DOI: 10.14457/tu.the.2020.670
title: A revisit of legal problems concerning capital contribution in kind in Thai private company

description: A private limited company raises its equity capital in a number of ways. Although general capital contribution must be made in cash, any other form of money’s worth or “contribution in kind” may also be contributed upon corporate decision-making. As the key difference between contribution in cash and in kind is that the latter is subject to valuation to determine the fair market value, laws and regulations in each jurisdiction are therefore differently legislated through the integration of legal theories to provide a security system into this valuation and impose civil and criminal liabilities together with administrative or judicial order in order to preserve the interests of company’s stakeholders, particularly on shareholders, creditors, and outsiders, with the aims to reduce and mitigate their potential risks of unlawful or fraudulent valuations. This thesis explores Thailand’s underlying problems of legal uncertainty of characteristics of contribution in kind, valuation, and law enforcement in Thai private companies upon the examination of laws and regulations including practices. The results discovered that the major impediment is the lack of direct and specific provisions to stipulate statutory characteristics, requirements, duties, and responsibilities to the merit of valuation, and when there is an infringement of overvaluation, the available civil and criminal liabilities together with administrative orders are insufficient and ineffective to process the remedies to affected parties and control corporate misconducts.In contrast, the study through the lens of comparative analysis from Germany and China indicates that they have prioritized to resolve the aforementioned 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 both civil and criminal to preserve the stakeholder’s interests. While Germany has equipped with more complex procedures by requiring a valuation report and registration of corporate documents and imposes civil and criminal liabilities to imprisonment, China further sets out various regulations to place a safety net over contribution in kind including harsh punishments in both criminal sanctions and administrative orders.This thesis therefore concludes that the legal frameworks from Germany and China are more strikingly vivid to protect the interests of stakeholders and suggests legislative and regulatory reform to diminish the existing problems in Thailand. For legal uncertainty of characteristics of contribution in kind, legislation of specific provisions and regulations for the clear characteristics of contribution in kind may be adopted to some extent, while mandatory disclosure of documentation and valuation report is further suggested to control transparency, accuracy, and creditworthiness of valuation. Last, the impositions of specific civil liability, additional criminal liability, and regulatory reform of administrative order are preferable not only to increase the level of law enforcement but to create more efficiency in regulating contribution in kind in Thai private companies at theoretical, policy, and practical levels.