The core answer
When one founder brings the money and the other brings the work, there is no legal formula for the split. The law's only real constraint is that shares in a Thai limited company are paid for in money, so "work for shares" does not happen by simply writing it into a contract. The fair split is a commercial decision that needs to be built into the paperwork on purpose.
The rule (Civil and Commercial Code). Section 1119 requires every share to be paid in money in full, except shares approved at the statutory meeting under s.1108(5), which may be issued as if paid up in exchange for labour or property. A partnership is different: s.1026 lets a partner contribute money, other property or labour.
Our practical view. Do not try to price effort in baht on day one. Split the shares by role and commitment, keep the money as a separate line (premium or shareholder loan), and let the work partner earn the shares over time under a written agreement between the founders. It is the only layout we know that stays fair when plans change.
This guide does not repeat the 50:50 deadlock guide or the BOI multi-founder guide. Read those if you are heading toward an even split or applying for promotion.
1. Can work be paid for shares in a Thai company?
Three rules from the Code decide this.
- Shares are paid in money (s.1119). Every share must be paid in full in money. The exception is a share approved under s.1108(5) or s.1221.
- The founding-meeting exception (s.1108(5)). At the statutory meeting, the founders and subscribers can approve a number of shares to be issued as though fully or partly paid because they were given in exchange for labour or property. The meeting must say so specifically and describe the labour or property precisely. When the company registers, the application records the shares issued as paid up otherwise than in money (s.1111).
- No set-off (s.1119). A shareholder cannot reduce the price of shares by setting off a debt the company owes him.
Points to confirm before you rely on this route: how the Department of Business Development handles s.1108(5) shares in practice, whether the one-day registration route in s.1111/1 can be combined with them, and what route exists for non-cash shares issued after the company exists. Ask the registrar and your adviser before you build a plan around it.
Even where the door is open, it is a blunt tool. A one-off issue for "work to be done" gives the worker the shares up front, which is the opposite of what the money partner wants. For that reason most founders use the structures below.
2. Practical options for a fair split
| Option | How it works | Watch out |
|---|---|---|
| Split by role, money partner pays more | Shares are allotted by agreed percentages. Shares cannot be issued below par (s.1105), but if the memorandum authorises it they can be issued above par and the excess is paid with the first call. | The premium must be authorised in the memorandum. The money partner owns a smaller share of the company than of the cash. |
| Money partner lends the difference | Both pay the same per share. The money partner puts the extra in as a written shareholder loan, repayable by the company. | The loan is a debt, not equity. Write the repayment terms, interest if any, and ranking against other creditors. It is not a share payment (s.1119). |
| Preference shares for the money partner | The money partner receives shares with a preference, for example on dividends or return of capital on liquidation. Dividends follow paid-up amounts unless the preference says otherwise (s.1200). | Section 1142 says that once preference shares are issued and the preference is fixed, it cannot be amended at all. Draft it correctly the first time. |
| Work partner earns shares over time | Both founders are registered shareholders now. A written agreement says part of the work partner's shares must be sold on if that founder leaves early. | The company cannot buy back its shares (s.1143), so the other founder, or a named buyer, is the buyer. |
| Work partner is paid salary or fee | Work is paid as a director fee or employee salary, separate from shares. | Tax and social-security treatment depend on the role. Ask your accountant before you set it. |
Many founders end up combining the second and fourth rows: equal or near-equal shares, a recorded loan for the money partner's extra cash, and a vesting agreement for the work partner.
3. Hypothetical example: how the maths is usually framed
Hypothetical example, not a real case or a recommendation. Ploy will fund the start-up and Ton will build the product full-time. They agree that Ton should end up with half the company, but only after four years of full-time work.
A common layout:
- Both are registered at 50:50 on day one, with each paying the par value in cash.
- Ploy lends the company the rest of the start-up money under a written loan agreement.
- Ton's agreement with Ploy says that if Ton leaves in the first year, Ton must sell most of the shares to Ploy at par. After that, a smaller portion each year becomes Ton's with no obligation to sell.
Ploy is protected if Ton quits. Ton is protected because the shares are registered in Ton's name and the vesting terms are written, so they cannot be changed informally. Because both are registered at 50:50 from day one, the voting position is already even, so read the deadlock guide before you accept that.
4. Why vesting is done between the founders, not by the company
Because s.1143 forbids a limited company from owning its own shares, you cannot rely on the usual "company repurchases the leaver's shares" clause. The workable tools are contracts between the people involved:
- A call option or obligation to sell. If a founder leaves in the first period, the other founder (or a named buyer) can, or must, buy the founder's unvested shares.
- Price formula. State the price method in the agreement: par value, cost, a formula, or an independent valuation. Say who picks the valuer.
- Transfer mechanics. Under s.1129 shares move freely without the company's consent unless the articles restrict transfer of registered shares. Where the transfer is of registered shares, the transfer instrument must be written, signed by both sides and witnessed by at least one person, and it only binds the company and outsiders once recorded in the share register. Prepare signed transfer forms in advance, or provide for a power of attorney, so a leaver cannot simply refuse to sign.
5. Leaver, drag and tag clauses
These clauses are contractual. The Code has no standard text for them, so what binds is what you write.
- Good leaver / bad leaver. A good leaver (illness, death, agreed exit) may keep earned shares at fair value. A bad leaver (serious breach, competing, quitting early) must sell at a lower price. Define each event in a way a third party can apply.
- Drag-along. If a buyer wants the whole company, a majority can require the others to sell on the same terms.
- Tag-along. If one founder sells, the other can join on the same terms.
- Penalties. If the agreement fixes a penalty or forfeiture, the court may reduce an excessive amount to a reasonable one (s.383). Do not assume a harsh forfeiture will be enforced as written.
- Where it should sit. A founders' agreement binds only the people who sign it. Put a matching restriction in the articles of association if you want it visible to the company, and ask us whether the registrar will accept the wording.
6. Directors, salary and dividends
- Roles. Who is a director and who signs for the company is a separate question from who owns shares. Agree it in writing.
- Salary vs dividends. Pay for work belongs in salary or a director's fee. Dividends reward capital and follow shares (s.1200), and the company may distribute dividends only from profit (s.1201). A work partner with a small shareholding but a full-time role will need a salary the company can really afford.
- Reserved matters. List the decisions that need both founders' approval, such as new share issues, borrowing above an agreed limit, and selling the business. This protects whichever founder holds fewer shares.
7. When the founders disagree
If the founders hold equal shares and cannot agree, the company can stall. The deadlock guide covers the routes. If one founder is the smaller holder, see minority shareholder rights. If you plan to add later investors or staff holdings, see the ESOP and RSU guide.
8. Checklist before you register
- Each founder's role, time commitment and start date written down.
- Share percentages and the reason for them.
- Money partner's extra cash recorded as premium, loan or preference shares, not left vague.
- If any shares are issued for work or property, decided before the statutory meeting and described precisely.
- Vesting or leaver terms: period, trigger events, price method, who buys.
- Signed transfer forms or power of attorney for the leaver case.
- Drag-along and tag-along terms agreed.
- Directors, signing authority and reserved matters listed.
- Salary or fee for the work partner, and what happens if the company cannot pay it.
- Contracts made before registration reviewed: see pre-incorporation contracts and promoter liability.
Further reading
- Shareholder deadlock in a 50:50 company
- Multiple founders and BOI shareholding
- Minority shareholder rights
- Employee share plans: ESOP and RSU
- Company registration costs in the first year
Money can be priced in the share count, a premium or a loan, but work should be earned over time and written down, so both founders know on day one what happens if one of them leaves.
We help co-founders choose a share structure and draft the founders' agreement and company documents. Initial consultation is free — call +66 92 254 2045 or send us the details. See also company registration, contracts and documents and joint ventures.
This guide is published by Suwanvara Law Firm — a Khon Kaen law firm established in 1986. General information only, not legal advice on a specific matter.
