An important concept in Thai law is that limited company are to be managed by the authorized directors of the company. Furthermore, when a company is registered with the government authorities, a statutory meeting of the company promoters must be presented which specifies the name and/or number of directors authorized to sign on behalf of the company and thereby legally bind it. Oftentimes, when foreign investors register a limited company in Thailand, some or possibly all of the authorized directors may not be residing in Thailand and in fact there is no legal requirement that the director of a private limited company be a resident of Thailand. However, in such a case, delays can be caused when a document requires the signature of a director and he or she is not physically present to sign it. If the director wishes to appoint an agent to sign in his or her place, a legal issue arises as to whether such a practice is lawful under the Civil and Commercial Code? The code itself does not offer a clear answer, but Thai Supreme Court Decision No. 3362/2532 addressed the issue.
“In regards to the question: Whether it was lawful for the director of the Plaintiff-company to authorize another person to act in her place according to the power of attorney annexed to the complaint? It is understood that Plaintiff is a limited company. The regulations of Plaintiff-company state that the director who is able to sign in order to bind the company is Mrs. A who must sign jointly with Mr. B and affix the corporate seal. However, the power of attorney annexed to the complaint states that Mr. B, in his capacity as director of the Plaintiff-company, authorizes Mrs. A to act as his agent in filing these proceedings against Defendant.
The Court is of the view that a limited company operates business according to its objectives by acting through its directors who are those who have the authority of the company and furthermore, in order to be a director, one must appointed from the shareholders of the company on whose behalf the director acts. Therefore, one who is to act on behalf of the company must have specific qualities and must act by himself and cannot authorize another person to act on his behalf.
The power of attorney annexed to the complaint wherein Mr. B has authorized Mrs. A to act on his behalf in his capacity as director of Plaintiff-company is therefore unlawful and has no binding effect on the Plaintiff-company. The Plaintiff’s lawsuit violates Section 158(7) of the Criminal Procedure Code.”
Corporate law in Thailand is complex. Foreign investors are advised to consult with competent Thailand Lawyers before proceeding with business here.
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