23 June, 2017
The National Council for Peace and Order (NCPO) has passed Order 21/2560 to amend laws to facilitate doing business in Thailand, with the order entering into force on April 4, 2017.
Among the amended laws is the Civil and Commercial Code, which now contains a new condition in Section 1201 that requires payment of dividends by a private limited company within one month from the date of resolution made by a shareholders’ meeting or board of directors’ meeting, as the case may be.
Under the previous law, private limited companies did not have a set time period in which they were required to pay dividends, unlike public limited companies, which have long been subjected to a one-month timeline for payment of dividends under the Public Limited Companies Act.
A private limited company that fails to comply with the new one-month timeline for dividend payments may be subject to penalties under the Act Prescribing Offenses Related to Registered Partnerships, Limited Partnerships, Limited Companies, Associations and Foundations B.E. 2499 (1956), as amended. These penalties include:
- A maximum fine of THB 20,000 for limited companies; or
- A maximum fine of THB 50,000 for directors, managers, or any other persons responsible for the limited company, if the offenses of the company are derived from the order or action of these persons, or, in the case where these persons had a duty to issue an order or to take action, but failed to do so, thereby causing the company to commit the offense.
All limited companies and directors need to be aware of the new prescribed time limits within which dividends must be paid in order to avoid penalties.
For further information, please contact:
Cynthia M. Pornavalai , Partner, Tilleke & Gibbins
cynthia.p@tilleke.com
