We have a client who asked the question “As a shareholder, how much are you liable for the company’s debts?” Here is the detail of the question and our answer:

Question:

I bought the company (with Baht 4 M registered and paid up capital) from someone years ago. Now the business is not going well and I do not have THB 4 M to pay the company’s creditors. Should I reduce the capital of the company to 1M, or should I do anything?

Answer:

Your company’s capital has been fully paid up. You bought the shares from the old shareholders who had already paid up their shares. Therefore, as a shareholder you will not have to pay anymore into the company.

Your company’s registered capital has nothing to do with how much you (as shareholder) have to be liable if the company does not have enough to pay the creditors. If all the company’s shares have been fully paid up, the shareholders are not liable any more to pay the creditors of the company.

Look at how much liabilities on the company’s balance sheet are. They are the amount the company has to pay to the creditors. Then you need to look at the assets of the company and see how much you think you can get from them. The money you will get from all your assets is the amount you will have available to pay off your liabilities. If you can get less money from your assets than the amounts you owe others, then you will not be able to pay all the creditors. However, your creditors will be the one to take the company to the bankruptcy court. This is because the bankruptcy procedures in Thailand can be started only by a creditor against a debtor who is regarded insolvent and owes more than 2 million Baht in the case of a company (or more than 1 million Baht in the case of an individual). Please read here for the translation of Thailand Bankruptcy Act.

Consult with MSNA Group for accounting and tax services.

During this pandemic, our clients asked questions about sick leave for COVID 19 cases. How many days can employees take off if they are sick? Normally the Thai labor law allows employees to take up to 30 days of sick leave per year. What can they do if they are sick more than 30 days a year? Here is the question from one of our clients:

Question: Is there any government regulation to give more sick leave if an employee is contracted with Covid-19? For example, if an employee is found to be COVID positive and if the person does not have any sick leave balance, can he use the annual leave to cover and can the company deduct no pay leave if they have used up all their sick leave?

Answer: The company cannot make him use his annual leave for his COVID sick leave after he has used all his yearly allowable 30 days of sick leave. You may deduct his salary based on the number of sick leave days in excess of 30.

In this COVID era, the employee may file a form with the Social Security Office for a compensation for his loss of income. The company will have to issue a letter confirming he has used up his 30 days of sick leave allowed by law attached with his sick leave request form.

Contact MSNA Group for your questions regarding Thai Labor Law.