Suing a Director as a Shareholder in Thailand: Section 1169, Limits and Case Law

Short answer: If a director causes loss to a Thai limited company and the company refuses to sue, any shareholder may bring the claim under Section 1169 of the Civil and Commercial Code. The Supreme Court limits this to a claim on the company’s behalf for compensation from directors.

This expands one part of Business Partner Fraud in Thailand.

What Section 1169 allows

The company may sue a director for compensation; if it refuses, any shareholder may bring the action, and company creditors may enforce it to the extent of their claims. No minimum shareholding is set. It is often compared to a derivative action, but Thai courts apply it on its own terms. It differs from a shareholder’s personal rights, such as inspecting minutes or receiving dividends.

Five conditions

1. On the company’s behalf — recovery goes to the company.
2. The company has not sued — write to the company first and keep proof.
3. Compensation only — not to void contracts or revoke transfers; return of property or its value from a director counts as compensation.
4. Directors only — non-director purchasers and outsiders fall outside the section.
5. Remain a shareholder — selling all shares ends standing.

Standing is a public-order issue the court may raise itself.

Case examples

In Supreme Court Judgment No. 10878/2551 (2008), a shareholder recovered land sold at an undervalue from the directors, but could not sue the non-director buyers. In No. 2481/2552 (2009), a claim to revoke a land transfer to a third party failed for lack of standing.

If Section 1169 does not fit

Replace the board by general meeting resolution so the company sues itself — see [removing a director] (cluster #5). For embezzlement, see [director embezzlement].

Limitation period

No Supreme Court ruling directly on the limitation period for Section 1169 claims was located. In tort it is one year from knowledge or ten years from the act, or a longer criminal period. Count conservatively.

FAQ

Can a foreign shareholder with 1% sue? The section refers to any shareholder, without a threshold or nationality condition.

Talk to a Thai Shareholder Dispute Lawyer

Section 1169 cases turn on the cause of action, the relief sought and the right defendants. Pattara Law Firm assesses standing, prepares letters to the company and pleadings, and represents clients in Thai courts.

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