Legal Effect of a Blank Share Transfer Instrument
A Blank share transfer instrument is widely used in a company limited whereby a current shareholder of a company, as a transferor, pre-sign a share transfer instrument and does not specify any particular name of the transferee, in other words, the name of the transferee is kept blank.
It is questioned whether the blank share transfer instrument is legally or illegally used in Thailand. It is also questioned what will happen if the transferor of this blank share transfer make another transfer to any other person before the first blank share transfer is completed.
It appears from the highest court decision number 52/2540 which seems to recognize the blank share transfer instrument. The decision could be concluded that the blank transfer is to provide convenience to the transferee. It allows the transferee to either transfer/complete it to his/her own name by complying with the laws or transfer the shares to any other person by merely deliver the blank share transfer. Reading together with Paragraph 2 of Article 1129 of TCCC, which specified what is considered as a form of evidence of shares transfers as “…The transfer of shares entered in a name certificate is void unless made in writing and signed by the transferor and the transferee whose signatures shall be certified by one witness at least…” Therefore, merely pre-signed a blank share transfer instrument and deliver to another party is not yet completed the transaction. Moreover, even though disobeying the above is not effected the transfer of shares to be void, the latest transferee cannot be considered as the shareholder of the company until the transaction is fully complied by-laws.
Another question to be concerned is that what will happen if while keeping the pre-signed instrument, the transferor transfers the shares to any other person. It is deemed to be the intention of the transferor to give away the shares to the transferee. If he/she transfers to any other person, without the director acknowledgment, a new list of shareholders cannot be submitted to the Department of Business Development.
Therefore, the fact that the new transferee cannot legally be a shareholder of the company could be solely claimed against the transferor. In other words, the only liable person to the new transferee is the transferor. The company itself or the person who keeps the blank share transfer does not have to be liable to the second transferee. Moreover, the transferor shall also be possibly faced with criminal offenses which will depend on the fact of each case.
Category: Business in Thailand, Company Law, Company Registration, Litigation
About the Author (Author Profile)
Sirinee Kamphaengkaew is an Attorney at Law for Siam Legal specializing in corporate law. She was educated at American University's College of Law in Washington, D.C., and at Chulalongkorn University in Bangkok. She earned a Bachelor of Law with Honors, and two Masters of Law, focusing on Business Law and Intellectual Property Law. She has been a member of the Law Society of Thailand since 2005, and is fluent in both Thai and English.
