Tag: Consumer Protection

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Thailand – New Rules for Company and Partnership

The Civil and Commercial Code Amendment Act (No. 23) B.E. 2565 (2022) will come into force and effect on 16 February 2023. The objectives of this amendment are to reduce career barriers and increase competitiveness of the country.

Key changes are as follows:

close up photo of a wooden gavel
SectionsAmendments
Section 1097: Any three or more persons may, by subscribing their names to a memorandum and otherwise complying with the provisions of this Civil and Commercial Code, promote and form a limited companyTwo (2) persons may  form a limited company
Enacting Section 1162/1Directors are able to remotely attend meetings via video conference
Section 1237: A limited company may also be dissolved by the court on the following grounds: (4) the numbers of shareholders are reduced to less than threeMinimized shareholders from less than three (3) to only one person
Section 1238: Amalgamation and merger1) After amalgamating, a new company may only exist and others are dissolved or 2) A merging company exists and others are dissolved
Enacting Section 1239/1 A new mechanism was established to deal with shareholders who do not agree with amalgamation/merger
Section 1240: The company must publish once at least in a local newspaper and send to all creditors known to the company a notice indicating the particulars of the proposed amalgamation and requiring the creditors to present, within sixty days from the date of the notice, any objections they may have to it. If no objection is raised during such period, none is deemed to exist. If an objection is raised by any creditor, the company may not proceed with the amalgamation unless it has satisfied the claim or given security for it.Protecting the company’s creditors and minimizing the time to make the process faster
Enacting Section 1240/1Holding a shareholders’ meeting shall be completed within six (6) months from the amalgamation
Section 1243: The new company is entitled to the rights and is subject to the liabilities of the amalgamated companies.Revised wording to be more specific in regard to rights and liabilities
Section 1246/1: A registered partnership or limited partnership having at least three partners may be transformed into a limited company upon having consent of all partners and upon following actions being taken: (1) notifying, in writing, the partners’ consent to  transformation of a partnership into a limited company to the Registrar within fourteen days as from the date of all partners’ consent; (2) publishing once at least in a local newspaper and sending to all creditors known to the partnership a notice, in writing, indicating particulars of the proposed transformation of the partnership into a company and requiring the creditors to present, within thirty days as from the date of the notice, any objections they may have to it. If an objection is raised by any creditor, the partnership may not proceed with transformation unless it has satisfied the claim or given security for itAll partners, instead of having at least three partners, must agree  to transform a registered partnership into a limited company.

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Thailand – New Regulation over the Defective Products

Nowadays consumers may face problems with defective products which the consumers find out about them later as the products never show any malfunction at the time of delivery. A draft Liability of Defective Product Act (“Act”), which was approved in principle by the cabinet on 22 November 2022, has been proposed to keep up with the problems and for the benefit of protecting the rights of consumers.

The draft Act will cover manufacturing for sale, hiring for manufacturing for sale and ordering or importing products into the kingdom for sale. This also includes a seller or a hire-purchaser where a manufacturer or an importer of such products cannot be identified. The products fallen under this draft Act are in the categories of electric and electronic types of equipment, vehicles, motorcycles, including other products prescribed by the Royal Decree.

This draft Act is requiring for the business operators to be liable for defect in products that cause depreciation expenses or deterioration of products within 2 years from the date of delivery regardless of whether the business operators are aware of the defect of the products or not. In case that the products are defective within 1 year from the delivery date, it is presumed that the products are defective at the time of delivery.

Moreover, the business operators are responsible for any defect in the case that the business operators install or assemble the products or where the consumers assemble the products or install the same according to the manual provided by the business operators, but the manual does not specify how to install or assemble the products correctly or completely.

The draft Act prescribes the rights of consumers against the business operators who are liable for defect as follows:

  1. Claiming the business operators to repair the products;
  2. Asking the business operators to exchange the products;
  3. Asking for a price reduction; and
  4. Terminating the agreement.

If there is an agreement in advance excluding liabilities of the business operators for any defect, such agreement is voided.

Under this draft Act, the statute of limitation for claiming under this draft Act is 2 years from the date that the defect is found or business operators refuse to be responsible for the defect. However, it does not extinguish the consumer’s rights to demand the business operators being liable for such defect by virtue of rights under other laws.

This draft Act will need to be processed through several steps before becoming into effect. It will possibly take a few years.

Hire Purchase Agreement for Vehicle and Motorcycle is Now Regulated

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Hire Purchase Agreement for Vehicle and Motorcycle is Now Regulated

On 12 October 2022, the Committee on Contract (“Committee”) set up by virtue of the Consumer Protection Act B.E. 2522 (1979) (“Act”) issued an announcement regarding updated rules, conditions and particulars of vehicle and motorcycle hire purchase agreement (“Announcement”), which is a contract-controlled business under the Act, in order to protect consumers’ rights from being taken advantage by business operators. This Announcement will become effective after 90 days from the date of publication, which will be on 10 January 2023.

This Announcement only applies to a hire purchase agreement for a vehicle or motorcycle (“vehicle”) between a business operator and a consumer. The vehicle must be used solely for personal purposes, not for transportation or commercial purposes. The following are examples of requirements that must be specified in the agreement which have changed from the previous announcement issued in 2018.

  1. The hire purchase interest will be charged in the effective interest rate method of no more than 10% per year for a new car, no more than 15% per year for a used car and up to 20% per year for a motorcycle.
  2. When the hire purchase provider terminates the agreement because of the hirer’s failure to pay debts in three consecutive installments or by any legitimate reason and hire purchase provider proceeds to sell the vehicle at private or public auction, the hire purchase provider must notify the hirer and the guarantor (if any) in writing at least thirty days in advance so that the hirer can exercise the right to purchase such vehicle within twenty days at the price of outstanding debt under the agreement. If the hirer wishes to do so and pay off all debts at once, the hire purchase provider must provide the hirer with the discount. However, if the hirer ignores or fails to exercise such rights, the guarantor may do so instead. The hirer and guarantor have the right to assign this right to any third party.
  3. The debt as mentioned above shall refer to and include the default payment, the installment that has not yet been due and any fee or charge spent by the hire purchase provider to collect hire purchase installment(s) that has been due prior to the termination of the agreement.
  4. The Hire Purchase provider must notify the hirer and the guarantor (if any) of the details of the seller, the date and time of the auction, and the selling price at least fifteen days before the auction date. Once the vehicle has been sold at auction, the hire purchase provider shall deduct the net proceeds of the auction from the debt owed by the hirer, any surplus shall be refunded to the hirer. However, if the net proceeds are less than the debt, the hirer shall be responsible for the remaining amount of such debt. Furthermore, the hire purchase provider must notify the hirer within fifteen days from the date the vehicle is sold with all details of the auction and the amount of debt as well.
man inside vehicle in front of opened door

In light of this, the aforementioned is only a partial requirement of the agreement that the hire Purchase provider must follow. There are still many details that the hire purchaser should know in order to prepare a legally binding agreement.  Any business operator who fails to deliver the agreement containing terms and conditions to the consumer in accordance with the Announcement shall be liable to imprisonment for a term not exceeding one year or to a fine not exceeding one hundred thousand Baht or both. Plus, the consumer should also be aware of this Announcement because it directly affects his or her rights. If a consumer sees that any business operator fails to comply with the Announcement, a consumer can file a complaint to Consumer Protection Board respectively.