Authority of Company Liquidators

When a company is dissolved in Thailand, it must thereafter be liquidated, wherein its debts are paid, its assets are distributed to the shareholders, and all of its other remaining affairs are settled. During the liquidation phase, company liquidators must be appointed in order to conduct the aforementioned duties. The company liquidators will have the following authority:

• To bring or defend any legal proceeding, civil or criminal, and to make compromise, in the name of the partnership or company.
• To carry on the business of the partnership or company, as far as may necessary for a beneficial settlement of the affairs.
• To sell the property of the partnership or company.
• To do all other acts as may be necessary for a beneficial settlement of the liquidation.

Normally, according to the terms of Section 1251 of the Civil and Commercial Code, the directors of the company assume the role of liquidators except in situations where the company has dissolved due to bankruptcy or in cases where the company regulations provide otherwise. However, it is important to understand that the position as company director and as company liquidators are legally distinct positions. Once a company is dissolved, it no longer exists as a legal personality. The authority of the company directors to act on behalf of the company will terminate and from then on, all actions done on behalf of the formerly existing company must be conducted by the company liquidators.

In Thai Supreme Court Decision No. 778/2547, Company A registered its company dissolution on 18 June 1998, however it then filed a lawsuit against Defendant on 14 July 1998 in order to enforce the payment of a 380,000 baht debt. The lawsuit was filed on behalf of Company by Mr. B acting in his capacity as director of Company A. Ultimately, the Court dismissed the proceedings against Defendant. The Court held that, based on the facts, the company was registered as dissolved before the filing of the lawsuit against Defendant. Therefore, according to Section 1259 of the Civil and Commercial Code, the authority to file the lawsuit on behalf of Company A transferred to the company liquidator. The Court held that Mr. B, in his capacity as company director, had no authority to file the lawsuit. The Court did not address the merits of the case.

Liquidating a company in Thailand is a complex matter. Businesses in Thailand that intend to terminate their operations are advised to consult with competent legal counsel.

 

Category: Business in Thailand, Company Law