Limited Company

Meaning of limited company On the basis that the liability of its shareholders is limited to amount unpaid (if any) on shares held by them.

 Company is promoted and formed by three or more person (called promoters). Capital is divided into equal shares. Liability is limited to the amount unpaid on the shares.

Forming of a company
Incorporation Process
1. Three or more persons agree to make a Memorandum of Association which contains
ame of the company with the word limited N egistered office R bjectives O eclaration of the shareholders is limited D mount of share capital and value of each share A ames, address, occupations and signatures of the N promoters and the number of shares subscribed by each of them.

2. Registering a Memorandum of Association 3. Subscribed of shares 4. To hold statutory meeting for;

Creation of the regulation (if any) Ratification of any contract and any expenses Appointment the directors and auditors and the fixing of their powers.

5. Hand over the business to the director (s) 6. 25% payment of shares (at least) 7. Registering the company within 3 months

Effects of incorporation
becomes a legal entity (juristic person)
can sue or be sued Make a contract own property

What will be effected if the registration is not made within the fixed time?
Company is not formed and all money received from the applicants must be returned without deduction including the interest. And the promoters will be liable for all obligation of the promotion of the company.

 Promoters are jointly and unlimitedly liable for all obligations and disbursements which are not approved by the statutory meeting. Even if those are approved, the promoters remain liable until the registration of the company.

Management of company
Director or Board of director has an authority to manage the company. He is appointed by the shareholders of the company.

Shareholders Meeting Board of Director Director

Appointment of directors
The first director (s) of the company must be appointed by the statutory meeting. The subsequent director (s) is governed by the general meeting of the shareholders.

Cases when the director (s) is unavailable

Resignation Retirement Dismissal Disqualification

Resignation of director
A director may resign his office anytime Provision for resignation is usually made in the regulations of the company The office of director shall be vacated if the director resigns his office by notice in writing to the company.

Retirement
If no regulation of a company for retirement of directors, one-third of the directors shall retire by rotation in each year. A retiring director is eligible for re-election

Dismissal
If a general meeting removes a director before the expiration of his period of office, and appointed another person instead, the person so appointed shall retain his office during such time only as the removed director was entitled to retain the same. The appointment of every new director shall be registered within 14 days from its6 date months
1 year New director

Disqualification
If a director becomes bankrupt or incapacitated, his office is vacated

Board of director
Board of director is a group of managing person of a company

Review
Fill in the Blank

 According to the Thai Civil and Commercial Code, there are ____ types of General Partnership including __________________. Also, there is another type of partnership which is called__________ partnership. The law provides in the general provision that a contract for the formation of a partnership or company is a contract whereby _____ or more persons agree to ______________, with a purpose to share____________.

Section 1013
There are three kinds of partnerships or companies 1_________________ 2_________________ 3_________________

 _____________ is a kind of partnership in which all the partners are jointly and unlimitedly liable for all obligations of the partnership. If nothing has been agreed between the partners as to the management of the business of the partnership, such business may be managed by___________. No partner may enter into a contract to which another partner _________.

 If it is agreed that matters relating to the business of the partnership shall be decided by a majority of partners, each partner shall have ______ vote, irrespective of the amount of his ______________. Even if the partners have agreed that the business of the partnership shall be managed by one or more managing partners, each non-managing partner has the right to__________ _____________________________________.

 If a partner on his own account or on account of another person carry on, without the consent of the other partners, any business of the same ______ and _______ with that of the partnership, the other partners are entitled to claim from him all ________ which he has made OR __________ for the injury which the partnership has suffered thereby. But such claim cannot be entered later than ______ year after the date of contravention.

 If a partner, without the consent of the other partners, transfers to a third person the whole or part of his share in the profits of the partnership, such third person (does/does not) become a partner.

 The share of each partner in the profits or losses is in proportion to his/her __________.

Board meeting
Any director may at any time summon a meeting of directors

Quorum of the board meeting

Quorum is the number of people required to be present before a meeting can conduct business The quorum shall be 3 unless otherwise provided by the company regulation In case of the number of director less than the quorum, the subsisting directors may not do anything except increasing the number of directors up to that number.

Chairman of the board meetings

If no chairman is elected or if at any meeting the chairman is not present at the time appointed for holding the same, the present directors may choose one of their numbers to be chairman of such meeting

Voting at board meetings

Voting at board meeting is governed by the regulation of the company and is normally one vote per director In case of no regulation of the company, any meeting of the board of director are decided by a majority votes; in case of equality of votes the chairman has a casting vote

Delegation of power to managers or committees

The directors may delegate any of their powers to managers or to committees consisting of members of their body. Every manager or committee shall, in the exercise of the power so delegated, conform to any order or regulations that may be imposed on them by the directors Unless provided otherwise by the delegation, any meeting of a committee shall be decided by a majority of votes of the members; in case of an equality of votes the chairman has a casting vote

Duties and liabilities of directors

Law of agency shall apply to the director, company and third person. If a board of director appoint the managing director, he will be the agents company. The other director are not the agent
Company = principal Director (s) or managing director = agents company

Duties of directors
The director must in their conduct of the business apply the diligence of a careful business man. The are jointly responsible for;
1. The payment of shares by the shareholders being actually made 2. The existence and regular keeping of books and documents prescribed by law 3. The proper distribution of the dividend or interest as prescribed by law 4. The proper enforcement of the resolution of the general meeting

Duties of directors (cont.)

A director may be individually liable if;
1. he undertakes commercial transaction of the same nature as and competing with that of the company without the consent of the general meeting, either on his own account or that of third person, 2. nor may he be a partner with unlimited liability in another commercial concern carrying on business of the same nature as and competing with that of the company

Effects of breach of duty

By company By the shareholders:
In case, the company refuses to sue against the director, the shareholder (s) may sue a director for injury caused by him.

By the creditor:
The creditor, upon liquidation, may sue against the director only an amount money that the company remains liable to him.

T/F
There are only two types of business organization under the Civil and Commercial Code, which are partnership and company General Partnership or Ordinary Partnership does not need to be registered. Both general partnership and limited partnership have two types of partners.

 Partner in general partnership is liable for all liabilities of partnership even in a transaction that his own name does not appear. There are two forms of contribution in general partnership. The profit can be distributed whenever partnership has income.

 Every type of partner can run business that has a same nature and competing with partnership. Partnership can be dissolved at any time without legal regulation. Limited partner is bound by the same legal principles as the partner in general partner. Managing Partner has both direct and indirect managerial power in partnership.

Describe characteristics of the share of the company limited.

1. The amount of share may not be less than 5 baht 2. Share is indivisible 3. The whole amount of every shares must be paid in money, except preferences shares allotted. 4. A certificate must be issued to each shareholder for the share held by him. (signed by the director and bear seal of the company) 5. Shares are transferable without the consent of the company except in case of shares entered in a name certificate or otherwise provided in the regulation of the company

What is general meeting of shareholders?

A general meeting of shareholders is the way that Shareholders control the management of business of the company. It shall be held within six months after the registration and shall subsequently be held once at least in every twelve months. Such meeting is called an ordinary meeting.

Provide all situations that can summon an extraordinary meeting.

The reasons to summon extraordinary meeting are as follows
1. Whenever the directors think appropriate 2. When the company has lost 50% of its registered capital 3. The shareholders ,not less than one-fifth of shares of the company, require in writing 4. Purpose of filling the vacancy among the auditors.

Give all circumstances that need special resolution in general meeting of shareholders.
A special resolution is required for the following matters;
1. Changes of the memorandum of association 2. Increase or reduce of capital 3. Insurance of new shares as fully paid up otherwise than in money on any increase of capital 4. Dissolution of the company 5. Amalgamation of the company

Special Resolution
Any business prescribed by law to be transacted by a special resolution with the majority of votes of not less than three fourth of the total votes of the shareholders attending the meeting and eligible to cast the vote. (**the law has been changed in B.E.2551)

Essay (10-15 marks)

Mr. Joe is a shareholder, holding 51% of shares in Pause Company Limited. On 1 September 2005, Mr. Joe found that some of directors had cheated on the company. Mr. Joe wants to dismiss those directors. However, the ordinary meeting will be held on 1 June 2006. Mr. Joe thought that it is too late to wait for such meeting in order to issue a resolution to dismiss the directors because of the cheating director has injured the company too much. What Mr. Joe can do in order to dismiss the directors? Please explain the process supported by legal provisions.

You should explain by using these rules

The shareholders represents at least one-fourth of the capital of the company shall be a quorum. If there is no quorum present within one hour from the time specified for the meeting, such meeting shall be dissolved

If a general meeting removes a director before the expiration of his period of office, and appointed another person instead, the person so appointed shall retain his office during such time only as the removed director was entitled to retain the same. The appointment of every new director shall be registered within 14 days from its date

Good luck!