This is a basic overview of the rights and responsibilities of a company director in Thailand.
In Thailand, each corporation is required to have at least one director who will oversee the company’s operations in accordance with its bylaws and annual shareholders’ meeting.
Role of a Company Director in Thailand
- Deciding by voting at the board meeting
- Deciding on matters required by laws or proposed by the management
- Setting goals, policies, and strategies
- Monitor, oversee, and evaluate
Eligibility to Become a Company Director in Thailand
The qualifications for an individual to be a director are:
- Must be at least 20 years old
- Not incompetent or bankrupt
- Can be a resident or non-resident
Appointment of Company Director in Thailand
The general shareholder meeting has the power to elect directors. A new director for the corporation may only be appointed by the majority of shareholder votes. After the election is complete, an individual earns the position, rights, and responsibilities of a company director in Thailand.
Resignation of Company Director in Thailand
Any director who wishes to resign must submit a resignation letter to the company in accordance with section 1153 of the Thai Limited Company Law, and the resignation is effective as of the day the letter is received by the business. Resigning directors may also inform the Registrar of their resignation.
The director’s declaration to resign from his position as a corporate director must be included in the resignation letter and must be signed by the departing director.
Removal of a Thai Company Director
A general meeting resolution that removes a director may be adopted.
If a director refuses to sign the resignation letter, issues may occur when removing them. A shareholder resolution to fire the director should be secured if this occurs.
The company must file the registration to the Ministry of Commerce within 14 days of a change in the board of directors.
Duties of a Thai Company Director
Statutory Duties
The duties of a director in a Private Limited Company in Thailand include:
- Manage the company according to their experience and knowledge
- Make sure that shareholders make the payment of shares
- Organize the keeping of books and documents
- Distribute the dividend or interest payments
- Enforce the decisions in the shareholders’ meetings
- Not undertake commercial transactions of the same nature as, and competing with the company, either on his own account or of a third person
- Not be a partner with unlimited liability in other companies of the same nature as or competing with the company
In addition to the above, Public Company Directors have the entitlement to some more duties like the following:
- Observing the Public Companies Act, the company’s objects and articles of association
- Not engage in any business in competition with the company
- Where a director purchases or sells property or does any business with the company, such transactions do not bind the company, unless approved by the board of directors
Fiduciary Duties
The fiduciary duties of a director are to:
- Act in good faith and in the best interests of the company
- Act with proper intentions
- Avoid conflict of interest between personal and company matters
Powers of Thai Company Directors
- Although there may be vacancies among them, the remaining directors may still act. However, if and for as long as their number falls below that required to constitute a quorum, the remaining directors may only act to call a general meeting of the company or to increase the number of directors to that number (section 1159).
- Directors may determine the quorum for the transaction of business at their meetings. However, in case of no quorum, three directors must form the majority when there are more than three directors (section 1160).
- At every board meeting, a majority vote settles the questions. However, in the event of a tie vote, the chairman has a casting vote (section 1161).
- A director may convene a board meeting at any moment (section 1162).
- The directors may choose one of their members to preside over meetings. Additionally, they can set the tenure of his/her term in office in the absence of a chairman (section 1163).
- Any authority held by the directors is subject to transfer to management or committees made up of other directors. Every manager or committee must follow any directives or rules that the directors may impose on them when exercising the authority entrusted to them (section 1164).
Liabilities of a Thai Company Director
If a director doesn’t carry out their duties or responsibilities, they may face termination, face financial penalties, or have to pay the firm, their shareholders, or other parties that suffered losses.
If the director’s negligence causes a criminal offense, such as public cheating and fraud, defamation, document forgery, or currency counterfeiting, the offense is due to the director’s action or negligence in order for the director to be criminally accountable.
According to Section 1169 of the Civil and Commercial Code, the company or, in the event the company declines to act, any shareholder, may file claims against the directors for compensation for harm they caused to the firm.
In the event that the company’s creditors have unresolved claims against it, they may also enforce such claims.
In order to avoid any duty violations, it is crucial that you understand the functions and responsibilities of a director, who are a necessary component of any Thai firm.
However, to be a Director of a Thai company, you must register your company in Thailand. Are you aspiring to be one?
Contact Konrad Legal Company Limited for complete support and coordination in the process with expert company registration services in Thailand. Email us at [email protected] and our team will get back to you within one working day! Additionally, we can also help you through the process of maintaining decorum and executing all the rights and responsibilities as a company director in Thailand.
