Do you think you can make decisions in your company without involving other shareholders? First, it’s important to note that Section 1237(4) of the Thai Civil and Commercial Code (“CCC”) requires every private Thai limited company to maintain at least three shareholders, or risk court-ordered dissolution.
Perhaps in your case, you structured your company so that you hold the majority of voting rights, ensuring the other shareholders cannot outvote you at shareholders’ meetings. You might assume this means you can make any company decision without needing to consult the other shareholders. However, in order for shareholders to vote, the CCC requires that they actually meet. So what are the requirements for a shareholders’ meeting?
To hold a legally proper shareholders’ meeting, an invitation must be sent to all shareholders by registered post at least seven days before the meeting, and also published in a local newspaper at least seven days before the meeting. The invitation must describe the subject matter of the meeting — including any resolutions to be considered and voted on — unless the meeting concerns a “special resolution,” in which case the invitation must be sent and published at least fourteen days in advance. Special resolutions involve matters requiring a higher majority vote to pass, and are defined either by Thai law or, in some cases, by the company’s articles of association.
Now suppose you’ve followed all of these requirements, but on the day of the meeting, no other shareholder shows up — only you, holding your majority voting rights, attend. You clearly hold the majority of the voting rights, but is that enough to constitute a legally valid shareholders’ meeting?
The first hurdle is the quorum requirement. Under CCC Section 1178, at least 25% of the company’s capital must be represented to form a quorum. Let’s assume you own more than that 25% — does that mean you can hold the meeting alone? Remember, in this hypothetical, you own more than 25% of the company’s capital and hold the majority of voting rights as well.
Interestingly, Thailand’s Council of State issued a legal opinion on precisely this question back in 1965. It examined the meaning of the word “meeting” itself, explaining that the term generally refers to an assembly or gathering of persons to discuss certain matters, and noting that the Royal Institute’s Thai Dictionary defines it similarly — as people coming together, assembling, and discussing. On this basis, the Council of State concluded that a “meeting,” for any purpose, requires the gathering of two or more people to discuss something; a single person attending alone does not constitute a meeting.
The Council of State reasoned further that the actual purpose of a shareholders’ meeting is to enable discussion among shareholders — something only possible with at least two people present. Accordingly, in the Council’s view, at least two individuals are needed to satisfy the “spirit of the law” in constituting a meeting. Whether a Thai court would agree with this opinion isn’t entirely clear. In any case, in light of this opinion, if you want to be certain your shareholders’ meeting will be considered lawful, it’s advisable to ensure at least two shareholders are in attendance at any formal meeting.