Cash Repatriation Heatmap

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Key Initial Planning Considerations
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Key Initial Planning Considerations
Generally speaking, assuming a straightforward process how long does it take to pay a dividend?

A reasonable time period for paying a dividend (from the process of approval to the actual payment) in a straightforward case is three to four weeks depending on the bank's requirements. The time period could be shorten if the dividend payment is approved by the board of directors and the company prearranges the payment with the bank.

However, if the company's articles of association stipulate a specific notice period for holding the board of directors, the dividend payment process will take longer.

Any timing restrictions on paying dividends?

Once the dividend payment is approved at either the board of directors' meeting or shareholders' meeting, the dividends must be distributed to the shareholders within one month of the relevant meeting.

What accounts will be required to support payment of dividend and will these need to be audited?

To support the justification on sufficient profit in declaration of interim dividend, the company may consider having a financial report for the relevant period (an unaudited financial report should be sufficient).

Are there restrictions on the amount of dividends that can be paid?

Yes, there are restrictions on the amount of dividends that can be paid.

  • The dividends must be paid out of the company's profits (retained earnings and current profits). If the company has incurred losses, such losses must be made good before the dividend can be paid.
  • At each payment of dividends, at least 5 percent of the profits must be appropriated to a legal reserve fund until the legal reserve fund reaches 10 percent of the company's capital or a higher proportion as may be prescribed in the company's articles of association.
  • The company's articles of association may contain other restrictions on the amount of dividends.
Are there any ways to increase reserves, and if so, how long do these generally take?

Yes, it is possible to increase reserves.

Generally, at each payment of dividends, at least 5 percent of the profits must be appropriated to a legal reserve fund until the legal reserve fund reaches 10 percent of the company's capital. Higher proportion of legal reserve can be prescribed in the company's articles of association. Therefore, if the company wishes to have more legal reserve as required by the law, the company must amend the articles of association to include the higher proportion of the legal reserve.

A reasonable time period for amendment of the articles of association in a straightforward case is four to five weeks.

Are foreign investment or other regulatory approvals required on payment of a dividend?

Yes. If the company's shareholders are foreign individuals or corporate entities and the dividends will be remitted to bank accounts opened outside Thailand, permissions for outward remittance from the Bank of Thailand or authorized commercial bank are required.

For the payment of dividends, the company must also submit the board of directors' and/or shareholders' minutes (as the case may be) approving  the dividend payment, a copy of the list of shareholders and other supporting documents as required by the bank.

Also, if the dividends to be remitted outside Thailand exceed US$ 50,000, a foreign exchange transaction form will be required.

Are there any foreign exchange requirements on paying dividends to foreign parent companies?

Yes. If the company's shareholders are foreign individuals or corporate entities and the dividends will be remitted to bank accounts opened outside Thailand, permissions for outward remittance from the Bank of Thailand or authorized commercial bank are required.

For the payment of dividends, the company must also submit the board of directors' and/or shareholders' minutes (as the case may be) approving  the dividend payment, a copy of the list of shareholders and other supporting documents as required by the bank.

Also, if the dividends to be remitted outside Thailand exceed US$ 50,000, a foreign exchange transaction form will be required.

Can cash be borrowed to settle a dividend?

Yes, there are no restrictions from a corporate law perspective on borrowing cash to settle a dividend.

Are dividends in kind possible?

In kind distributions are not permitted. Dividends must be paid out of profits only.

Are there any other general considerations with a significant timing impact on payment of dividends?

Once the dividend payment is approved at either the board of directors' meeting or shareholders' meeting, the dividends must be distributed to the shareholders within one month of the relevant meeting. Therefore, it must be ensured that the dividend can be paid within the timeline. Otherwise, there will be fine penalty imposed.

Are there any restrictions on lending funds intra-group but cross border?

Yes. If the company is considered as "foreigners " under the Foreign Business Act, the company cannot lend funds to intra-group companies outside Thailand unless the company obtains a foreign business license or a foreign business certificate from the Ministry of Commerce.

In addition, if the company lends funds to the intra-group companies outside Thailand, permissions for outward remittance from the Bank of Thailand or authorized commercial bank will be required.

Also, if the funds to be lent to the intra-group companies exceeds US$ 50,000, a foreign exchange transaction form will also be required.

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