All Experts Here:how To Determine Profit Sharing?

[qsecofr]

hi :

I have started a business with another 2 partners about half years ago... initially we just started the business as sole prop. and we verbally agreed that each of us own 33% shares from the business... As the business is getting more stable after half years of operation, one of my partner is suggesting to convert the business into PTE LTD.

However we cannot come up a conclusion that how many % of shares should each of our partners get if we convert the business into PTE LTD. One of my partner disagreed that the shares should distributed equally among three (33%) as he tot that he came up with this whole business idea and he put in more affords to develop the business than any others in the past 6 months. I didn't really agree with his point of view as shares cannot determine by the affords ... Each of us may work harder in various time... etc...

so my questions is

1. in this situation, what is the best way for shares distribution...

2. Is the decision making determined by how many shares the person hold in the company ??? say one partner holds 50% and the other 2 hold 25% and 25%...

Can the partner with 50% make a sole decision (eg. lay off someone or sell the company) without other 2 partners consent??

To me, the meaning of company shares is more for profit distribution, all partners should have equally rights to make all decision for the business.

Any experts ,,, pls advice ??

tks

ted

[Richard Hall]

Primarily, the idea of shares is surely to inject money and capatilize the company. The value of the shares is increasing with the company succeeding and getting more and more profitable and so is the return of the financial investment.

Sometimes there are also just silent shareholders that do not want to get involved in any operational or decision making processes.

Eventually, all surely depends on the company set-up, who sits in the board of directors and who has the right to sign for the company. Obviously, in your case it makes sense that shares are given out as per how much money one puts actually into the company. To secure your interests it is recommendable that company transactions require the signature of all three of you which should be reflected in the company's regististration papers.

Work load coverage should not be done by share distribution but rather by a salary and/or a bonus scheme. Just an idea.

Lots of luck.

Richard

[qsecofr]

thank you Richard... now i have better ideas.

[Sumitr Man]

Keep in mind that if you are doing this under Thai law, even though you have a PTE LTD, one of your members (shareholders) will still have unlimited liability.

It might be the case that you want to give the person with the biggest risk (the unlimited liability shareholder) the biggest share?

Just a thought.

[Sunbelt Asia]

Keep in mind that if you are doing this under Thai law, even though you have a PTE LTD, one of your members (shareholders) will still have unlimited liability.

Please be aware that in Thailand the director of a partnership must be Thai, and that a limited partnership must have at least one partner with unlimited liability.

A limited partnership must be managed only by the partners with unlimited liability. If a partner with limited liability interferes in, or otherwise gets involved with the management of the partnership, he becomes jointly, unlimitedly liable for all the obligations of the partnership.

www.sunbeltasia.com

[GuestHouse]

Go get good legal advice... NOW!

Prefarably from a firm that deals expressly with foreigners investing in Thailand.