We don’t have any income anymore, business is bad. What should I do with the company?
If for any reason your business takes a downturn and your income decreases or even drops to 0 then you have 3 options to consider regarding your Thai company.
- You can keep your Thai company alive while you investigate new ways of generating income or attracting investment and submit the yearly accounts and VAT returns as required. If you need to put funds into the company to cover expenses this can be done as a loan which you should not have to pay tax on.
- You can make the company dormant but you will need to submit a balance sheet at the end of every year even if you have no income and pay any relevant accountants fees. If you are registered for VAT you will still need to file a monthly VAT return with a nil balance. If you don’t do this, you will be liable for a fine of 500 baht per missing VAT return.
- You can close the company completely, however this is not a straightforward process and has more steps than actually setting up a company.
What are the steps involved in closing a Thai company?
The company must:
1.Hold a Board of Directors’ meeting to adopt and approve liquidation of the company and to fix dates for two separate General Meetings of shareholders to consider this. Any of the directors or a person authorized by the directors may issue notices calling for such shareholders’ meetings, unless required otherwise by the Articles of Association of the company.
2.General Meeting (first) of the shareholders is to adopt a special resolution to liquidate and dissolve the Thai company. A liquidator and an auditor will be appointed by the meeting for such purpose.
3.General Meeting (the second) of the shareholders will confirm the special resolution adopted in the first meeting. The second meeting must be not less than fourteen days and not more than six weeks from the date of the first meeting, unless stated by the Articles of Association of the company.
4.Place two successive advertisements in a local newspaper announcing the company liquidation to allow creditors (if any) to make a claim for debts owed to them by the company.
5.Send to all creditors a letter by registered mail requesting them to file a debt claims owed to them by the company.
6.File the relevant application documents together with copies of the special resolutions with the Company and Partnership Registration Office, Commercial Registration Department, Ministry of Commerce, within 14 days from the date of the second shareholders’ meeting.
7.The appointed auditor must prepare and certify the financial statements (Balance Sheet and Accounts) as of the date of dissolution. The date of such financial statements must be the date of the second shareholders’ meeting (i.e., the confirming meeting).
8.Hold a shareholders’ meeting to approve the financial statements for submission to the Ministry of Commerce.
9.Submit a report of the liquidator every three months to the Ministry of Commerce. This obligation shall continue until completion of the liquidation process.
10.Once the liquidator has cleared the assets and liabilities and has called on debtors for payment of debts to the company, the liquidator must call a final meeting of the shareholders to approve the final liquidation of the company. The minutes of the meeting shall be submitted to the Ministry of Commerce within fourteen days from the date of the meeting.
11.Submit application to the Thai Revenue Department for liquidation of the company and return the original Value Added Tax Certificate and original Tax Identification Card in the name of the company.
12.When the Revenue Department grants approval, the liquidator shall notify and submit a copy of such approval to the Ministry of Commerce in order to obtain final approval from the Ministry.
13.The liquidator has the duty to deposit all the company’s books of accounts with the Registrar’s office, where they shall be kept for ten years counting from the date of final approval of the liquidation. (In practice, the Ministry does not keep the books of accounts. Instead, it asks the liquidator to keep the books and notify the Registrar of such fact by letter.)
If you need to discuss any aspect regarding the closure of a Thai company please contact [email protected]
