Restaurant Purchase

[geroreilly]

Hello one and all and a Happy New Year.

I have been working in Bangkok for 2 years now and finally seem to have found a small restaurant to purchase after a long long search.

I am hoping people can offer advice and point out any pitfalls that I should avoid.

I will list a few questions that you may be able to help me with.

1. I want to set up a Thai Limited Company (7 shareholders), registered capital of 1 million baht. How much should it cost for the legal work? I was quoted at 30,000 baht.

2. I would like to have overall control of the company with my Thai girlfriend being one of the shareholders but me and my family making up the other 6 - with our combined shares being more than hers. Is this possible? Is it done by change the Articles of Association of the Company?

3. I am buying an existing business but may not want to retain existing staff. Do I have any monetary or compensation responsibilities?

4. Can anyone recommend and give contact details for lawyers with experience in the restaurant industry.

Any help or advice or links would be appreciated.....

Have a happy and prosperous New year...............

[p1p]

To the best of my knowledge, and this has applied to companies I have set up over the past few years, Thai nationals need to control OVER 50% of the company and there must be numerically more Thai shareholders than non Thai.

If you do your homework right and negotiate successfully, you should ensure all employees are "let go" by the previous employer and any responsibilities paid up and taken care of. You can then re-hire them under your own terms and conditions, including a trial period, (very important).

As a general rule I would NEVER purchase an existing company, unless I am taking on a brand new non-trading company "off the shelf". Far too many potential liabilities can be hidden which you will later find yourself responsible for. Far better to have your own company and transfer listed purchased assets from the outgoing one. If the vendors refuse to do this, ask yourself why and walk away.

Send a PM to ###### for advice. He forms companies specifically for people in your type of situation. He should be able to help you for a considerable saving.

And yes, 30K seems very high indeed for such a transaction, unless you are using one of the large Farang firms in Bangkok.

[geroreilly]

Thanks... I have PM'd ###### for his advice.

As regards the business..... I am buying the restaurant and not the company. So I am just paying for assets, lease and goodwill.

Basically I will set up my own company and transfer everything into this new company. I will not have any obligation to liabilities of existing company that the restaurant is trading under.

A quote from the Ministry of Foreign Affairs Guide

"A minimum of seven shareholders is required at all times. A private limited company may be

wholly-owned by aliens. However, in those activities reserved for Thai nationals, aliens’

participation is generally allowed up to 49 percent.".

So I suppose the question is - what are the activities reserved for Thai Nationals?

It is my hope to have majority control over the company - if possible!

[Guest IT Manager]

When you say legals, do you include the cost of set up or just legal advice? Seems very expensive for just legals, relatively.

Suggest undertaking a conversation at some time.

IT

[Sunbelt Asia]

Hi George,

1. I want to set up a Thai Limited Company (7 shareholders), registered capital of 1 million baht. How much should it cost for the legal work? I was quoted at 30,000 baht."

Our fee is 7,500 Baht. The Government fee will be Duty stamp 210 Baht

Step 1 Government registration 1,000 Baht, Duty stamp for cap registration 800 Baht, Capital registration 5,000 Baht

So with Sunbelt Asia, you're talking 14,010 Baht NOT 30,000 Baht.

"2. I would like to have overall control of the company with my Thai girlfriend being one of the shareholders but me and my family making up the other 6 - with our combined shares being more than hers. Is this possible? Is it done by change the Articles of Association of the Company?"

A Thai shareholder needs to have 51% of the shares in this particular case. However you as the Managing Director can bind the company and have different classes of voting shares... The GF who can have 51% of the shares…for every 10 shares =1 vote and the 49% foreign interest has 1 share =1 vote. As the 51% has the class of shares with only 1/10 of the voting rights. The Thai has the first right to liquidation proceeds. However you could put in the bylaws beforehand what valuation the 51% ratio will obtain...( note it does not have to be 51% will get 51%...it can be much lower or higher, up to you)

"3. I am buying an existing business but may not want to retain existing staff. Do I have any monetary or compensation responsibilities?"

If you are buying the assets...no. That’s why I would reco to form the company and put these assets in that corp.. In the Asset purchase agreement, this should be spelled out…heres some basic wording.

The BUYER, will not have any responsibility towards employee compensation or benefits accrued before January 10th 2004. Compensation will be restricted to only hours worked for the buyer and no compensation will be given towards work perform prior to January 10st 2004 for the Seller.

4. Can anyone recommend and give contact details for lawyers with experience in the restaurant industry.

I'm biased but think our three in house lawyers are the best. For the Asset purchase Agreement which covers non-competition, solicitation of your employees, liabilities, lease etc, Guarantee of Asset Ownership, Bill of Sale; our staffs professional fee is only 7,500 Baht.. I’m 100% positive, no one has a lower fee in Thailand but will provide these same type of professional contracts. These contracts are the same standard as several International Law firms in Bangkok that charge USD$350.00 per hour. I’m in the industry so know what’s out there. We do it as a service for our clients which acquire existing businesses.

Regards,

Greg

You can reach us at [email protected] or 02-642-0213

[geroreilly]

Greg,

14,010 baht sounds like a very good deal. Does that include everything? Legal costs, government duties, taxes, application fees, capital registration etc etc? If it does then great. How long would it take to get the company registered?

As regards maintaining control of the company myself - arranging the voting rights like this is a new idea I never heard of. Is this all done through the Articles of Association of the company? Other people have suggested that I keep 49% and use people that do not know each other as the remaining 6 shareholders so that they cannot come together to make 50% and outvote me.

Speaking to the seller about food and liquor licenses it appears that I will have to arrange all of these myself as they are in his companies name. Can your accountants and lawyers arrange these details as well?

Thanks for the info ...............

[Sunbelt Asia]

14,010 baht sounds like a very good deal. Does that include everything? Legal costs, government duties, taxes, application fees, capital registration etc etc?

Yes it includes everything on registering the company. However their is 7% Vat on the legal fee so the total is 14,535 Baht.

If you want to file for the Corp ID, VAT, visa and work permit, its extra but to only register the company with 1 million capital. That’s the complete fee including the. government and our legal fee. It takes two weeks to complete the registration.

As regards maintaining control of the company myself - arranging the voting rights like this is a new idea I never heard of. Is this all done through the Articles of Association of the company?

Yes

food and liquor licenses it appears that I will have to arrange all of these myself as they are in his companies name. Can your accountants and lawyers arrange these details as well?

Yes our licensed lawyers do this every week. Many times in fact including the cigarette license. The liquor license will only take one day. The food license, the Thai officer will come out to inspect after you're open. takes around two weeks for them to come out. You get your license the next day, if everything is ok.

Regards,

Greg

[email protected]