Protection of Non-Adjusting Creditors of Private Limited Companies in Thailand
Article Sidebar
Main Article Content
Abstract
This article analyses the legal framework for protecting non-adjusting creditors of private limited companies in Thailand. Non-adjusting creditors are a subcategory of creditors, not specifically recognised by law, who are unable to negotiate contractual or proprietary protections and are thus vulnerable to potentially abusive actions of the debtor company. Using the Enlightened Shareholder Value model of corporate governance, the legal regime is evaluated across rules relating to legal capital, challenging transactions, directors’ duties and obligations to preserve creditors’ interests, and shareholder liability. The article also performs a comparative analysis with English and German law, which influenced Thai law at the time of its adoption, to highlight Thai law’s path of development and characteristic approach. The article makes six recommendations to align Thai law with the ESV normative model, including the establishment of a regime of public enforcement by way of administrative sanctions and a director disqualification regime to protect non-adjusting creditors.
Article Details
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
References
Books and Book Chapters
Bridge M, ‘Collectivity, Management of Estates and the Pari Passu Rule in Winding Up’ in Armour J and Bennett H (eds), Vulnerable Transactions in Corporate Insolvency (Oxford University Press 2003)
Bruner C, ‘The Corporation’s Intrinsic Attributes’ in Barnali Choudhury and Martin Petrin (eds), Understanding the Company: Corporate Governance and Theory (Cambridge University Press 2017)
Davies P, Introduction to Company Law (2nd edn, Oxford University Press 2010)
Department of Legal Studies in Society, Philosophy and History, Transcript of Interview with Phraya Manavarajasevi (Plod Wichiar Na Songkla) (Winyuchon Publication House 2014) (Thai language)
Ferran E, Ho LC, Principles of Corporate Finance Law (2nd edn, Oxford University Press 2014)
Goode R, Principles of Corporate Insolvency Law (4th edn, Sweet & Maxwell 2011)
Jiramongkonpanich P, Disregarding Separate Corporate Personality (Thammasat University 2013) 56 (Thai language).
Kasemsup P, ‘Reception of Law in Thailand-A Buddhist Society’ in Chiba M (ed), Asian Indigenous Law: In Interaction with Received Law (KPI 1986)
Kraakman R (et al), The Anatomy of Corporate Law: A Comparative and Functional Approach (3rd edn, Oxford University Press 2017)
Ministry of Justice Thailand and René Guyon, L’Oeuvre de codification au Siam (Imprimerie Nationale 1919) (French language)
Nawathragulwisuth N, Legal Principles of Partnerships, Limited Companies and Public Limited Companies (4th edn, Winyuchon Publication House 2019) (Thai language).
Ratanakorn S, Explanation of the Provisions of the Civil and Commercial Code relating to Partnerships and Companies (12th edn, Nitibannagarn 2010) 267 (Thai language).
Ratthanapaijitr S (et al), ‘Research Report Concerning Project to Improve the Enforcement of Bankruptcy Cases in accordance with International Standards’ (Thai language)
Ratthanapaichitr S, Explanation of the Principles of Partnership and Company Law (6th edn, Winyuchon Publication House 2020) (Thai language)
Journals
Baird D, Jackson T, ‘Bargaining after the Fall and the Contours of the Absolute Priority Rule’ (1988) 55 University of Chicago Law Review 738
Bebchuk L, Fried J, ‘The Uneasy Case for the Priority of Secured Claims in Bankruptcy’ (1995) 105 Yale Law Journal 857, 880–891
Coase R, ‘The Nature of the Firm’ (1937) 4 Economica 386
Davies P, ‘Directors’ Creditor-Regarding Duties in Respect of Trading Decisions Taken in the Vicinity of Insolvency’ (2006) 7 European Business Organization Law Review 301
Easterbrook F, Fischel D, ‘Limited Liability and the Corporation’ (1985) 52 The University of Chicago Law Review 89
Easterbrook F, Fischel D, The Economic Structure of Corporate Law (Harvard University Press 1996) 69
Halpern P, Trebilcock M, Turnbull, S, ‘An Economic Analysis of Limited Liability in Corporation Law’ (1980) 30 The University of Toronto Law Journal 117
Jensen M, ‘Value Maximization, Stakeholder Theory, and the Corporate Objective Function’ (2001) 14 Journal of Applied Corporate Finance 8
Keay A, ‘Directors’ Duties to Creditors: Contractarian Concerns Relating to Efficiency and Over‐Protection of Creditors’ (2003) 66 The Modern Law Review 665
Keay A, ‘Directors’ Duties and Creditors’ Interests’ (2014) 130 Law Quarterly Review 443, 459–62.
Pettet B, ‘Limited Liability–A Principle for the 21st Century?’ (1995) 48 Current Legal Problems 125
Reekie A, ‘Challenging “Fraudulent” Transactions and Protecting Company Creditors in Thailand: A Comparison with English and German Law’ (2019) 37(2) Chulalongkorn Law Journal 135–168.
Reekie A, Reekie S, Ruengsrichaiya K, ‘Legal Landscape of Trust Law in Thailand: The Fading Twilight of Common Law Trusts and the Sunrise of Statutory Trusts’ (2021) 27 Trusts & Trustees 830
Legislation
Act Prescribing Offences Related to Registered Partnerships, Limited Partnerships, Limited Companies, Associations and Foundations BE 2499 (1956)
Bankruptcy Act Thailand BE 2483 (1940)
BGB (Civil Code) (Germany)
Companies Act 2006 (England)
Consumer Cases Procedure Act Thailand BE 2551 (2008)
Civil and Commercial Code of Thailand
Criminal Code (Germany)
GmbH Act (Germany)
Insolvency Act 1986 (England)
Penal Code of Thailand
Statute of 13 Elizabeth 1 of 1571 (England)
Court Decisions
England
Prest v Petrodel Resources [2013] UKSC 34
Progress Property Co Ltd v Moorgarth Group Ltd [2010] UKSC 55
Germany
OLG Koblenz AG 2007, 408
OLG Köln AG 2009, 584
Trihotel, BGH 16 July 2007 (II ZR 3/04)