THAILAND Law and Practice Contributed by: Tirayu Songdacha, Nutchaya Khayan, Piyachat Suwanwihok and Lalita Sriboonruang, MSC International Law Office
ing activities or soliciting employees, customers, or suppliers. • Obligation to contribute capital, assets, or services as agreed in the JV agreement. Profit and Loss Distribution UJV • Profits are distributed as profit shares and losses allocated according to the JV agreement. • There are no statutory requirements governing the allocation, giving parties contractual flexibility. IJV • Profits are distributed as dividends in proportion with shareholdings unless otherwise specified in company’s AOA. • Losses are borne in proportion with shareholding. • The CCC prescribes that shareholder returns are made through dividends, capital reductions, or distribution upon dissolution. Liabilities for Debts and Obligations UJV • Thai court precedent treats UJVs as unregistered partnerships, meaning participants are jointly and unlimitedly liable for the debts and obligations of the JV, including tax liabilities, regardless of internal allocation arrangements. IJV • Shareholders’ liability is generally limited to unpaid capital. 6.7 Minority Protection and Control Rights The typical ways for a minority member of the JV to protect their interests include the following. UJV • Protections depend entirely on the JV agreement, as there is no statutory framework. • Common provisions include reserved matters requiring unanimous or majority consent for key business decisions. IJV Minority shareholders benefit from both statutory rights and contractual protections as follows.
• Statutory rights under the CCC, such as the ability of shareholders holding at least 10% of shares to call a shareholders’ meeting. • Contractual rights typically agreed in the share - holders’ agreement or AOA, which may include: (a) tag-along rights, allowing minority sharehold - ers to sell their shares on the same terms if a majority shareholder sells its stake; (b) share transfer restrictions, requiring consent or rights of first reversals before shares are sold to third parties; or (c) reserved matters, requiring super-majority or unanimous approval for significant corporate actions. 6.8 Applicable Law and Dispute Resolution in International JVs International Joint Ventures In Thailand, JV participants may choose a foreign gov - erning law under the JVA (joint-venture agreement) provided it does not conflict with Thai public order or mandatory provisions, such as restrictions on land ownership or labour laws. However, the IJV registered in Thailand remains subject to Thai corporate law regardless of the chosen governing law. If a dispute is litigated before a Thai court, the party relying on foreign law bears the burden of proving its content to the court’s satisfaction. Courts as a Venue for Resolving Disputes Foreign JV members rarely select Thai courts due to the fact that proceedings are conducted solely in Thai and often consume a large period of time. The primary exception arises when the counterparty holds assets in Thailand, allowing for direct enforcement of a Thai court judgment against those assets. Failure to Agree on the Applicable Procedural Law A Thai court cannot apply any procedural law other than Thai procedural law; parties therefore cannot agree to use a different procedural law for court pro - ceedings in Thailand. In arbitration, if the parties fail to agree on the applicable procedural law and the seat of arbitration is in Thailand, the arbitral tribunal will apply the Thai Arbitration Act B.E. 2545 (2002). This Act is based on the UNCITRAL Model Law, although Thailand is not a contracting state to that instrument.
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