According to the World Health Organization (WHO), as of March 29th of this year, there were 571,678 COVID-19 cases worldwide, including 62,514 new infections and 26,494 deaths (mortality rate: 4.63%). On the same day, Thailand reported 143 new cases, bringing its total number of confirmed cases to 1,388. The new infections were predominantly among Thai nationals who had recently returned from abroad or had been in contact with many people. Few of those infected worked in healthcare, and they were all male and between 20 and 49 years old. Male patients were frequently seen at boxing stadiums, entertainment venues, or on the Da'wa pilgrimage.

Shops are closing, events are being postponed

The Thai government is considering closing or temporarily closing schools, entertainment venues, and sports centers in light of rising COVID-19 infection rates. Cockfighting, a popular sport among Thais, may be suspended, at least during the pandemic. The highly anticipated New Year holidays next month are also expected to be postponed to curb the spread of the virus. These measures are in response to the kingdom's ongoing surge in infections, which is occurring three times a week.

The government is allowing restaurants to operate, provided they adhere to social distancing rules. Authorities are taking the link between the spread of infections and entertainment and sports venues very seriously. Therefore, public gatherings have been strictly restricted. Government employees have also been instructed to work from home whenever possible to avoid or limit human contact. The government is prioritizing the lives of the population over economic and social concerns, as necessary, given the uncertainty surrounding the further development of the situation.

Some businesses didn't need government support. They closed their doors voluntarily due to a lack of customers and unprofitable profits. This was also the case for pub owner Jumbaree Parlick, who ran a bar in what was once Bangkok's busiest nightlife district for over 40 years. For her, continuing to operate was no longer profitable.

Steps to closing a company in Thailand

Establishing and operating a business in Thailand is extremely difficult for foreign investors. They must complete all the necessary formalities for company formation, set up the required infrastructure, and recruit employees by filling out the relevant forms with the appropriate authorities. Added to this is the challenge of finding workers in the Kingdom's tight labor market. Once these hurdles have been overcome and operations have commenced, the foreign company must contend with unavoidable cultural differences. Conflicts with employees, customers, and other stakeholders are not only highly likely but practically inevitable. Furthermore, complying with contracts in Thai and navigating bureaucracy present obstacles that are made even more difficult without strong language skills.

Assuming he overcomes these formidable obstacles and his business achieves a degree of success, unforeseen events can alter his situation. Despite all his efforts, or through no fault of his own, he may find himself facing the reality that his company can no longer thrive. Unless someone buys it, he will have to navigate a series of further, costly processes to properly wind down the business he painstakingly built and ran with some success. In addition to losing his company, he will face the difficult task of adhering to lengthy legal procedures for its proper dissolution.

As already mentioned in the overview of company dissolution, a company can be dissolved either by law or by court order.

A company is dissolved in accordance with the following legal provisions:

  • In the cases possibly provided for in its provisions;
  • If it was formed for a specific period, upon expiry of that period;
  • If it was established for a single company, it expires upon the dissolution of that company;
  • By a special resolution for dissolution; and
  • Due to the company's insolvency.

    • A limited liability company can also be dissolved by the court for the following reasons:

  • If the legally required notification is not submitted or the legally required meeting is not held;
  • If the company does not commence its business activities within one year from the date of registration or suspends its business activities for a whole year;
  • If the company's business operations can only be conducted at a loss; and
  • When the number of shareholders is reduced to the legally required number.

    • The following steps are required:

  • He has officially applied to the Ministry of Economic Affairs for the dissolution of his company;
  • Liquidation of assets if the company becomes insolvent;
  • In the event of insolvency, shareholders can contribute additional capital. Otherwise, the liquidator must initiate bankruptcy proceedings. This process requires that the debts be legally settled before the company can be closed.
  • The company should not neglect filing its income tax returns and paying all taxes due, as insolvency proceedings do not settle tax debts;
  • The company must also pay the salaries and severance packages of its employees;
  • The work permits of foreign workers, if any, must be returned to the Ministry of Labour within the first seven days of their employment.
  • The company must formally and legally inform its suppliers and customers about the cessation of business. This essentially means terminating its service contracts with them.
  • The company must also settle and close all accounts with banks and other financial institutions;
  • The company must inform the landlord or property owner about the cessation of operations so that the lease can also be terminated. This applies if the company is a tenant; and
  • The company must pay overpaid taxes and settle debts to its shareholders.

    • The current situation resulting from the global pandemic necessitates the closure of some businesses that can no longer maintain operations. These closures are regrettable but must be carried out properly. It is particularly important to settle all debts and outstanding contracts, as otherwise the company's directors and owners may face legal action. Competent and experienced business lawyers can handle all these burdensome requirements and procedures, thus ensuring a smooth and risk-free process.

    Our corporate lawyers offer you the following services:

  • Examine the available strategies and select the most suitable one to close the business at the lowest possible cost;
  • Prepare the minutes of the meeting to conclude business operations;
  • Conduct legal settlements and other negotiations in connection with the separation of the workforce in accordance with the provisions of labor law;
  • Conduct payment negotiations with the landlord/lessor, if the company is a tenant, in order to achieve the earliest possible termination of the lease;
  • Create a draft of existing contracts with suppliers, if any exist;
  • Prepare the required audit report on the closure of the company for submission to the Ministry of Economic Development;
  • All of the company's sales tax and tax accounts with all Thai government agencies must be closed, and
  • Providing the necessary legal support and representation in the event of insolvency or bankruptcy, as well as in the court-supervised restructuring of insolvency proceedings.

    • If you have any questions or need assistance with the proper closure of your business, please contact us.