Hi,

I have an opportunity to "buy" 50% ownership in a thai ltd. partnership. It is my understanding that there is a thai 51% shareholder but the thai has no financial control over the business and the farang is 100% in control of the company and its assets. Taking into account that all this is verifiable I would like to know how this would all look on paper. Im basically interested in becoming a silent partner.

Thanks

In that case the farang who holds the 49% should have no problem transferrign his full holding to you and enterign an agreement/ contract with you in regards to the other 1% and the operations of the business including your entitlements.

Other than that i wouldnt do it.

You may well find yourself becoming responsible for liabilities created by the existing partner/pertners. As it will be almost impossible to cover your back in this respect, best advice is don't do it. If you want to proceed, the best way is dissolution of the existing ltd partnership by the existing partners, with you forming a new entity that has never traded which can then acquire the unencumbered assets of the previous ltd partnership. Any assets acquired MUST be unencumbered to protect yourself.(ie they must not be the subject of a loan/lease agreement) Just remember people lie, so protect yourself and don't ever take the seller's word for anything unless you are willing to be at risk. Forgery is rife here.

Buying into a limited partnership is not recommended since the Managing Partner, or the one with majority ownership, has control over the company. However, the Managing Partner also carries unlimited liability while the Investor partner (minority holder) has limited liability. The unit of ownership in a Limited partnership does not use shares but amount of investment (in Baht). 51/49% Thai/foreign ownership of a limited partnership is no longer allowed and a higher percentage on the Thai side is now being required.

When both partners would like to represent the company they would both be Managing Partners but they would need to add a third investor partner who would then have limited liability. It is also possible for the minority owner to have signing rights but only one signatory is allowed in a Limited partnership.

An alternative course of action would be start a Limited Company and sell the assets of the Limited Partnership to that company. While technically a limited partnership can be converted to a limited company, it is very rarely allowed and the easier course of action would be to establish a new limited company.The Authorized Director could also be stipulated as having limited liability and to also establish different classes of shares to limit voting rights.

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