A Revisit of Legal Problems concerning Capital Contribution In Kind in Thai Private Companies

Abstract

Instead of cash, any other form of money’s worth or “contribution in kind” may also be contributed to private companies. As the key difference between contribution in cash and in kind is that the latter is subject to valuation, laws and regulations in each jurisdiction are therefore differently legislated through the integration of legal theories to preserve the interests of company’s stakeholders, particularly on the legal framework of characteristics and specific requirements of contribution in kind including additional liabilities to mitigate potential risks when there is an unlawful or fraudulent valuation. This article discovers that Thailand encounters the problems of legal uncertainty of characteristics of contribution in kind, valuation, and law enforcement as a result of the lack of specific and sufficient provisions to stipulate statutory characteristics, requirements, duties, responsibilities, civil and criminal liabilities including administrative order to the persons directly involving with contribution in kind.

In contrast, the study through the lens of comparative analysis from Germany and China indicates that they have prioritized to resolve the aforesaid Thailand’s problems by stipulating specific provisions into legislation and regulatory framework in order to impose general characteristics, statutory obligations, specific requirements, restrictions, prohibitions, and additional liabilities of both civil and criminal to preserve interests of company’s stakeholders. This article consequently suggests legislative and regulatory reform by adopting some of the findings that could cope with the existing problems that current Thai laws and regulations are unable to resolve.