Withdrawing Shareholder Meeting Resolutions
Shareholder meetings play an important role in the governance of Thai limited companies since the Civil and Commercial Code require that limited companies be managed by the directors under the control of meetings of the shareholders (called “general meetings” in the Code). The primary instrument used by the general meetings to govern the company are shareholder meeting resolutions which are passed by a majority vote of the shareholders attending the meetings. However, an important legal issue that arises in regards to shareholder meeting resolutions concerns the withdrawal of resolutions after they have been passed by a meeting. Section 1195 of the Civil and Commercial Code provide for the withdrawal of company resolutions. According to that section, a resolution must be withdrawn by court order. Furthermore, only a shareholder or director has standing to challenge a resolution and may make such an application to the Court.
The reasons that a shareholder meeting resolution may be withdrawn are as follows:
- Failure to properly summon a shareholder meeting: This refers specifically to the requirements of Section 1175, which requires that “Notice of the summoning of every general meeting shall be published at least once in a local paper not later than seven days before the date fixed for the meeting, and sent by post with acknowledgement of receipt to every shareholder whose name appears in the register of shareholders not later than seven days or, in case the notice is for a special resolution to be made by the general meeting, fourteen days before the date fixed for the meeting.” Furthermore, a “notice of the summoning of a general meeting shall specify the place, the day and the hour of meeting and the nature of the business to be transacted. In case the notice is for a special resolution to be made in the general meeting, the substance of the proposed resolution shall also be included in the notice.”
- Conducting a shareholder meeting improperly: This basis for withdrawal refers to such improprieties as allowing those without the right to attend a meeting to do so, not allowing those with the right to attend a meeting to do so, improper manner in conducting the meeting, meeting without a quorum, an unauthorized person appointed as chairman, rescheduling a meeting without the consent of the meeting,
- Improper casting of votes: This basis refers to such improprieties as failure to allow for a poll or failure to count the votes properly, allowing those without the right to vote to cast votes, or allowing proxies to vote without a lawful proxy letter.
- Exercising of rights in bad-faith: Thai legal principles, as defined in the Civil and Commercial Code, generally void legal acts when they are done in bad-faith.
Thai company law is complex. Foreigners who are involved in the management of Thai limited companies or who have invested in such companies are advised to consult with competent Thailand lawyers.