It might happen that a company might have to increase or decrease capital for its internal compliance with business strategy. Adjustment in capital structure of a company with effect of whether increase or decrease is rather straight forward in Thailand. An extraordinary shareholders meeting must be called by shareholders to agree of the change, and the Articles of Association may need to be amended in some cases.

Decrease of capital:

A private limited company in Thailand can decrease the capital of the company either by lowering the amount of each or by lowering the number of shares in the company. There are two important phases while decreasing capital of the company.

PHASE 1

For the phase one shareholders have to be notified about the extra ordinary shareholder meeting with invitation sent to each shareholder and publish announcement in local newspaper. The newspaper announcement has to be made at least 14 days prior to the extra ordinary meeting date.

After the meeting passes the resolution, first application is submitted to department of Business development(DBD). First application has to be submitted to DBD office within 14 days from the date of such extra ordinary meeting
.
PHASE 2

For phase 2 of capital reduction process, once more time newspaper announcement has to be done notifying creditors of the company and sending letters to them for the consent from creditors as well. The time period of such notice is 30 days from the date of publication of newspaper announcement.

After 30 days period, if there is no formal objective for any of the creditors. Final paperwork for changing company’s memorandum is filed with DBD.

Please kindly note that if there is objection raised by the creditors then matter with creditor has to be settled first before submitting application for final change.
With reference to the civil and commercial code of ThailandSection 1225. The capital of the company may not be reduced to less than one-fourth of its total amounts.

Increase capital

Increasing capital of the company is rather straight forward than that of decrease of capital and takes shorter time as well.

For the increase of the capital of the company, an invitation letter to each shareholder has to be sent calling for the extra ordinary shareholder meeting and at the same time newspaper announcement also has to be made in local newspaper. The newspaper announcement has to be made at least 14 days prior to the date of such meeting. Shareholding should pass the resolution for the increase of capital.

Application for the increase of capital should be filed with Department of business development within 14 days from the date of shareholder meeting.
The documents needed for increase of capital are:

• Copy of company affidavit
• Shareholder list
• Copy of ID card or copy of passport of authorized director
• Details of capital increase and subsequent share allotment to each shareholder.

If increase of capital of the company effects total registered capital of the company to be more than 5 million then proof of adequate balance has to be shown/submitted to DBD along with the application for increase of capital. Company should hold minimum of 25% of the amount to be increased in its corporate bank account. Balance certificate letter should be acquired from the bank.