What should a Founders' Agreement include under Thai law?

1. Definitions and Interpretation
2. Nature of the Co-operation
3. Formation of the Company
4. Shares, Capital and Foreign Ownership
5. Roles and Commitment
6. Decisions Before Registration
7. Expenses and Contracts Before Registration
8. Intellectual Property
9. Vesting
10. Leavers
11. Transfer of Shares
12. Non-Solicitation and Non-Competition
13. Confidentiality
14. Personal Data
15. Warranties
16. Breach and Termination
17. Notices
18. Governing Law and Disputes
19. General

• Each founder should read the whole Agreement, especially Clauses 9 and 10 (vesting and leavers), and should have the chance to take independent legal advice. A founder who signs under pressure may later argue that the leaver terms are unfair.
• A founder who is still employed elsewhere should check the employment contract first. Some contracts give the employer work created outside office hours or restrict competing businesses (Clause 15.1(c)).
• Agree the Vesting Start Date honestly. It should be the date on which each founder really started working on the Business.

• This Agreement is not an instrument listed in the Stamp Duty Schedule of the Thai Revenue Code, so it normally carries no stamp duty.
• If the founders ignore Clause 2 and trade together before the company is registered, the arrangement may be treated as a partnership agreement, which carries duty of 100 THB (Instrument 27).
• Every later transfer of shares, including a transfer under a Call Notice (Clause 10), is made by an instrument of transfer that carries duty of 1 THB for every 1,000 THB, or part of 1,000 THB, of the paid-up value or the price, whichever is higher (Instrument 2). The transferor pays it. Share certificates carry 5 THB each (Instrument 11).
• An unstamped instrument cannot be used as evidence in a Thai civil court until the duty and a surcharge are paid (Revenue Code section 118).

• Reserve the company name with the Department of Business Development, then register within … days (Clause 3.1). Until registration, do not sell, invoice or borrow together (Clause 2.2): persons who carry on a business together to share profits may be treated as an unregistered ordinary partnership, in which every partner is liable for all its debts without limit (Civil and Commercial Code sections 1012 and 1025).
• Pay for the shares from each founder's own bank account and keep the slips. Each founder pays 25% before registration and the rest when the board calls for it (Clause 4.2).
• The memorandum and articles of association are filed in Thai and bind outsiders. Ask whoever handles registration to include the share transfer restrictions of Clause 11 in the articles, as far as the Registrar accepts them. A founders' agreement alone does not stop the company from registering a transfer.
• Within 60 days after registration, sign a shareholders' agreement (Clause 3.4). It should keep the vesting and leaver rules.

• Within 14 days after registration, each founder signs the IP assignment in Schedule 3 with the company, attaching a list of the code, designs, brand names, domain names and accounts assigned (Clause 8.2). A transfer of copyright must be in writing and signed (Copyright Act section 17). Keep the signed originals with the company's records.
• Move domain names, app store accounts, social media accounts and cloud subscriptions into the company's name (Clause 7.2).
• If a founder later becomes an employee of the company, copyright in works created as an employee belongs to the employee unless agreed otherwise in writing (Copyright Act section 9). Put an IP assignment into every employment or service contract with a founder (Clause 5.2).
• Get written assignments from freelancers before paying their final invoice (Clause 8.4).

• Record the Leaving Date in writing (Clause 10.1). Vesting stops on that date.
• If you believe a founder is a Bad Leaver, collect the evidence first. The discount of …% (Clause 10.4) works like a penalty under Thai law, and a court may reduce it if it is excessive (Civil and Commercial Code section 383).
• A Call Notice must be given within 90 days (Clause 10.3). The company itself cannot buy back the shares, so the other founders, or a buyer they nominate, must buy them.
• A transfer at a price below market value may have income tax consequences for the buyer or the seller. Ask an accountant before completing it.

• Thai persons must hold more than half of the shares at all times (Clause 4.4). A Thai founder must pay with his or her own money. Holding shares for a foreigner, or with a foreigner's money, is a criminal offence for both of them.
• Because foreigners may hold half or more of the shares, the company may need a Foreign Business Licence, a Foreign Business Certificate (for example with BOI promotion) or another permission before it carries on restricted businesses (Clause 4.4). Allow several months for this.
• A foreign founder who works in Thailand needs a visa and a work permit. Being a founder, shareholder or director does not by itself allow a person to work in Thailand.

• If you collect sign-ups, waitlists or user data before registration, your privacy notice should say that the company to be formed will receive the data (Clause 14.2). After registration, move the data into the company's systems and delete personal copies.

• A Thai court works in Thai. A founder who relies on this Agreement must file a certified Thai translation. Budget for this cost.

Compiled from the notes that accompany the English contract templates on this site, published by Phuwara Krobtaku (ภูวรา ครอบตะคุ), Thai attorney-at-law, licence no. 477/2558. The short answer and summary at the top of this page are put together by the site from the template's clause headings and notes. Statutes are quoted only in the official Thai text: Thai is the only official language of Thai legislation, and an unofficial translation can mislead. Article registry OKC-492605. If you reuse this content, please credit the author and link to the original.