What should a Share Subscription Agreement include under Thai law?

1. Definitions and Interpretation
2. Subscription
3. Conditions
4. Period Before Completion
5. Shareholders' Meeting and Pre-emption
6. Completion
7. Registration and Issue of the New Shares
8. Use of Proceeds
9. Company's Warranties
10. Investor's Warranties
11. Claims and Limits
12. Investor's Rights After Completion
13. Foreign Ownership and Nominees
14. Termination
15. Costs and Taxes
16. Confidentiality and Personal Data
17. Notices
18. Governing Law and Disputes
19. General

1. The board of directors resolves to call a shareholders' meeting (Clause 3.1(a)). Send the notice of meeting in the way and for the period required by law and the articles (Clause 5.1).
2. Each existing shareholder signs the waiver in Schedule 3, or the company offers the new shares to them in proportion to their holdings and the offer period ends (Clause 5.2). A private limited company must offer new shares to its existing shareholders first.
3. The shareholders' meeting passes a special resolution to increase the capital, amend the memorandum and allot the New Shares to the Investor.
4. Within 7 days after the resolution, the Investor pays the Investment Amount into the company's bank account (Clause 6). Keep the bank slip: the Registrar may ask for evidence of payment.
5. Within 14 days after the resolution, the company files the capital increase with the Department of Business Development (Clause 7.1). Missing this deadline can mean holding the meeting again.
6. Within 14 days after registration, the company enters the Investor in the register of shareholders and issues the share certificate (Clause 7.2).

• New shares cannot be issued below their par value. If the Subscription Price is higher than par, the articles must allow shares to be issued at a premium, and the premium must be paid in full with the first payment (Clause 2.3). Check the articles before the meeting and amend them first if needed.
• If the registration is refused or not completed within 60 days, the Investor may terminate and the company must refund the Investment Amount with interest (Clause 7.3).

• A subscription for new shares is not a transfer of shares, so this Agreement normally carries no stamp duty. The share certificate carries 5 THB (Instrument 11), paid by the company (Clause 15.1).
• The company pays the Registrar's fees for registering the capital increase.

• A foreign Investor should transfer the Investment Amount in foreign currency to the company's account in Thailand, where it is converted into Thai Baht. Ask the bank in advance which foreign exchange form and supporting documents it needs, and state the purpose as investment in shares. Keep the bank's records: they are the evidence of a foreign investment.
• After Completion, Thai persons must still hold more than half of the shares (Clause 13.1). Count the shares held by any Thai company shareholder that is itself majority foreign-owned as foreign.
• If aliens will hold half or more of the shares, the company may need a Foreign Business Licence, a Foreign Business Certificate or another permission before it carries on restricted businesses (Clause 13.1). Apply before Completion where possible.
• A Thai person who holds shares for a foreigner, or with a foreigner's money, commits a criminal offence, and so does the foreigner (Clause 13.2).

• List every known problem in Schedule 2 before signing. A matter that is fairly disclosed cannot be the basis of a warranty claim (Clause 11.1).
• The Investor must notify any claim within … months after Completion, and the company's liability is limited to …% of the Investment Amount, except for fraud, wilful misconduct or gross negligence (Clause 11).
• A claim against the company is paid out of the company's own money, which the Investor now partly owns. An Investor that wants stronger protection should ask the main shareholders to give personal warranties in a separate document.

• The Investor should receive management accounts every quarter and the audited financial statements each year (Clause 12.1).
• Register the Investor's nominee as a director at the same time as the capital increase (Clause 6.4), and update the company affidavit.
• The Investor signs an undertaking to be bound by the existing shareholders' agreement at Completion (Clause 12.4). Check that the articles also reflect that agreement.
• If no shareholders' agreement exists, consider signing one now with all shareholders, covering reserved matters, board seats and share transfers.

• A Thai court works in Thai. A Party that 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-60D411. If you reuse this content, please credit the author and link to the original.