Buying/Overtaking An Existing Thai Company -

[vertigo4u]

I want to start a - small at first - Business in Thailand

I am planning to buy / overtake an existing Thai Company

What legal Stuff I have to care and observe to do so?

Thanks in Advance for any Suggestion

Any Offer is also welcome

Cheers

[keeniau96]

This is a move fraught with dangers, notably hidden liabilities accrued by the existing company. A notable one is tax liabilities, which can surface several years after the tax may be incurred. The purchase agreement may well include an indemnity and hold-harmless clause but this is Thailand and litigations can go on for years. I would form a new company unless there were compelling reasons otherwise. A decent Thai lawyer can set you up for 10-15k Baht; one of the expat law firms will likely charge far more and may deliver less than a knowlegable Thai tana kwam.

[BWPattaya]

This is a move fraught with dangers, notably hidden liabilities accrued by the existing company. A notable one is tax liabilities, which can surface several years after the tax may be incurred. The purchase agreement may well include an indemnity and hold-harmless clause but this is Thailand and litigations can go on for years. I would form a new company unless there were compelling reasons otherwise. A decent Thai lawyer can set you up for 10-15k Baht; one of the expat law firms will likely charge far more and may deliver less than a knowlegable Thai tana kwam.

That is good advice. Buy an existing company and you may find that you have incurred their unpaid tax liabilities. Every year it is unpaid incurs extra tax and fines, eventually there will be an arrest warrant issued. Acoiding tax is a serious offence, easily avoided by starting a new company.

Only buy an existing company if it is the business and assets you want. Plus, only after due diligance.

Good luck.

[scorecard]

This is a move fraught with dangers, notably hidden liabilities accrued by the existing company. A notable one is tax liabilities, which can surface several years after the tax may be incurred. The purchase agreement may well include an indemnity and hold-harmless clause but this is Thailand and litigations can go on for years. I would form a new company unless there were compelling reasons otherwise. A decent Thai lawyer can set you up for 10-15k Baht; one of the expat law firms will likely charge far more and may deliver less than a knowlegable Thai tana kwam.

That is good advice. Buy an existing company and you may find that you have incurred their unpaid tax liabilities. Every year it is unpaid incurs extra tax and fines, eventually there will be an arrest warrant issued. Acoiding tax is a serious offence, easily avoided by starting a new company.

Only buy an existing company if it is the business and assets you want. Plus, only after due diligance.

Good luck.

It's not necessarily such a risk if the company was originally set up for the obvious reasons and has in fact never traded, plus the annual accounts, auditing, company reports have been prepared and submited by a professional agency and accepted, and of course you or your accountant or lawyer have conducted a comprehensive due diligence.

[Riley'sLife]

Best advice is NEVER buy an existing corporate entity, whether it has traded or not. This is true in the west where at least some form of redress is available in the event of problems, but in Thailand the risk is about as high as it could possibly be.

As has already been sensibly advised, form your own new company. That way there will be no unpleasant surprises.

If you are wanting to take over an existing company, it is far better to form your own company first, then use this new company to acquire the assets of the company you wish to buy/take over, but not the company itself. The aim here should be to acquire the assets and protect your new company from any hidden liabilities which may have been created by the company you wish to take over.

Professional advice is of paramount importance especially if you have limited commercial/legal knowledge, which appears to be the case.

My wife is a Thai Auditor, and she has told me some tales that beggar belief. I wouldn't trust anyone's accounts, audited or not. Remember this is Thailand where less than 10k can get someone terminated, so you can imagine how inexpensive it is to make a company look good on paper!!

Good luck.

Edited July 24, 2010 by Riley'sLife

[chainarong]

My advise is against your present plans , start your own business from scratch, probably be cheeper in the long run.

[topsecret]

I would add saying you should be asking what exactly are you buying?

Even is the business is a trading entity you can still set up a new Ltd company and continue trading as normal under the new company name, but keep the trading name.

You also need to know exactly why the person is selling a business, and you wont get that by asking.

Due diligence is required

[NaChampain]

I would add saying you should be asking what exactly are you buying?

Even is the business is a trading entity you can still set up a new Ltd company and continue trading as normal under the new company name, but keep the trading name.

You also need to know exactly why the person is selling a business, and you wont get that by asking.

Due diligence is required

Agree with all posters. Been here 15+ yrs. I have worked on a couple of SET listed companies takeovers. At that level of governance it still was a challenge to get full and open information on the books. I would advice you as in other cases around the world to have the following:

- A fully backed up and financed plan

- Strong advisory team: Best in league lawyers and investment bankers

- Strong management team ready to take over (you may be part of that or be part of the board)

Do not be mistaken. In many cases people think that Thailand is a developing country and thus lower their expectations. Have a look at Lombard investments (S&P, Asia Books, Preuksa etc.). Their principal Thai partner is Yale and HBS educated. That is what you should aim for in a take over - do not look down at Thailand and be ready to perform at your best if you want to take over another company.