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 affects both Thai-owned and foreign-owned businesses. Unlike informal adjustments, it involves changes to ownership, control, taxation, regulatory compliance, and, sometimes, a company’s legal ability to operate. As a legal operation, restructuring requires careful coordination with multiple statutory regimes.

The Civil and Commercial Code forms the basis of company restructuring in Thailand, covering limited companies, shareholder rights, capital modifications, mergers, and amalgamations. Additionally, the Foreign Business Act B.E. 2542 (1999) restricts foreign ownership and control in certain sectors. Any restructuring that alters shareholding, voting rights, or control must comply with these restrictions and avoid nominee structures.

Tax-wise, the Revenue Code scrutinizes company restructuring. Transactions like share transfers, capital reductions, asset transfers, and mergers 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 challenge transactions that lack economic justification.

Recent amendments to the Civil and Commercial Code in 2023 introduced a more flexible approach for mergers and amalgamations. This change allows businesses to consolidate or reorganize more efficiently while ensuring shareholder and creditor protections.

For foreign investors, restructuring ensures compliance with Thai regulations, aligns with BOI promotion conditions, and facilitates acquisitions or exit strategies. However, improper planning may lead to legal and tax risks, including invalid acts and retroactive tax assessments.

At Benoit & Partners, we guide businesses through the restructuring process in Thailand. Our team advises on regulatory requirements, tax implications, and procedural steps to ensure compliance with Thai law. We help optimize restructuring to reduce costs and enhance performance.

Get expert legal guidance.

What does “Company Restructuration” mean under Thai Law?

Under Thai law, company restructuring refers to modifications in a company’s structure that affect share capital, ownership, governance, assets, or legal existence. The Civil and Commercial Code does not provide a single definition of restructuring but regulates the legal mechanisms for restructuring.

These mechanisms include capital increases or reductions, share transfers, amendments to articles of association, and the creation of different share classes. Other mechanisms involve 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).

Company restructuring differs from ordinary management decisions due to its legal impact. A restructuring alters the company’s legal framework and may affect third parties, such as creditors, employees, regulators, and tax authorities. It is subject to mandatory procedures that protect stakeholder interests and maintain transparency.

Why companies in Thailand undertake a company restructuration

Company restructuring in Thailand is driven by strategic, regulatory, and financial considerations. Many businesses face it as they evolve or encounter new constraints.

A common driver is regulatory compliance, especially with the Foreign Business Act. Foreign investors may need to restructure shareholding or voting arrangements to meet ownership limits, eliminate nominee risks, or respond to regulatory scrutiny. In some cases, restructuring aligns the company’s structure with BOI promotion conditions, which impose specific requirements on capitalisation, activities, and governance.

Restructuring also facilitates investment and financing. Investors typically require a clear, 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, restructuring helps separate business lines, isolate liabilities, or prepare for mergers, acquisitions, or divestments. Companies must manage tax considerations carefully, as aggressive or artificial restructurings may face challenges from 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 restructuring involves changes in ownership, share classes, or capital structure. It may include share transfers between shareholders, capital increases to admit new investors, or capital reductions to eliminate accumulated losses. Thai law requires shareholders to approve and register these changes with the DBD.

The creation of preferred shares often helps adjust voting rights, dividend entitlements, or liquidation preferences. This is particularly common in joint ventures or investment-driven restructurings.

Governance and control restructuration

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

Asset and business transfers

In some cases, restructuring occurs through the transfer of assets or entire business units to another entity. These transactions must comply with contractual obligations, labor laws, and tax regulations. They may also require notifying or obtaining approval from regulatory authorities.

Mergers and amalgamations

The most comprehensive form of company restructuring 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 create 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 are increasingly focusing 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.

Therefore, company restructuring involving foreign shareholders requires careful legal structuring to ensure compliance is maintained not only in form but also in substance.

Get expert legal guidance.

Legal procedures required for company restructuration

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

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

After internal approvals, the company must register changes with the Department of Business Development. Failure to complete registration renders the restructuring legally ineffective against third parties.

Depending on the nature of the restructuring, the company may also need to file or notify the Revenue Department, labor authorities, or sector-specific regulators.

Tax implications of company restructuration in Thailand

Tax considerations are central to any company restructuring. 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 issues regarding loss carryforwards, asset revaluation, and continuity of tax attributes. The Revenue Department closely examines restructurings to ensure they are supported by genuine economic reasons and not solely designed to avoid tax.

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

Risks associated with company restructuration and how to mitigate them

Company restructuring carries inherent legal and financial risks that businesses must carefully anticipate. When restructuring is improperly planned or executed, corporate acts may become invalid, shareholders may challenge decisions, and directors or shareholders may face personal liability. Authorities may also impose regulatory sanctions or revisit past transactions if they identify compliance defects.

Common risks include violations of foreign ownership restrictions under the Foreign Business Act, especially when restructuring alters control mechanisms or voting rights. Tax exposure is a major concern, as restructuring transactions may trigger capital gains tax, VAT, specific business tax, or retroactive reassessments by the Revenue Department. Inadequate protection of creditors or minority shareholders can lead to litigation, suspension of corporate operations, or annulment of the restructuring.

Companies can effectively mitigate these risks through careful legal planning, thorough due diligence, and close coordination between corporate, tax, and regulatory advisors. By ensuring compliance at each stage of the restructuring 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, which increases the risk of invalid corporate acts or regulatory challenges.

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

By aligning the restructuring strategy with the company’s actual legal situation, due diligence significantly reduces the risk of post-restructuring disputes, tax reassessments, or intervention by authorities. It ensures that company restructuring rests 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 restructuring. A law firm helps clients by structuring the restructuring, drafting resolutions and agreements, coordinating filings with authorities, managing tax exposure, and ensuring post-restructuring compliance.

Benoit & Partners offers integrated legal support for company restructuring in Thailand, combining expertise in corporate law, tax law, foreign investment regulations, and regulatory compliance to ensure clients achieve legally robust restructurings.

Conclusion

Company restructuration in Thailand is a decisive legal operation that businesses must approach 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 structured properly, 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, allowing businesses to operate securely and sustainably in Thailand.

If you need further information, you may schedule an appointment with one of our lawyers.