perform other acts in accordance with the provisions of this Code. |
| [Basic Articles of Association] Article 1099 | |
|---|---|
| Old provision | Two or more copies of the basic articles of association shall be prepared and signed by all the founders and two witnesses.One copy of the prepared articles of incorporation shall be deposited and registered at the registry office having jurisdiction over the area in the Kingdom where the headquarters of the company is located. |
| New provision | At least two copies of the basic articles of association shall be prepared and one copy shall be registered after being signed by all the founders and two witnesses. (Former paragraph 2 deleted) (New provision) If the company is not registered within three years from the date of receipt of the registration of the basic articles of association by the registrar, the said basic articles of association shall cease to be valid. |
| [Agenda for the By-Laws] Section 1108(1) | |
|---|---|
| Old provision | The agenda to be conducted at the founding general meeting shall be as follows. (1) Agreement on the company’s by-laws (2) The articles of association of the company, which may provide for the resolution of problems or disputes that cannot be settled between the directors or shareholders. |
| New provision | The agenda to be conducted at the founding general meeting shall be as follows. (1) Agreement on the company’s by-laws (2) The company’s articles of association, which should provide for a method of resolving issues or disputes that cannot be resolved or settled among the directors or shareholders. |
| [Creation of share certificates] Article 1128.1. | |
|---|---|
| Old provision | Each share certificate should be signed by at least one director. Stock certificates should contain at least the following text. |
| New provision | Each share certificate should be signed and stamped with the company seal (if any) by at least one director. |
| Article 1158 | |
|---|---|
| Old provision | Unless otherwise provided for in the company’s by-laws, the directors shall have the powers set out in the following six articles. |
| New provision | Unless otherwise provided for in the company’s by-laws, the directors shall have the powers set out in the following seven articles. *Amended to add the following additional ways of holding meetings of the Board of Directors. |
| [Ways of holding board meetings] Article 1162/1 | |
|---|---|
| New provision | Board meetings may be held by any means of communication using any technology. In this case, the directors do not have to be present at the place of the meeting. However, this does not apply if the company’s by-laws prohibit this.
Meetings of the Board of Directors using the communication methods provided for in paragraph 1 shall be governed by the law on meetings by electronic means.
A director who attends (a meeting of the Board of Directors) using the method of communication provided for in paragraph 1 shall be deemed to have participated in the meeting of the Board of Directors. Furthermore, they shall be counted as a quorum and shall have voting rights at the Board of Directors’ meetings.
|
| [Method of convening the general meeting of shareholders] Article 1175, paragraph 1 | |
|---|---|
| Old provision | The notice convening a general meeting shall be published at least once in a local newspaper at least seven days before the date of the meeting and shall be sent by registered mail with proof of delivery to all shareholders whose names appear in the register of shareholders of the company at least seven days before the meeting. However, a general meeting for special resolutions shall be convened at least 14 days prior to the date of the meeting. |
| New provision | Notice of a general meeting shall be sent by certified registered mail to all shareholders whose names appear in the company’s register of shareholders at least seven days before the date of the meeting. However, this shall not apply if the company has bearer shares and such shareholders are required to publish notice of the general meeting at least once in a local newspaper, or if notice is given by electronic means in accordance with the conditions and procedures set out in the ministerial ordinance at least seven days before the date of such general meeting. Notice of a general meeting for a special resolution shall be given at least 14 days before the date of the meeting.
|
| [Quorum for general meetings of shareholders] Article 1178 | |
|---|---|
| Old provision | If no shareholder representing at least one-quarter of the share capital is present at a general meeting, no agenda may be discussed at that meeting. |
| New provision | No resolution may be passed at a general meeting if two or more shareholders representing at least one-quarter of the share capital or a person appointed by the shareholders are not present. |
| [Deadline for payment of dividends] Article 1201, paragraph 4 | |
|---|---|
| Old provision | Dividends shall be paid within one month of the resolution of the General Meeting or Board of Directors meeting. |
| New provision | Dividends shall be completed within one month of a resolution of the general meeting or board of directors’ meeting. |
| [Company dissolution event] Article 1237(4)(5) | |
|---|---|
| Old provision | (4) If the number of shareholders is reduced to less than three. (5) If there is cause for the company to be unable to continue. |
| New provision | (4) If the number of shareholders is reduced to one. (5) If there is cause for the company to be unable to continue. |
Part 9 Mergers of joint-stock companies
| Article 1238 | |
|---|---|
| Old provision | Joint-stock companies may not merge (‘kuap kao’). However, this shall not apply in the case of a merger by special resolution. |
| New provision | Joint-stock companies may merge (‘Kuap Ruam’) by special resolution. Two or more companies shall merge by one of the following methods. (1) Merger by creation of a new company (merger by incorporation). The merged companies shall cease to exist as corporations. (2) A merger whereby one of the companies continues to exist as a corporation and the other merged company ceases to exist as a corporation.
|
| Article 1239 | |
|---|---|
| Old provision | A special resolution to decide on the merger of a joint stock company (‘Kuap’) must be registered by the company within 14 days of the date of the resolution. |
| New provision | A special resolution to decide on the merger of a joint stock company (“Kuap Ruam”) must be registered by the company within 14 days of the date of the resolution. |
| Article 1239/1 | |
|---|---|
| New provision | If a special resolution to decide on a merger of companies (‘Kuap Ruam’) is passed, but the shareholders present at the general meeting oppose such a merger, the company must arrange for someone to purchase the shares held by such shareholders at an agreed price. If agreement cannot be reached, the price assessed by the price assessor shall be adopted. If the shareholder concerned does not agree to sell his shares within 14 days of the purchase offer, the company shall continue the merger and the shareholder concerned shall be deemed to be a shareholder of the merged company. The appointment of the price assessor referred to in paragraph 1 shall be subject to the criteria, procedures and conditions set out in the ministerial ordinance. |
| Article 1240 | |
|---|---|
| Old provision | The company shall send a notice of the proposed merger to all known creditors of the company with at least one publication in a local newspaper, and shall lodge any objections to the merger matter within 60 days after the date of this notice to the creditors. If no objection is lodged within the time limit set out in the preceding paragraph, the company shall be deemed to have no objection. If a creditor objects, the company may not carry out the merger unless it has paid its debts or guaranteed such debts. |
| New provision | When a special resolution to amalgamate companies has been passed, the company must, within 14 days from the date of the resolution, send a notice of such resolution to the debtors of the company under the register of the companies to be amalgamated. Any objections shall be lodged within one month from the date of receipt of the resolution notice. The company shall also publish the resolution in a local newspaper within 14 days of the date of the resolution. If a creditor objects, the company may not carry out the merger unless it has paid its debts or guaranteed such debts. |
| Article 1240/1 | |
|---|---|
| New provision | After the procedures set out in Articles 1239 and 1240, the directors of each company to be merged shall convene a meeting of all shareholders to discuss the following topics. (1) The name of the merged company may adopt the name of the new company or the name of one of the merging companies. (2) The purpose of the merging companies (3) The share capital of the merging companies must not be less than the previous share capital of the merging companies. (4) The allotment of shares to the shareholders of the company being amalgamated. In this case, Article 1222 shall not apply. (5) The basic articles of association of the company being merged (6) The by-laws of the company to be merged (7) Appointment of directors of the company to be merged (8) Appointment of the accounting auditors of the company to be merged (9) Other matters (if any) necessary in the merger of the companies The above general meeting must be completed within six months from the date of the last (merger) resolution of the merging companies. However, this period shall not exceed one year, unless a resolution has been passed to postpone the general meeting as set out in this Article. |
| Article 1240/2 | |
|---|---|
| New provision | The general meeting of shareholders for the joint consideration of each of the matters set out in new Article 1240/1 shall be held in the area where the headquarters of one of the companies to be merged is located or in a province neighbouring the area where the headquarters of one of the companies to be merged is located, subject to the following conditions. (1) The presence of shareholders representing at least a majority of the total number of shares of each of the companies to be merged shall constitute a quorum. (2) The shareholders present shall elect one of them as chairman. (3) The final decision at the general meeting shall be taken by a majority vote of the shareholders present in accordance with (1). However, this shall not apply if otherwise agreed. |
| Article 1240/3 | |
|---|---|
| New provision | The directors of the pre-merger company must hand over the company’s business, assets, accounting books, documents and evidence to the directors of the post-merger company within seven days after the conclusion of the general meeting provided for in Article 1240/1. |
| Article 1241 | |
|---|---|
| Old provision | When companies are merged, each of the former companies shall register the merger within 14 days from the date of the merger. The joint-stock company formed as a result of the merger shall be registered as a new company. |
| New provision | The directors of the merged company shall register the merger with the registrar within 14 days after the conclusion of the general meeting as provided for in Article 1240/1 and shall submit the basic articles of association and by-laws approved by the general meeting as provided for in Article 1240/1. |
| Article 1242 | |
|---|---|
| Old provision | The share capital of the new company shall be equal to the total share capital of the merged company. |
| New provision | Upon acceptance of the merger registration by the registrar, the registrar shall include the following notes in the registration entry. (1) In the case of a merger of companies into a new company, a note shall be made to the effect that the company before the merger has ceased to exist as a corporation. (2) In the case of a merger by absorption of a company, a note shall be made to the effect that the merged company has ceased to exist as a corporation.
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| Article 1243 | |
|---|---|
| Old provision | The new company shall succeed to all rights and liabilities of the pre-merger company. |
| New provision | The merged company shall succeed to all assets, liabilities, rights and liabilities of the pre-merger company. |
Part 12 Transition of registered partnerships and partnership corporations to joint-stock companies
| Article 1246/1 | |
|---|---|
| Old provision | A registered partnership or limited partnership with three or more contributors may be converted into a joint stock company by the following procedures, with the consent of all contributors. (1) Notify the registrar in writing within 14 days from the date of consent of all the contributors that all such contributors have consented to the conversion from a partnership to a joint stock company. (2) A notice of the reorganisation shall be published at least once in a local newspaper and a notice of the wish to reorganise into a joint stock company shall be sent to all known creditors of the partnership, and any objections to such reorganisation matter shall be lodged within 30 days of the date of the notice. If objections are lodged, the partnership concerned may not be reorganised unless it has paid its debts or guaranteed its liabilities. |
| New provision | A registered partnership or a limited partnership with three or more contributors may, with the consent of all contributors, be reorganised into a joint stock company by the following procedures. (1) Notify the registrar in writing within 14 days from the date of consent of all investors that all such investors have consented to the conversion from a partnership to a joint stock company. (2) A notice of the reorganisation shall be published at least once in a local newspaper and a notice of the wish to reorganise into a joint stock company shall be sent to all known creditors of the partnership, and any objections to such reorganisation matter shall be lodged within 30 days of the date of the notice. If objections are lodged, the partnership concerned may not reorganise unless it has paid its debts or guaranteed its obligations. |
Land and buildings tax
The Minister of Finance, Mr Arkom, has announced that a reduction in the Land and Buildings Levy is under consideration until 2024. When the Land and Buildings Levy is reduced, local authorities will be affected and the Government will need to compensate for any reduction in revenue during the period in question, but the Government also has budgetary restrictions and the Ministry of Finance needs to consider this under strict caution.