THAILAND Law and Practice Contributed by: Tirayu Songdacha, Nutchaya Khayan, Piyachat Suwanwihok and Lalita Sriboonruang, MSC International Law Office
is granted (if required) and upon entering into a bind - ing agreement. 5.3 Conditions Precedent, Material Adverse Change and Force Majeure In Thailand, the conditions precedent in JV agree - ments typically include: • obtaining required regulatory approvals (eg, the licensing requirements under specific laws, or BOI (board of investment) approvals); • execution of ancillary agreements (eg, IP licences, asset transfer agreements, and service agree - ments); • fulfilment of capital contribution requirements or other agreed funding arrangements; and • clearance of any existing encumbrances on assets to be contributed to the JV. The satisfaction of these conditions is usually a mutual obligation, but specific items may be allocated to one party. Material adverse change and force majeure clauses usually permit the following: • a material adverse change clause generally allows a party to terminate or delay closing if a significant negative change occurs in the other party’s finan - cial condition, business operations, or the JV’s target business before completion; and • force majeure clauses typically excuse delays or non-performance caused by events beyond the parties’ control, such as natural disasters, war, pandemics, or government actions – in JV agree - ments, force majeure clauses can also be linked to extensions of long-stop dates or temporary sus - pension of obligations. 5.4 Legal Formation and Capital Requirements In Thailand, there is no specific legislation govern - ing UJVs, and therefore no minimum capital require - ment applies. For IJVs incorporated as private lim - ited companies, there is similarly no minimum capital requirement; however, under the CCC, at least two shareholders are required, the minimum par value per share is THB5, and each shareholder may hold any
number of shares. If a foreign shareholder is involved, the minimum capital requirement under the FBA is THB3 million. Activity-specific capital requirements must also be considered, as certain regulated activities impose their own minimum paid-up capital thresholds; for example, a cryptocurrency or digital token exchange centre must have at least THB100 million in paid-up capital, while a non-life insurance business must have at least THB300 million in paid-up capital. 6. Core Terms of a JV Agreement 6.1 Drafting and Structure of the Agreement In Thailand, the primary governing document for UJVs is the joint-venture agreement, which sets out the JV participants’ rights and obligations, capital or asset contributions, profit-sharing arrangements, manage - ment structure, and dispute resolution mechanisms. For IJVs, in addition to the joint-venture agreement, the articles of association (AOA) and a shareholders’ agreement are typically executed to govern matters such as the relationship between shareholders, board composition, procedures for the appointment and removal of directors, share transfer restrictions, and exit mechanisms. The key terms commonly addressed in a joint-venture agreement are: • objectives and business activities; • shareholding structure; • board composition; • appointment and removal of directors; • voting rights; • management authority and reserved matters; • profit, loss, and dividend allocation; • share transfer restrictions; • exit mechanisms;
• confidentiality obligations; • non-compete undertakings; • dispute resolution procedures; and • governing law and jurisdiction.
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