Thai "company" For Sale For 5,000 Baht?

[El_D]

Hey Steve & Sunbelt,

I saw an ad in the Pattaya Mail for a "company" for sale for 5,000 baht.

I'm 36 years old, married to a Thai, & travel with my regular job too much (am off to five mideast contries for 3 weeks come Monday) to need anything other than a 30 day tourist visa at this point. I've been based here for 3 years though and am quite familiar with the Cambo crossings & have a passport that's almost as thick as the New Testament...

I have supply of a product in Thailand that is in demand in the US. I plan to market this online.

What would I be getting into with this 5K baht "company" for sale should I choose to "buy" it?

Thanks,

El D

[bukmba]

Do NOT buy any company. If you need one, open one. It's more expensive but the company is 100% clean. Revenue Department is checking pretty tough at the moment.

You will not know if the company you intend to buy has problems from years ago because they didn't pay some taxes. You can get in real deep trouble faster as you can realize. I know one guy, he would even give you some money if you would overtake his company. Guess why ?!

So if you think about saving some Baht on a company purchase you might soon face your biggest loss ever.

[El_D]

Thanks for the input Capo.

You make some valid points to consider!

Further input like Capo's would be GREATLY appreciated.

Thanks again to all,

El D

[Indo-Siam]

Hi El D -

Piecemeal, here are a few additional thoughts:

1. In addition to outstanding tax liability (as mentioned above), here are two more "skeleton in the closet" scenarios that could come out and bite you:

a. The company co-signed a business loan for another individual or company. The loan is in default. The present company is broke - so the creditor patiently waits for someone to buy thecompany, turn it into a profitable entrrprise and - he then presents the co-signed loan - and you have to pay it off.

b. After five years, the company ran itself broke. It then laid off all its employees. They all have legitimnate severance claims against the company - lets say five employees, each with 40,000 baht in valid severance claims. Since company is broke, they don't file. You buy the company, put in some operating funds, and suddenly the claims start appearing.

2. There is a process for closing down a company. It typically takes about 6 months, and perhaps 60,000 baht - newspaper ads, appointment of a liquidator, depositing of all company files with the liquidator, etc. If company is bankrupt and owes creditors, the liquidation process is even more onerous and costly. Easy way out: Find some sucker to buy your company.

3. Never buy the shares of a Thai Provate Co. Ltd. in Thailand - particularly a "distressed" company. There is virtually no way to perform adequate due diligence. The only conceivable justification that I could see for taking this risk would be to "inherit" carry-foward benefits - such as perhaps five remaining years on an 8-year corporate tax exemption at a BOI "priority industry" company - and BOI companies must regularly prepare and submit financial reports to BOI, so there would be some better chance that company records were representative of reality.

Think about it - you buy someone's company. You immediately assume his payroll responsibility - from minute one. If you don;t like the strangeremployees, you can terminate them. But - for "sudden termination," Thai labor law requires that you pay them the present month and following month's salary, and THEN pay severance pay in addition - applicable to anyone with more than 90 days of tenure. You assume the company lease obligation - whatever that is (although perhaps you only face loss of the deposit that your predecessaor made - if that is transferred to you. You ceretiuanly assume the corporate tax liability for the present year - typically paid at the end of each anniversary year.

Execute an asset purchase agreeement, but do not execute a share sale/transfer transaction. By doing so, you take on only the assets and liabilities/obligations listed on the agreement - the other company retains all other of its liabilities and obligations.

Good luck! Cheers!

Steve

Indo-Siam

[Sunbelt Asia]

Execute an asset purchase agreeement, but do not execute a share sale/transfer transaction.

Steve summed it up. Amen!

How bout this as well... criminal liability!

We have done some share transfers but these were excellent companies that had a track record. In the share transfer agreement, many of these points of liability were covered and the seller was responsible. The only reason to ever do it was the a long term lease that could not be assigned or contracts with multi nationals that they felt would not transfer over to the new buyer easily.

A asset agreement favors the buyer anyway for tax versus the share transfer.

Risk and reward in everything in business but to buy a shell company for 5,000 Baht is like putting a gun to your head. It only cost 7,500 Baht for a new company on the legal fees.

You are smart to ask the question before doing this. I applaud your wisdom in doing so.

Regards,

Greg Lange

www. sunbeltasia.com

[email protected]

[El_D]

Thanks Guys. I knew something had to be a bit fishy there.

El D