Company Restructuration in Thailand: Legal Overview

Company restructuration as a regulated legal tool under Thai Law

Company restructuration in Thailand is a legally regulated process that plays a central role in the life cycle of both Thai-owned and foreign-owned companies. Unlike informal corporate adjustments, company restructuration involves structural changes that directly affect ownership, control, taxation, regulatory compliance, and, in some cases, the legal capacity of a business to continue operating lawfully in Thailand. As a result, restructuration is not merely a strategic or financial decision; it is a legal operation governed by multiple statutory regimes that must be carefully coordinated.

The legal foundations of company restructuration in Thailand are primarily found in the Civil and Commercial Code, which governs companies limited by shares, shareholder rights, capital modifications, mergers, and amalgamations. These provisions are complemented by the Foreign Business Act B.E. 2542 (1999), which imposes strict limits on foreign ownership and control in certain business activities. Any restructuration involving changes in shareholding, voting rights, or effective control must therefore be assessed in light of foreign ownership restrictions and the prohibition of nominee structures.

From a tax perspective, company restructuration is closely examined under the Revenue Code. Transactions such as share transfers, capital reductions, asset transfers, mergers, or intercompany reorganisations may trigger corporate income tax, withholding tax, specific business tax, stamp duty, or VAT. The Thai Revenue Department applies substance-over-form principles and may reassess restructuration transactions that lack genuine economic justification.

Recent legislative developments have further reshaped the legal landscape of company restructuration. The 2023 amendments to the Civil and Commercial Code introduced a modernised and more flexible regime for mergers and amalgamations, allowing companies to consolidate or reorganise more efficiently while imposing enhanced procedural safeguards for shareholders and creditors.

For foreign investors, company restructuration is often essential to ensure compliance with Thai regulations, align corporate structures with BOI promotion conditions, prepare for capital injections or acquisitions, or facilitate exit strategies. However, without proper legal planning, a restructuration may expose shareholders to significant legal and tax risks, including invalid corporate acts, regulatory sanctions, or retroactive tax assessments.

This article provides a comprehensive legal analysis of company restructuration in Thailand, examining its legal meaning, available mechanisms, procedures, risks, and strategic benefits, while highlighting the critical role of legal counsel in securing a compliant and effective restructuration.

What does “Company Restructuration” mean under Thai Law?

Under Thai law, company restructuration refers to any legally significant modification of a company’s structure that affects its share capital, ownership, governance, assets, or legal existence. The Civil and Commercial Code does not provide a single definition of restructuration; instead, it regulates various legal mechanisms through which restructuration may occur.

These mechanisms include capital increases or reductions, share transfers, amendments to articles of association, creation of different share classes, changes in directorship or management authority, mergers, amalgamations, and business or asset transfers. Each of these operations is subject to specific statutory requirements, shareholder approvals, and registration formalities with the Department of Business Development (DBD).

Importantly, company restructuration is distinguished from ordinary management decisions by its legal impact. A restructuration alters the company’s legal framework and may affect third parties, including creditors, employees, regulators, and tax authorities. As such, it is subject to mandatory procedures designed to protect stakeholder interests and maintain transparency.

Why companies in Thailand undertake a company restructuration

Company restructuration in Thailand is driven by a combination of strategic, regulatory, and financial considerations. For many businesses, restructuration becomes unavoidable as the company evolves or faces new constraints.

One of the most common drivers is regulatory compliance, particularly with the Foreign Business Act. Foreign investors may need to restructure shareholding or voting arrangements to comply with ownership limits, eliminate nominee risks, or respond to regulatory scrutiny. In other cases, restructuration is required to align the company’s structure with BOI promotion conditions, which often impose specific requirements regarding capitalisation, activities, and governance.

Company restructuration is also frequently undertaken to facilitate investment and financing. Investors typically require a clear and legally secure ownership structure before injecting capital. This may involve consolidating shareholdings, issuing preferred shares, or reorganising group structures.

From a tax and risk management perspective, restructuration may be used to separate business lines, isolate liabilities, or prepare for mergers, acquisitions, or divestments. However, tax considerations must be handled carefully, as aggressive or artificial restructurations may be challenged by the Revenue Department.

Main forms of company restructuration available in Thailand

Thai law provides several legal tools for company restructuration, each serving different strategic objectives.

Share and capital restructuration

Share restructuration involves changes in ownership, share classes, or capital structure. This may include share transfers between shareholders, capital increases to admit new investors, or capital reductions to eliminate accumulated losses. Thai law requires shareholder approval and registration of these changes with the DBD.

The creation of preferred shares is often used in restructuration to adjust voting rights, dividend entitlements, or liquidation preferences, particularly in joint ventures or investment-driven restructurations.

Governance and control restructuration

Company restructuration may also involve changes to governance structures, such as appointing new directors, redefining management powers, or introducing reserved matters requiring special shareholder approval. These changes are typically implemented through amendments to the articles of association.

Asset and business transfers

In some cases, restructuration is achieved through the transfer of assets or entire business units to another entity. These transactions must comply with contractual obligations, labor laws, and tax regulations, and may require notification to or approval from regulatory authorities.

Mergers and amalgamations

The most comprehensive form of company restructuration involves mergers or amalgamations. Following the 2023 amendments to the Civil and Commercial Code, Thai law now offers a clearer and more flexible framework for corporate consolidation. Mergers allow one company to absorb another, while amalgamations result in the creation of a new legal entity.

Company restructuration and foreign ownership restrictions

Foreign ownership remains one of the most sensitive aspects of company restructuration in Thailand. Any restructuration that alters shareholding ratios, voting rights, or effective control must be assessed under the Foreign Business Act.

Thai authorities increasingly focus on substance and control, rather than formal shareholding percentages. Arrangements that grant foreign shareholders de facto control through voting agreements, preferential shares, or financing mechanisms may be scrutinised and challenged as illegal nominee structures.

As a result, company restructuration involving foreign shareholders requires careful legal structuring to ensure that compliance is maintained not only in form but also in substance.

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Legal procedures required for company restructuration

Company restructuration in Thailand follows a formal and sequential legal process.

At the corporate level, restructuration typically requires shareholder resolutions adopted in accordance with statutory quorum and majority requirements. Certain operations, such as mergers or capital reductions, require special resolutions and creditor protection procedures.

Following internal approvals, changes must be registered with the Department of Business Development. Failure to complete registration renders the restructuration legally ineffective against third parties.

Depending on the nature of the restructuration, filings or notifications may also be required with the Revenue Department, labor authorities, or sector-specific regulators.

Tax implications of company restructuration in Thailand

Tax considerations are central to any company restructuration. Share transfers may trigger capital gains tax, while asset transfers may be subject to VAT, specific business tax, or stamp duty.

Mergers and amalgamations raise complex tax questions regarding loss carryforwards, asset revaluation, and continuity of tax attributes. The Revenue Department closely examines restructurations to ensure they are supported by genuine economic reasons and not designed solely to avoid tax.

Failure to properly assess tax implications may result in reassessments, penalties, and surcharges.

Risks associated with company restructuration and how to mitigate them

Company restructuration carries inherent legal and financial risks that must be carefully anticipated. When restructuration is improperly planned or executed, corporate acts may be declared invalid, shareholder decisions may be challenged, and directors or shareholders may be exposed to personal liability. In addition, authorities may impose regulatory sanctions or reopen past transactions if compliance defects are identified.

The most frequent risks include violations of foreign ownership restrictions under the Foreign Business Act, particularly where restructuration alters control mechanisms or voting rights. Tax exposure also represents a major concern, as restructuration transactions may trigger capital gains tax, VAT, specific business tax, or retroactive reassessments by the Revenue Department. Furthermore, inadequate protection of creditors or minority shareholders may lead to litigation, suspension of corporate operations, or annulment of the restructuration.

These risks can be effectively mitigated through careful legal planning, thorough due diligence, and close coordination between corporate, tax, and regulatory advisors. By securing compliance at each stage of the restructuration process, companies can protect their shareholders, preserve legal validity, and avoid costly disputes or enforcement actions.

The role of legal due diligence in company restructuration

Legal due diligence is a fundamental step in any company restructuration in Thailand. Before implementing structural changes, it is essential to clearly identify the company’s existing legal, regulatory, and contractual position. Without this analysis, restructuration decisions may rely on incomplete or inaccurate information, increasing the risk of invalid corporate acts or regulatory challenges.

In practice, legal due diligence covers the review of corporate records, shareholding structure, articles of association, shareholder agreements, licenses, key contracts, and tax compliance. This process allows legal advisors to detect irregularities, contractual restrictions, foreign ownership risks, or latent liabilities that may directly affect the feasibility and legality of the restructuration.

By aligning the restructuration strategy with the company’s actual legal situation, due diligence significantly reduces the risk of post-restructuration disputes, tax reassessments, or intervention by authorities. It ensures that company restructuration is implemented on a solid legal foundation and remains fully compliant with Thai law.

How our Law Firm supports company restructuration in Thailand

Given the complexity of Thai corporate and regulatory law, professional legal assistance is indispensable for company restructuration. A law firm supports clients by structuring the restructuration, drafting resolutions and agreements, coordinating filings with authorities, managing tax exposure, and ensuring post-restructuration compliance.

Benoit & Partners provides integrated legal support for company restructuration in Thailand, combining expertise in corporate law, tax law, foreign investment regulations, and regulatory compliance to secure legally robust restructurations. You may book a free consultation to assess your restructuring needs and define a compliant strategy under Thai law.

Conclusion

Company restructuration in Thailand is a decisive legal operation that must be approached with precision and foresight. Far from being a simple internal adjustment, company restructuration affects ownership, control, taxation, and regulatory compliance, particularly in a jurisdiction where foreign ownership rules and tax scrutiny are strictly enforced. When properly structured, it allows businesses to secure compliance, support investment strategies, and strengthen long-term stability.

However, the effectiveness of a company restructuration depends on strict adherence to legal procedures and a clear understanding of its tax and regulatory consequences. Without adequate planning, restructuration may expose companies and shareholders to significant legal and financial risks. This is why professional legal guidance remains essential to ensure that company restructuration is both legally valid and strategically beneficial, enabling businesses to operate securely and sustainably in Thailand.