ภาษาไทย
By Pattarapongpun Singkhamharn | Attorney-at-Law (Thailand)
Corporate & Commercial Practice
Being defrauded by a business partner or company director is a serious issue, particularly in closely held companies with only a few shareholders. Such misconduct can directly affect cash flow, reputation, and the long-term stability of the business.
This article provides a structured overview of the legal steps available under Thai law, including relevant statutory provisions, to help business owners make informed decisions before taking action.
Note: If the matter involves complex transactions, multiple entities, or layered asset transfers, professional legal advice should be obtained before proceeding.
What Constitutes Business Partner Fraud?
- Embezzlement of company funds – transferring money to personal accounts or withdrawing funds without legitimate business reasons
- Falsification or alteration of accounting records – concealing income/expenses or creating false entries
- Unauthorized transactions – signing contracts, borrowing funds, or selling company assets without proper authority or required resolutions
- Misuse of confidential business information – using client lists, formulas, or pricing strategies to compete against the company
- Lack of transparency – refusing to provide access to financial records or corporate documents
Relevant Laws Under Thai Law
1) Civil and Commercial Code (Directors’ Duties and Liability)
- Section 1168 – Directors must perform their duties with honesty, good faith, and reasonable care.
- Section 1169 – If a director causes damage to the company, the company may claim compensation from the director. Shareholders may also bring an action on behalf of the company if the company fails to act.
2) Thai Penal Code (Criminal Liability)
- Section 352 – Embezzlement
- Section 353 – Embezzlement by a person entrusted with property
- Section 264 – Forgery of documents
Steps to Take If You Suspect Business Partner Fraud
Step 1: Systematically Gather Evidence
- Financial statements and accounting records
- Company bank statements
- Contracts, quotations, tax invoices related to suspicious transactions
- Board and shareholder resolutions
- Relevant communications (emails, LINE messages, internal memos)
Tip: Prepare a chronological timeline of events, including dates and transaction amounts. This significantly helps in legal evaluation and case preparation.
Step 2: Review Signing Authority and Company Regulations
Examine the company affidavit, articles of association, and signing authority requirements. Determine whether the disputed transaction exceeded the director’s authorized power.
Step 3: Convene a Shareholders’ or Board Meeting
- Resolve to investigate suspicious transactions
- Appoint an auditor or financial expert
- Pass a resolution to initiate legal proceedings (civil and/or criminal)
Step 4: Send a Formal Demand Letter
A formal written demand clarifies the company’s position and may facilitate negotiation or settlement before litigation. It should clearly state the facts, claimed damages, and a deadline for response.
Step 5: Choose the Appropriate Legal Action (Civil / Criminal / Both)
- Civil Action – To recover damages or claim compensation under Sections 1168 and 1169 of the Civil and Commercial Code.
- Criminal Complaint – If conduct constitutes embezzlement or forgery under Sections 352, 353, or 264 of the Penal Code.
Strategic Consideration: In certain cases, pursuing both civil and criminal actions may strengthen negotiation leverage. However, evidence strength and potential business impact must be carefully assessed.
How Long Does Litigation Take?
The duration depends on transaction complexity, volume of evidence, and litigation strategy. Cases may take several months to several years. Early strategic planning and proper documentation can significantly improve efficiency and outcomes.
Frequently Asked Questions (FAQ)
Can a minority shareholder file a lawsuit?
In certain situations, a shareholder may file a derivative action on behalf of the company under Section 1169 if the company fails to act. Specific eligibility depends on the corporate structure and facts.
What if there is insufficient documentation?
Begin with accessible financial records such as bank statements and accounting documents. Professional forensic review may help reconstruct transaction patterns and identify legal options.
Can civil and criminal proceedings be initiated simultaneously?
Yes, if both civil liability and criminal elements are present. Strategic coordination is important to avoid adverse procedural effects.
Can a director be removed immediately?
Removal typically requires compliance with corporate procedures, including proper meetings and resolutions in accordance with applicable laws and company regulations.
Need an Initial Legal Assessment?
If you suspect embezzlement, forgery, or unauthorized transactions within your company, starting with structured evidence gathering and legal planning can minimize damage and provide clarity in decision-making.
Contact a business law advisor to assess your legal options.
About the Author
Pattarapongpun Singkhamharn is a Corporate & Commercial Lawyer in Thailand specializing in business disputes, director liability, and corporate advisory services.
Tel. | WhatsApp: +66 99 249 5989
LINE Official: @patt
Email: info@thailandlawyer.com
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