When passing shares within a family business, first distinguish a limited company from a partnership. This article explains transfers of registered shares in a limited company under Thailand’s Civil and Commercial Code; it does not explain transferring a partner’s interest in a partnership.
Legal requirements for transferring shares
Section 1129 states that shares may be transferred without the company’s consent unless the company’s articles provide otherwise. A transfer of registered shares must be made in writing, signed by both the transferor and transferee in the presence of at least one witness, and identify the share numbers being transferred. The transfer cannot be asserted against the company or a third party until the transferee’s name and address are entered in the shareholder register. Read Book III of the Civil and Commercial Code on partnerships and companies from the Department of Business Development.
Check documents before signing
- Compare the share numbers, share count, and holder’s name on the share certificate with the shareholder register.
- Read the company’s articles and any shareholders’ agreement for transfer conditions or pre-emptive rights.
- Confirm that the transferor is entitled to transfer the shares and whether they are pledged or otherwise encumbered.
- Make clear whether the transaction is a sale, gift, or another type of transfer, including the amount, payment date, and proof of payment if consideration is involved.
What the agreement should record
For a clear record, the parties may document the share numbers and quantity, price and payment method, conditions before handover, documents to be delivered, and who will follow up on the register update. These are matters to address in an agreement based on the parties’ terms; they do not guarantee that every dispute will be prevented. Have a lawyer review the actual agreement and company articles.
After preparing the transfer instrument
- Submit the documents to the company for review under its articles and request proof of receipt.
- Follow up on recording the transferee’s name and address in the shareholder register.
- Check that the register and company records reflect the same transaction as the transfer instrument.
- Keep the transfer instrument, share certificate, and supporting evidence with the accounting and tax records.
Receiving shares through inheritance is not the same as a standard sale agreement. Start with the estate documents and ask the company to check the circumstances. A change in shareholders also does not automatically make the recipient a director or an authorized signatory.
For details on the shareholder register and recording a share transfer, see the Department of Business Development.
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