Types of Shares in Thai Limited Companies Explained

More than 75% of new companies in Thailand rely on just two core options when choosing their share structure, yet misunderstanding the types of shares in a Thai limited company can expose founders to serious compliance risks and missed opportunities.

With new regulations enforcing stricter controls on voting rights, dividend priorities, and share registration, every business owner and investor needs a clear, up-to-date understanding.

Whether you want to protect management control, attract foreign capital, or ensure smooth shareholder agreements, a precise share structure is essential.

Navigating the differences between ordinary and preference shares could mean the difference between growth and costly mistakes.

Types of Shares in Thai Companies

Main Share Types in Thailand

Thai limited companies recognize two main types of shares: ordinary (common) shares and preference (preferred) shares, as defined under the Thai Civil and Commercial Code.

All shares must have a par value of at least 5 baht, and non-voting or treasury shares are not permitted by law.

Key distinctions between share classes for private limited companies include:

• Ordinary shares: Standard ownership, typically 1 vote per share, paid dividends after preference shares.
• Preference shares: Custom privileges (such as dividend or liquidation priority), voting rights may vary, often used to facilitate foreign investment.

Public limited companies in Thailand follow similar rules but face extra requirements under the Public Company Limited Act.

Type	Voting Rights	Dividend Priority	Liquidation Priority	Common Use
Ordinary (Common)	1 vote/share (standard)	After preference	After preference	Company control, long-term returns
Preference (Preferred)	As specified, may be limited	Before ordinary	Before ordinary	Dividend priority, foreign structuring

Gain further details at the Thai Ministry of Commerce.

Ordinary vs Preference Shares

Ordinary shares grant full shareholder rights, including voting on major company decisions. Preference shares often provide fixed dividends and priority if the company is liquidated, but may limit voting power based on the Articles of Association.

In practice:

• Companies structure preference shares to align with foreign ownership laws and investment strategies.
• Sectors like technology or real estate often use preference shares to attract investors seeking steady returns while preserving Thai majority control.
• Articles of Association and shareholder agreements specify the exact privileges and restrictions for each share class.

Choosing the right share type is essential for balancing investor expectations, decision-making rights, and compliance with Thai company law.

Legal Requirements for Share Classes (2025)

Regulatory Obligations for Share Types

Thai law in 2025 sets clear, essential rules for all types of shares in a Thai limited company.

• All shares must have a par value of at least 5 baht
• Every share must carry a voting right; non-voting shares are prohibited
• Treasury shares are not allowed (the company cannot repurchase or hold its own shares)
• Every share class, including ordinary and preference shares, must be registered with the Department of Business Development (DBD)

Registration of share classes involves:

1. Filing company Articles of Association outlining share details
2. Submitting required documents to the DBD for approval
3. Updating the shareholder register after approval

Legal reforms in 2025 continue to emphasize transparency and protect minority shareholders. For more details, visit the DBD’s Share Class Guidelines.

Customizing Share Rights While Complying

Companies may tailor preference share rights to suit their needs while staying within legal limits.

• Preference shares can offer customized voting rights, dividend priorities, or higher liquidation priority
• These rights must be clearly detailed in the Articles of Association and approved by shareholders

Carefully structuring share rights allows companies to align business goals, incentive plans, or joint venture needs, enhancing both flexibility and legal compliance.

By following these requirements, Thai limited companies combine legal certainty with the flexibility to design bespoke share arrangements for modern business needs.

Shareholder Rights and Influence

Rights and Duties by Share Type

Shareholder rights in a Thai limited company depend on whether the shares held are ordinary or preference shares.

Key rights and duties include:

• Ordinary shares typically provide one vote per share, offering direct participation in general meetings and decision-making.
• Preference shares may grant priority for dividends and capital return but can carry limited or customized voting rights based on the company’s Articles of Association.
• Dividend payments for preference shareholders generally come before those for ordinary shareholders.

All shareholders regardless of share type must:

• Contribute the subscribed share capital when called upon
• Share proportionally in company liabilities, limited to the unpaid share amount
• Meet obligations as outlined in company regulations

A Thai limited company cannot issue non-voting shares: every share provides at least one vote by law.

How Share Type Affects Control

Share class also determines real influence over company affairs and board appointments.

Examples:

• Ordinary shareholders often control or nominate directors and shape company policy.
• Preference shares can be structured to provide enhanced returns but limited direct influence, allowing majority holders to retain control.
• In joint ventures, families, or foreign investment structures, preference shares are frequently used to balance control and investment, satisfying both legal compliance and business strategy needs.

The type of shares you hold shapes not only economic benefits but also your voice in critical company decisions.

A clear understanding of share rights in Thai companies equips you to protect your investment and participate effectively in management choose your share class to match your goals and desired level of influence.

Share Issuance, Structure and Transfer

Issuing and Structuring Ordinary vs Preference Shares

Issuing shares in a Thai limited company starts with board approval and a clear decision on whether to allocate ordinary or preference shares.

The process includes:

• Preparing a shareholder resolution and updating the company’s Articles of Association
• Filing key documents (including updated Articles) with the Department of Business Development (DBD)
• Securing shareholder consents and required regulatory checks to comply with the Thai Civil and Commercial Code

All shares must have a par value of at least 5 baht, and every share must carry voting rights, according to Thai law. Aligning share classes with business strategy protects ownership structure and ensures investor confidence.

Rules for Transferring Shares

Share transfers in Thai companies require a written share transfer instrument signed by both parties and registered with the company.

Key compliance steps:

• Ensure the transfer does not breach foreign ownership restrictions (usually capped at 49% for non-Thais)
• Update the shareholder register and submit necessary filings to the DBD
• Obtain board approval if required by the company’s Articles or shareholder agreement

Common pitfalls include incomplete documentation and missing DBD filings, which can invalidate the transfer or delay company operations.

Careful planning for share issuance and transfer safeguards both compliance and strategic goals, ensuring stable ownership and legal clarity at every stage.

Strategic Uses of Share Classes

Using Preference Shares for Investment or Control

Preference shares allow Thai companies to balance regulatory compliance with flexible ownership structures.

For example, these shares are often used to:

• Meet Foreign Business Act requirements by preserving Thai majority voting power
• Provide foreign investors with financial benefits (such as priority dividends) while limiting decision-making rights
• Support family-owned businesses by granting founders management control without diluting future value

Risks and Opportunities of Different Share Classes

Selecting the right share class involves weighing specific risks and benefits.

Risks include:

• Compliance failures causing registration delays or fines
• Potential loss of control if preference shares unintentionally confer excessive voting power
• Minority shareholders having limited protection, especially during capital restructuring

Opportunities arise by:

• Encouraging tailored investment (such as fixed or variable dividends)
• Incentivizing management with select share rights
• Enabling controlled exits for early-stage investors

Strategic use of share classes strengthens deal-making leverage and supports sustainable company growth.

Adapt share structures deliberately to support both business goals and legal compliance.

FAQ: Thai Limited Company Shares

Understanding the types of shares in a Thai limited company helps business owners and investors make compliant, strategic decisions fast.

What are the legal limits and rules for issuing shares in Thailand?

Key points include:

• Thai law mandates that all shares must grant some form of voting right; non-voting shares are not permitted.
• Preference shares can be issued to both Thai and foreign shareholders but must always respect the foreign ownership cap of 49% under applicable laws.
• Each share must be issued at a par value of at least 5 baht, as stipulated by the Thai Civil and Commercial Code.

How is the value of shares determined and what protections exist for minority shareholders?

• Market value upon issuance may be higher than 5 baht, depending on company valuation and investor negotiations.
• Statutory protections exist for minority shareholders, including access to company information, the right to vote at meetings, and the ability to challenge improper company decisions.
• Additional contractual safeguards: drag-along, tag-along, and pre-emptive rights frequently appear in shareholder agreements for enhanced minority protection.

Always check voting rights, confirm par value, and ensure share class terms match both legal requirements and your business objectives.

Conclusion

Clarity on share types empowers you to structure your Thai limited company with confidence protecting control, attracting investment and ensuring compliance every step of the way.

If you’re planning your next move, review your Articles of Association, verify shareholder voting rights and confirm that your share classes support both legal requirements and your business goals.

For tailored advice or assistance with share structuring, contact us. Themis Partner makes complex regulations accessible and will guide you through every stage from set-up to shareholder agreements always with efficiency and clarity.