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Closing a company requires strict compliance with the laws and regulations of the relevant Thailand government agencies. You need to settle the Financial, Auditing and Legal aspects of the company accordingly.
Reasons for closing a company
- Provided by its regulations.
- The formation of the company is for a specified period, by the expiration of such period.
- The company intends to operate for a single undertaking, by the termination of that undertaking.
- A special resolution to dissolve the company.
- The company is bankrupt.
The Court may also dissolve a Limited Company on the following grounds:
- Default in filing the statutory report or in holding the statutory meeting.
- The company does not commence business within a year from the date of registration or suspends its business for a whole year.
- Carrying on the business of the company at a loss and there is no prospect of retrieving its fortunes.
- Reduction of the shareholder’s number to less than 3.
The company must call a shareholders’ meeting to discuss the liquidation process and to confirm the liquidator(s)’ appointment. It is a requirement to publish invitation letters in a local newspaper and to send registered mail to all the shareholders of the company at least 14 days before the meeting date. The meeting may direct the liquidators to make an inventory or whatever is necessary for the affairs of the company. The liquidators are responsible and authorized to settle the company affairs, to pay its debts and to allocate its assets.
The company must register its dissolution and the liquidator’s name with the (DBD) Department of Business Development, Ministry of Commerce within 14 days from the approved closing date of the company. The liquidators must prepare the company’s Financial Statement and have an appointed auditor to examine and certify the statements. Consequently, they must notify the public by advertising in a local paper announcing the company’s liquidation to warn its creditors, if any. It is also necessary to send a registered mail notice to each creditor requesting them to file a claim for any debts owed to them by the company. The liquidator may require the shareholders to pay their unpaid shares at once. If the liquidator finds out that after the shares are paid and the assets are still insufficient to meet the liabilities, they must apply at once to the Court to start bankruptcy proceedings.
The company must file its tax return and settle all taxes due. VAT registered companies have to apply for VAT de-registration within 15 days before the company’s closing date. The company must return the TAX I.D. card along with the VAT Registration Certificate (Por Por20) to the Revenue Department. Failure to comply within the specified time results to the imposition of penalty.
Final Shareholders’ Meeting
Once the assets and liabilities of the company are fully liquidated, the liquidator must call the final shareholders’ meeting. The liquidator will present an account report of the liquidation showing the liquidation process and the disposal of company’s assets. After the approval of the account report, the liquidators must register the proceedings of the meeting with the DBD within 14 days. Such registration is the end of the liquidation.
During the liquidation process, the liquidators must file a report of their activities. They must show the accounting of the liquidation process every 3 months with the DBD until the liquidation process is complete and the after the issuance of a letter by the Revenue Department to the DBD certifying that the company is free of taxes. The DBD will then issue a document to certify that the company’s liquidation is complete.
After the liquidation, the balance sheets shall then be deposited within 14 days at the DBD where they will keep open for public inspection.
Magna Carta’s team of professional accountants can guide you on the laws and procedure in closing a company in Thailand.