Buying A Company

[UKJASE]

Hi Guys - i was hoping some one could help me please. I have spent a couple of hours searching through old posts, but am unsure if i have found the answer to my question or not, so would like some help if possible....

My girlfriend and i are looking at buying a house. we found one and it is very nice. the owner is a european guy. he says that 6 years ago he and his wife started up a company, which bought the land and the house. he says that he and his wife own 99% of the company shares, and a thai person owns 1%. he says he pays 6,000B a year to maintain the company, pay taxes and pay the lawyer

he says this was allowed 6 years ago, and if we buy the company, then myself and my girlfreind can own 99% of the company. he says the law changed to 51% thai ownership 5 years ago, and that if the company is sold to us, we the original rules from 6 years ago will still apply

this does not seem possible from what i have read on this forum. also an agent working in one of the offices in town told me not to believe him either

I ran this by the owner again, and he seems adamant that he and his wife own 99% of the company, which owns the land and house, and which he can sell to us

he says a trip to his solicitor will show all of this

please can you help me - is he pulling my plonker, or is what he is telling me the truth??

[UKJASE]

Sorry - i forgot to mention...... the european guys wife is also european

[InterestedObserver]

A misunderstanding somewhere. A couple of Europeans cannot own 99% of a Thai company, unless they are talking about different classes of voting shares. You need your lawyer to perform due diligence on the property and company.

Edited November 30, 2011 by InterestedObserver

[trajan]

the shareholding structure of the holding company doesn't sound correct....there seems to be a "lost in translation" communication.

It is probably a 49% foreign-owned (with controlling shareholder vote and dividend right) Thai registered company (with the remainder held by Thai shareholders with minimal voting and dividend rights)..[The European probably means that he controls 99% of the votes & dividends, but technically owns 49% or less of the shares].

assuming the structure if OK, the real danger is if the company has any hidden liabilities (tax payables, account payables, guarantees extended to anyone etc.etc.) ....should have someone examine the company before you buy it...

Edited November 30, 2011 by trajan

[Langsuan Man]

I seriously question the 6,000 THB figure per year to maintain the company, think more in the neighborhood of 15 to 20,000 THB for the annual accounting and registration renewal

This guy can be as adamant as he wants but he is flat out wrong

He can only own 49% of any Thai registered company, the rest may be split among a number of Thais, so that he can maintain a majority of shares, but nothing like the 99% he claims

[jaapfries]

Never buy an existing Co.,Ltd. because in spite of doing the best of due diligence efforts, years later facts (hidden debts)may surface and then you'll know that you should have NEVER purchased an existing Co., Ltd. ! ! !

Please safe yourself heaps of potential grief !

[donx]

If I remember correctly, 6 years ago a Thai limited company needed 7 different Thais to own 51% of the shares. It has since been reduced to 3 Thais owning 51% of the shares. So how can he claim that only one Thai owns stock in the company? Even today you need at least 3 Thais (or did they change the law again?)

[Darrel]

It seems to me that one of the few things worse than setting up your own company to buy a house is to buy a company that someone else set up to buy a house.

It's rather like the difference between using a sharp knife or a blunt knife to cut off your own genitals.

[InterestedObserver]

If I remember correctly, 6 years ago a Thai limited company needed 7 different Thais to own 51% of the shares. It has since been reduced to 3 Thais owning 51% of the shares. So how can he claim that only one Thai owns stock in the company? Even today you need at least 3 Thais (or did they change the law again?)

Today it's a total of three shareholders with at least 51% of the stock owned by one or more Thais. Management voting rights is another subject altogether.

[stgrhe]

assuming the structure if OK, the real danger is if the company has any hidden liabilities (tax payables, account payables, guarantees extended to anyone etc.etc.) ...

To complement Trajan's remarks please pay attention to the 12.5% tax of the "rent", a value assessed by the Land Office, that all company residents should be paying for living "free". Very few do pay this tax and since it is retroactive and follows the company it can amount to a large figure.

If you do insist on going the company route form your own company and let it buy the property from the current owner's company.

[Langsuan Man]

if you do insist on going the company route form your own company and let it buy the property from the current owner's company.

Which the seller will not want to do, since it will cost him in the neighborhood of 50,000 THB to legally close an existing company

[stgrhe]

if you do insist on going the company route form your own company and let it buy the property from the current owner's company.

Which the seller will not want to do, since it will cost him in the neighborhood of 50,000 THB to legally close an existing company

Well, if he wants to sell, and I would be the buyer, that is what I would insist on, and whether the seller has additional costs for winding up the company would not be my concern. There are so many objects for sale so a potential buyer has no reason to accept a non-attractive deal as he easily can find another object to buy.

[UKJASE]

Thanks for replies guys.....

i spoke the vendor today and i explained that there may be some misunderstanding regarding the ownership of the land, and he accepted that this may be the case

so next week we are going to visit his lawyer and see what he says

we will of course also find our own legal representation before we sign any deal

i dont suppose any of you lovely people could recommend a good lawyer based in hua hin could you??

thanks again for taking the time.....

:jap::jap:

[ludditeman]

He appears to have deliberately tried to mislead you into buying his company.

Do you really want to buy anything from this person?

Can you really afford to lose this much money?

The sellers lawyer will say whatever the seller tells him to say.

Edited December 1, 2011 by ludditeman

[stgrhe]

i dont suppose any of you lovely people could recommend a good lawyer based in hua hin could you?

:jap::jap:

I would contact Chavalit, Finch & Partners if I wanted a Hua Hin legal representative.

http://www.chavalitfinchlaw.com/