12 December 2008
The Board of Legal Advisory Committee of the Department of Business Development, Ministry of Commerce (the "Board") has ruled that "non-juristic bodies of persons" cannot be shareholders in private and public companies.
"Non-juristic body of person"
The ruling of the Board was at the behest of the Revenue Board which was at a quandary on how to treat and tax "non-juristic bodies of person."
The Revenue Code defines a "non-juristic body of persons" as an ordinary partnership, a group or an association operated by two or more natural persons. In contrast, the Civil and Commercial Code ("CCC") and Public Limited Company Act B.E. 2535 ("PLC") do not provide a definition of a "non-juristic body of persons".
On 29 July 2008 at meeting No. 5/2551, the Board clarified that:
- A "non-juristic body of persons" is not a natural person or a juristic person under the CCC and PLC and thus does not have the legal status to be a shareholder in a private and public company.
- Under Thai law, a share is indivisible, and if more than one person holds a share, one of the members must be appointed to exercise the rights as a shareholder. Companies which have non-juristic bodies of persons as shareholders are not in compliance with the law.
The Board suggested that companies which have "non-juristic bodies of persons" as shareholders to amend their list of shareholders by specifying details about the "non-juristic bodies of persons", e.g. the amount of shares owned and held by each member. More importantly, the Board recommended that "non-juristic bodies of persons" should appoint one member to exercise the stockholder's rights and benefits on their behalf, including receiving dividends. Under this arrangement, the appointed person shall receive the dividends intended for the "non-juristic body of persons."
Given the Board's ruling, the Revenue Department will introduce changes to the taxing of "non-juristic body of persons". At present, "non-juristic bodies of persons", which are not liable for corporate income taxes, enjoy the same tax rates and allowable allowances as natural persons or non-juristic partnerships.
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