Amendment on the Law on Commercial Enterprises 2022

Law on the Amendment of the Law on Commercial Enterprises was promulgated on 29 January 2022 through the Royal Kram No. NS/RKM/0122/003 (hereinafter the “Amendment on the LCE”).

Following this Amendment, 12 articles were annulled, 12 articles were modified, and 3 articles were added. The Amendment on the LCE has the following details:

Company Secretary refers to a natural person who is appointed by the company and has the right to receive and hold documents related to the company’s affairs as stated in article 2 (new). Company secretary comes to replace the “agent” in the Law in the following articles: article 3 (new), article 4 (new), article 106 (new), article 110 (new), article 114 (new), article 115 (new), article 137 (new), article 225 (new), and article 234 (new).

A sole proprietorship is now a form of commercial enterprise in addition to a partnership and company under the Amendment on the LCE. A sole proprietorship refers to an enterprise which is established by a natural person whose asset is a capital of the sole proprietorship according to Article 8 (bis).

The owner of the sole proprietorship may dissolve his/her enterprise based on his/her own discretion. The sole proprietorship may be dissolved based on the following reasons: voluntarily, the death of the owner, or the decision of the court.

The Amendment on the LCE offers a legal ground for nominee shareholder arrangement. Under article 147 (bis), a shareholder in a company which has no intention to disclose one’s own identity in the company article of incorporation may appoint his/her representative as a nominee. This appointment shall be made through an agreement between the nominee and the shareholder which can be a natural person or a legal person.

The information on the identity of the shareholder and the agreement shall be deposited at the Ministry of Commerce.

The Amendment on the LCE also puts an end to articles 166-175, article 182-190, and article 196. These articles cover two main aspects such as the securities in bearer form, and the endorsement of securities. Other amendments include the appointment and the qualifications of the liquidator for company dissolution, the creation of local company branches as well as the removal of the assumption to the value of the share of a company, and other modifications with respect to the above amendments.

In conclusion, the Amendment on the LCE provides a more up-to-date regulatory environment for the business.