Not keeping your company up to date – 3 years and it’s all gone

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Amid increasing scrutiny of illegal business activities, the Department of Business Development (DBD) is flagging entities that have failed to submit financial statements for three consecutive years. The DBD has identified 8,221 companies, representing over 900,000 individuals, that have not submitted financial statements for several years. These entities are at risk of being declared non-operational and struck off.

Non-compliant companies that wish to remain on the list must submit a letter requesting suspension of the strike-off by 29 May 2024. The DBD has notified the Directors of companies that have not complied and cautions them to thoroughly verify all their company details.

Mrs. Oramon Supthaweetham, Director-General of the Department of Business Development, stated that the DBD has also notified the Bangkok Partnership Registration Office about removing certain partnership companies from the register. Consequently, the Department has initiated legal proceedings to ensure accurate juristic person information, primarily focusing on Bangkok-based entities, with similar actions undertaken by Provincial Commercial Offices. 

Entities marked as “abandoned” lose their legal capacity to act, yet obligations of key stakeholders endure. Reinstatement is possible within ten years through a costly and lengthy court application, but compliance is urged to ensure business integrity.

Compliance, AGMs, and submissions

As with its efforts to crack down on nominee shareholders, the DBD’s efforts to identify non-compliant companies and partnerships underscore the government’s focus on unlawful business activities. This includes ensuring that registered businesses in Thailand adhere to all regulations and fulfill necessary submissions, such as financial statements.

Companies and partnerships are typically required to submit financial statements to the DBD within one month after their Annual General Meeting of Shareholders (AGM). AGMs are held annually by the Board of Directors, with invitations sent to all shareholders.

Invitations for AGMs involve publishing a notice in a local newspaper at least seven days before the meeting and sending invitations to shareholders with a means to verify delivery. For the meeting to proceed, a minimum attendance of 25% of registered capital, or as specified in the company’s Articles of Association, is required.

Only notified agenda items can be discussed during the meeting. These procedures are governed by the Civil and Commercial Code, particularly s.1175.

During AGMs in Thailand, shareholders review and approve the company’s financial statements for the previous fiscal year, including the balance sheet, income statement, and cash flow statement. Shareholders may also vote to appoint or re-elect members to the Board of Directors and select auditors for the upcoming fiscal year.

Decisions regarding dividend distribution, executive compensation packages, and matters related to corporate governance, such as changes to bylaws or policies, are discussed and voted upon. Shareholders may also raise other business or questions relevant to the company’s operations or governance during the meeting. The AGM ensures shareholder involvement in key decision-making processes and promotes transparency and accountability within the company.

Conclusion

In light of the Department of Business Development’s (DBD) efforts to update its database and identify non-compliant companies and partnerships, entities that have failed to submit financial statements for three consecutive years have to take immediate action to rectify their status. 

To avoid being marked for removal, non-compliant entities must submit a letter requesting suspension of their name marking by 29 May 2024. If they have not already done so, business entities must conduct their AGMs as soon as possible to ensure financial documents have been reviewed and approved, appointments have been made, and matters related to corporate governance have been addressed.

In summary, if you are involved with a company or partnership that hasn’t posted their returns for three years, you should immediately rectify their status to avoid being struck off. This is even more important if you are holding property through a company, as being struck off means you cannot deal with the property, and it may be seized and sold.

Silk Legal provides various services related to corporate and commercial matters and can support you in conducting your AGM. This article is for information only. While we have tried to keep our updates as accurate as possible, errors and changes to proposed legislation may affect your decisions. Please feel free to contact us for a free consultation at [email protected]

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