Sunbelt: About Buying Existing Company

[junkofdavid2]

Sorry, I posted this in another post about "closing" a company, but I guess that forum is not in line with the gist of this issue, which is about "buying" a company.

QUESTION FOR SUNBELT, or Others:

With most of these dormant companies, THE BOOKS AREN'T IN ORDER... and many monthly govt. required filings probably have not been done and are way overdue... may have even possibly not filed an Annual Audit in the past year(s) as required by law.... sales and expenses (with lost receipts, etc.) don't tally with bank statements.

How big a problem does this cause for the new owner ???

(and/or old owner/s as well?)

[Sunbelt Asia]

Sorry, I posted this in another post about "closing" a company, but I guess that forum is not in line with the gist of this issue, which is about "buying" a company.

QUESTION FOR SUNBELT, or Others:

With most of these dormant companies, THE BOOKS AREN'T IN ORDER... and many monthly govt. required filings probably have not been done and are way overdue... may have even possibly not filed an Annual Audit in the past year(s) as required by law.... sales and expenses (with lost receipts, etc.) don't tally with bank statements.

How big a problem does this cause for the new owner ???

(and/or old owner/s as well?)

Been involved with over existing 1,000 business transfers and don't recall one time it was ever a issue. 99% of all existing business transfers are not share purchase but asset purchases. The few times they were share purchase, the buyer always made sure the audits were done, withholding tax filed, Vat, etc. Money was set aside in escrow for 6 months to a year in case, their was a unforeseen tax problem, etc.

When you are talking dormant companies, you do not have that luxury as you are buying the shares. The take over will be less than 30Kand the norm is 20% of this is held in escrow. 6K is not much assurance if they have not been filing promptly. You will find a fine line between criminal and civil law as a Director. You may be left holding the bag no matter what the SPA states. Acquiring a dormant company is not worth it. It is easier to set up a new company in most cases.

www.sunbeltasiagroup.com