Capital Increase and Reduction in Thailand: Legal Steps and DBD Registration

In short

A Thai private limited company (บริษัทจำกัด) increases its capital by issuing new shares, which requires a shareholders' special resolution; as a rule the new shares must first be offered to the existing shareholders in proportion to their holdings, and once shareholders have subscribed and made the first payment the change is registered with the Department of Business Development (DBD). A capital reduction likewise requires a special resolution and, in addition, statutory publication and notice to creditors and the handling of creditor objections before registration; the capital may not be reduced to less than one-quarter of its original total.

1. Increasing capital: four steps to issue new shares

In legal terms, a private limited company increases its registered capital by issuing new shares, not by simply “changing a number”. The core basis is Section 1220 of the Civil and Commercial Code: a company may issue new shares to increase its capital only by special resolution.

Step 1 · Shareholders' special resolution: the shareholders' meeting passes a special resolution approving the amount of the increase and the issue of new shares (Section 1220). A special resolution must be passed by the meeting with the statutorily required qualified majority; the specific voting threshold is subject to the prevailing official rules (our firm can help confirm it).
Step 2 · Pre-emptive offer to existing shareholders: the new shares must first be offered to the existing shareholders in proportion to their holdings; the offer must be made by notice specifying the number of shares the shareholder may subscribe for and fixing a date after which the offer, if not accepted, is deemed declined. Only after existing shareholders decline may the directors offer such shares to other shareholders or subscribe for them themselves (Section 1222).
Step 3 · Subscription and payment: each new share may not have a nominal value below 5 baht (Section 1117); the first payment on subscribed new shares must not be less than 25% of their nominal value (Section 1105), with the remainder callable later as the company arranges.
Step 4 · Registration with the DBD: the amount of capital, the number of shares and the value of each share are all matters that must be registered (Section 12 of the Commercial Registration Act); once the increase is complete, the change must be registered within the prescribed period (see “Registration and deadlines” below).

2. Reducing capital: special resolution plus creditor protection

A company may reduce its capital either by lowering the amount of each share or by reducing the number of shares, but this too must first obtain a shareholders' special resolution (Section 1224 of the Civil and Commercial Code). Because a reduction directly affects the capital cushion available to creditors, the law adds a creditor-protection procedure.

Step 1 · Shareholders' special resolution: approve the method of reduction (lowering the nominal value or reducing the number of shares) and the amount of the reduction (Section 1224).
Step 2 · Publish, notify creditors and handle objections: when the company proposes to reduce its capital, it must publish the reduction as required by law and give written notice to known creditors, giving them the chance to object within the statutory period; if a creditor objects, the company must first satisfy the claim or provide security before it can proceed. The exact number of publications, the manner of notice and the creditor-objection period are subject to the prevailing official rules (our firm can help confirm them).
Step 3 · Registration with the DBD: after completing the creditor procedure, register the capital reduction with the Department of Business Development (Section 12 and Section 13 of the Commercial Registration Act).

3. The one-quarter floor and minimum numbers

A reduction cannot be compressed without limit. Section 1225 of the Civil and Commercial Code expressly provides that a company's capital may not be reduced to less than one-quarter of its total amount. In other words, whether by lowering the nominal value or reducing the number of shares, the registered capital after the reduction must retain at least 25% of the original total.

Moreover, increasing or reducing capital does not itself change who the shareholders are, but the company must at all times maintain the statutory minimum numbers: a private limited company currently must have at least 2 shareholders (as amended 2023, Section 1097 of the Civil and Commercial Code) and must keep at least 1 director (Section 1144).

4. Registration and deadlines: changes must be filed with the DBD

A company's amount of capital, number of shares and value of each share are all matters that must be registered by law (Section 12 of the Commercial Registration Act). When these registered particulars change, the change must be registered with the competent registrar within thirty days of the date of change (Section 13 of the Commercial Registration Act). In practice, both the capital increase and the capital reduction of a private limited company are registered with the Department of Business Development (DBD), and failure to register in time may incur penalties.

Increase Issue new shares

Special resolution → pre-emptive pro-rata offer to existing shareholders → subscription and first payment (first payment at least 25% of nominal value, each share at least 5 baht) → DBD registration. Basis: Sections 1220, 1222, 1105 and 1117.

Reduction Protect creditors

Special resolution → publish and notify creditors, handle objections → DBD registration; capital may not be reduced to less than one-quarter of the original total. Basis: Sections 1224 and 1225.

⚠️ Deadlines and thresholds follow the current official rules

The provisions cited in this article come from the Thai Civil and Commercial Code and the Commercial Registration Act. Specific figures — such as the voting threshold for a special resolution and the number of creditor publications and the objection period for a reduction — may be adjusted through legal amendment; before filing, please rely on the Department of Business Development's current rules. Our firm can help verify them and handle the registration on your behalf.

FAQ

Does a Thai company always have to issue new shares to increase capital? What resolution is required?

Yes. Section 1220 of the Civil and Commercial Code provides that a private limited company must issue new shares by special resolution to increase its capital; and Section 1222 requires the new shares to be offered first to the existing shareholders in proportion to their holdings, so that only after existing shareholders decline may the directors offer them to others or subscribe for them themselves.

Is there a floor for a capital reduction? What is the lowest it can go?

Yes. Section 1225 provides that capital may not be reduced to less than one-quarter of its total amount — that is, at least 25% of the original total must be retained. A reduction also requires the special resolution under Section 1224, and can only be carried out after publication, notice to creditors and the handling of their objections.

Must subscribed new shares be paid in full at once? Are there requirements for the nominal value per share?

No, they need not be paid in full at once. Section 1105 provides that the first payment must not be less than 25% of the nominal value, with the remainder callable later as the company arranges; the nominal value per share may not be less than 5 baht (Section 1117).

How soon after increasing or reducing capital must it be registered, and where?

Capital, number of shares and value per share are registrable particulars (Section 12 of the Commercial Registration Act); after a change they must be registered within thirty days (Section 13 of the Commercial Registration Act), which in practice is done at the Department of Business Development (DBD).