4jasmin Posted March 21, 2015 Share Posted March 21, 2015 If I would buy 49 % of an existing, functioning and strong selling Thai Company - what would it mean for me? Will I have any Rights? What are the Advantages and the Disadvantages? About what Part in the Agreement I have to take care? Thanks in advance for your postings Link to comment Share on other sites More sharing options...
Popular Post Soutpeel Posted March 22, 2015 Popular Post Share Posted March 22, 2015 If I would buy 49 % of an existing, functioning and strong selling Thai Company - what would it mean for me? it means you own 49% of a Thai company, which is less than the 51% required to be a majority stake holder, further if your a foreigner 49% is the maximum percentage you can hold in Thai company. Honestly if your getting into this and not sure what your getting into, which by you post seems you don't, I wouldn't be putting any money up until you do figure it all out, its called due diligence otherwise you could end up owning 49% of nothing If you unsure of contracts and shareholders agreements, you better get yourself a lawyer of your own choosing as if your asking on here what to look out for, you had better be careful because you don't know what your looking at, spending a some decent money up front for a good lawyer will pat dividends in the long run 13 Link to comment Share on other sites More sharing options...
Popular Post Anthony5 Posted March 22, 2015 Popular Post Share Posted March 22, 2015 Someone who comes ask on a forum which part of a business agreement he should take care of, should only be advised to stay clear of any business agreements. 13 Link to comment Share on other sites More sharing options...
Popular Post 4jasmin Posted March 22, 2015 Author Popular Post Share Posted March 22, 2015 (edited) thanks for your postings - but I have asked a simple question and NOT your opinions if someone buys a Condo, what is thai owned, he buys even less than 49% of this legal entity ... so you suggest what? staying out of a business, because I want to get deep into the legal facts, advantages and disadvantages ? so hopefully somebody would like to enter my discussion with some decent knowledge, what could NOT be found so easy in the internet like the followwing A Thai Limited Company must consist of a minimum of 3 shareholders and a Director(s). For the Company to remain a Thai Limited Company the porpotion of a foreign shares in the Company must not exceed 49% and the Thai shareholders must possess 51% of the total shares Foreigners can also hold Preferred shares to give them more voting rights and hold the majority voting power over the Thai shareholders, even though the Thai shareholders must hold 51% of the shares. Edited March 22, 2015 by 4jasmin 5 Link to comment Share on other sites More sharing options...
Popular Post Soutpeel Posted March 22, 2015 Popular Post Share Posted March 22, 2015 thanks for your postings - but I have asked a simple question and NOT your opinions if someone buys a Condo, what is thai owned, he buys even less than 49% of this legal entity ... so you suggest what? staying out of a business, because I want to get deep into the legal facts, advantages and disadvantages ? so hopefully somebody would like to enter my discussion with some decent knowledge, what could NOT be found so easy in the internet like the followwing A Thai Limited Company must consist of a minimum of 3 shareholders and a Director(s). For the Company to remain a Thai Limited Company the porpotion of a foreign shares in the Company must not exceed 49% and the Thai shareholders must possess 51% of the total shares Foreigners can also hold Preferred shares to give them more voting rights and hold the majority voting power over the Thai shareholders, even though the Thai shareholders must hold 51% of the shares. based on your response, may I humbly suggest you retain a lawyer then to ask your simple question to and stop looking for free legal advice by trawling the internet 11 Link to comment Share on other sites More sharing options...
Popular Post fletchsmile Posted March 22, 2015 Popular Post Share Posted March 22, 2015 (edited) Your rights will be the rights attached to the shares. Without knowing those it's pretty difficult to say what are the advantages/ disadvantages. They can vary enormously. In particular you need to understand 1) the voting rights, 2) rights to distributions/dividends, 3) rights in the event the company is wound up; which are attached to the shares. Shares effectively give ownership. Ownership does not however mean control. So arguably the most important is the voting rights attached to the shares as this effectively gives control (or not) over the company. If you hold 49% of shares and they have no voting rights then you have no control, and are vulnerable to what other shareholders decide, and they can simply act in their own interest. On the other hand it's possible to structure that 49% share ownership gives you control, eg 99% of voting rights, so what you decide goes. Then a myriad of variations in between Cheers Fletch Edited March 22, 2015 by fletchsmile 5 Link to comment Share on other sites More sharing options...
Srikcir Posted March 23, 2015 Share Posted March 23, 2015 "it's possible to structure that 49% share ownership gives you control, eg 99% of voting rights, so what you decide goes." It is also possible that even pledged shares in Thai ownership to de facto foreign ownership can at any time be ruled by the Junta as illegal. This issue has been a current debate between the foreign business community and the Junta that threatened not only to discourage further foreign investment in Thai businesses but a deterrent to common rules of company ownership among the ASEAN Community that provides for foreign control of domestic companies. For now the Junta has deferred its legislation to eliminate indirect foreign control of Thai businesses if only because of the deterriorating economy. You are best to be prepared for all eventualities with strong legal Thai representation. 2 Link to comment Share on other sites More sharing options...
worgeordie Posted March 23, 2015 Share Posted March 23, 2015 A lot would depend on who owns the 51%,and if you have any control over them. regards Worgeordie Link to comment Share on other sites More sharing options...
klauskunkel Posted March 23, 2015 Share Posted March 23, 2015 You will own a part of the company, but you will not have a say on how to run it. Let's say your 49% earns you some yearly dividend based on the rules the company has in place now, however, who is to say they won't change those rules right after you bought those shares? Link to comment Share on other sites More sharing options...
godden Posted March 23, 2015 Share Posted March 23, 2015 49% of nothing is nothing Link to comment Share on other sites More sharing options...
konfuzed Posted March 23, 2015 Share Posted March 23, 2015 It also means that you are liable for the 49% of the debts and potentially any lawsuits that come up. Registration of a new company is so easy there is no point to purchasing a shelf company. Link to comment Share on other sites More sharing options...
Balance Posted March 23, 2015 Share Posted March 23, 2015 What are we talking about; a billion bhat company or your wife's noodle shop. I get the feeling you do not know much about business and would strongly suggest you spend no money until you understand more in general, and particularly how business works in Thailand. When I came to Thailand four years ago, I thought it would be great to see what exporting opportunities existed. After several months talking to people and testing suppliers, I WALKED AWAY and just settled down to enjoy being retired. If you want to get involved, the first thing you do is find a good Thai business attorney. If you don't have the money to do this, STOP. Link to comment Share on other sites More sharing options...
KamnanT Posted March 23, 2015 Share Posted March 23, 2015 It also means that you are liable for the 49% of the debts and potentially any lawsuits that come up. Registration of a new company is so easy there is no point to purchasing a shelf company. A shareholder's liability for the debts of an incorporated business is limited to the fully paid up value of their shares - that's one of the principal advantages of incorporation. So if your 49% costs you 490,000 baht, that's the extent of your liability. If the company goes bankrupt owing THB 50 million, as a shareholder you are not liable for anything beyond your original investment. As for lawsuits and criminal charges, generally only company directors and managers can be held responsible for the actions of an incorporated body, not passive shareholders. However, as konfuzed points out, if you only need the assets of an existing business, it may be wiser to incorporate a new company and acquire the assets of the existing company, leaving behind any liabilities, dodgy bookkeeping, litigious customers, etc. 1 Link to comment Share on other sites More sharing options...
Bigfarang1948 Posted March 23, 2015 Share Posted March 23, 2015 Don't do it, period, if you want to keep your money for more than a year. It probably means you will ultimately lose your investment. Who are you going to trust to make sure you are not being cheated; that would be my number one concern, knowing how so much of this country's businesses are managed. You sure as heck will not be able to hire a expat book keeper or office manager so your money will be deposited into a very loose sieve and you will never know it is going down the drain until you suddenly cannot meet expenses,but like most expats, you will learn the hard way not to invest money in Thailand and have it managed by the locals. As much as I love Thailand, I do not trust any of them with my money. Link to comment Share on other sites More sharing options...
Bigfarang1948 Posted March 23, 2015 Share Posted March 23, 2015 If I would buy 49 % of an existing, functioning and strong selling Thai Company - what would it mean for me? it means you own 49% of a Thai company, which is less than the 51% required to be a majority stake holder, further if your a foreigner 49% is the maximum percentage you can hold in Thai company. Honestly if your getting into this and not sure what your getting into, which by you post seems you don't, I wouldn't be putting any money up until you do figure it all out, its called due diligence otherwise you could end up owning 49% of nothing If you unsure of contracts and shareholders agreements, you better get yourself a lawyer of your own choosing as if your asking on here what to look out for, you had better be careful because you don't know what your looking at, spending a some decent money up front for a good lawyer will pat dividends in the long run First post I have replied to in 3 months and I get a message saying I cant post again so quickly and must wait six seconds to add new reply. Well anyway, as I tried to say, don't invest because you will more than likely lose your money. Nobody, in my opinion, can trust anyone here besides themselves to count the money before it is siphoned off into someone else's pocket. Who do you trust here not to rip you off? No names come to mind; I thought so. me either. Don't be foolish. keep your money and invest elsewhere. You sure as heck will not be able to hire an expat book keeper or office manager... Link to comment Share on other sites More sharing options...
KIWIBATCH Posted March 23, 2015 Share Posted March 23, 2015 Don't invest 1 baht in this country.......corruption, scamming...cheating...lying....with the Junta hovering around behind the scenes who could likely make a law/rule change as to foreign ownership at the drop of a hat... If I wanted to "own" a company I would expect to "own" it 100% (or at the very least be able to make the decision as to whom my partners in this business are going to be) I would not want to have some completely unknown bunch of grubby locals whose names were plucked out of a hat owning 51% of "my company" there you are...an opinion....or advice.....you decide 1 Link to comment Share on other sites More sharing options...
fred Kubasa Posted March 23, 2015 Share Posted March 23, 2015 If you could buy 49 % of the police/immigration agencies or even a temple, then run, don't walk tot he nearest broker but 49 % of many/most ?/ all Thai managed companies, could be the worst financial mistake you'll ever make. Link to comment Share on other sites More sharing options...
Runamile Posted March 23, 2015 Share Posted March 23, 2015 (edited) There's some good stuff here on the technical position, but, then, there's real life. A lot will depend on what business. In fact I'm not even sure we're talking about a business, rather than a way forward in property purchase. Where the technical position runs out is when we start to consider governance in reality. I don't know for Thailand, but my guess is that governance could be questionable.. My guess is, also, that standards of governance vary widely; and that different industries are very different in terms of what is usual by way of governance. But, industry may be too grandiose term to use, here. It could be that noodle stall. Equally, it could be a fairly sizable bar. Imagine trying to unpick that. Just think of the financial statements, alone. A fair representation? In a cash industry? How's the tea money represented? ......................... So, without knowing the business behind the question, it's more-or-less impossible to answer, except with a pile of leagise, which may well mean zit in practice. Edited March 23, 2015 by Runamile Link to comment Share on other sites More sharing options...
Luxfare Posted March 23, 2015 Share Posted March 23, 2015 What business? There's a big difference between 49% of a successful franchise and 49% of Ning's girly bar. As for the 49% ,you could still technically have a say in the running if your 49% were listed as preferred shares giving them more power than the 51%, however the intricacies are above my head and you'd need a lawyer to explain fully. Link to comment Share on other sites More sharing options...
JohnnyHK Posted March 23, 2015 Share Posted March 23, 2015 Is this an elephant/pig/fish breeding farm? Link to comment Share on other sites More sharing options...
mikehock Posted March 23, 2015 Share Posted March 23, 2015 thanks for your postings - but I have asked a simple question and NOT your opinions if someone buys a Condo, what is thai owned, he buys even less than 49% of this legal entity ... so you suggest what? staying out of a business, because I want to get deep into the legal facts, advantages and disadvantages ? so hopefully somebody would like to enter my discussion with some decent knowledge, what could NOT be found so easy in the internet like the followwing A Thai Limited Company must consist of a minimum of 3 shareholders and a Director(s). For the Company to remain a Thai Limited Company the porpotion of a foreign shares in the Company must not exceed 49% and the Thai shareholders must possess 51% of the total shares Foreigners can also hold Preferred shares to give them more voting rights and hold the majority voting power over the Thai shareholders, even though the Thai shareholders must hold 51% of the shares. based on your response, may I humbly suggest you retain a lawyer then to ask your simple question to and stop looking for free legal advice by trawling the internet OR make use of the free legal advice available on the forum "Ask a lawyer" Link to comment Share on other sites More sharing options...
paddyjoe41 Posted March 23, 2015 Share Posted March 23, 2015 Hi there,this does not answer your questions,so only an onlooker,why not ask yourself why a foreigner would be wanted in the first instance?or perhaps in your case,why would you want to be part of that company?If you can answer yourself this question,then perhaps you can begin to wonder why some of the posts you have received are not the answers you asked for.Perhaps a big percent of us foreigners have already worn the T shirt,so tried and tested.Good luck regardless what decision you make,lets hope if in the future someone asks the same question,that you will have a positive answer. Link to comment Share on other sites More sharing options...
paddyjoe41 Posted March 23, 2015 Share Posted March 23, 2015 Although some answers are not what you wanted,why are you so annoyed when you receice good advice free? Link to comment Share on other sites More sharing options...
Sabot Posted March 23, 2015 Share Posted March 23, 2015 Although some answers are not what you wanted,why are you so annoyed when you receice good advice free? Perhaps because some posters would just like an answer to their questions without receiving loads of unsolicited advice. Its frustrating looking for an answer to something when most people just want to go on about their crusade of giving sage advice on a topic. I'm sure if the OP wanted advice, rather than information, he would have asked. 2 Link to comment Share on other sites More sharing options...
doublephil Posted March 23, 2015 Share Posted March 23, 2015 What a lot of nonsense in reply to the OP. If you are buying shares in a limited company in Thailand - same as any company, anywhere - then you need to see the proper, published accounts of the company as submitted to the Thai Tax office by the company's accountants to see what "official" profit (or loss) was declared by the company over the past 2-3 years and you need to know the current shareholding details. In Thailand, limited companies must submit annual accounts and generally the accounting period is January 1st to December 31st. The accounts usually must be submitted before March 31st - but accountants can find creative ways of "extending" that on occasions. Examining the accounts will give you a picture as to how the company is performing - but remember there are many, many methods of "creative accounting" that may mean the real picture is not the same as the "official" version. - so beware. However, companies are are often performing better than what the official accounts show - because accounts are usually prepared to minimize tax liability. It is the accounting information that is important from a financial investment point of view - not the percentage of shares - though that is important in other ways such as who legally controls the company. If you don't understand company accounts - find an independent accountant - not a lawyer - and who can give you a professional opinion as to what the shares are worth. Also you have not mentioned whether you will be a director of the company. This is also very important to consider - and it would be very sensible to be a director and a joint signatory on all official company matters - as that makes it more difficult for other people to cheat you by signing documents without your knowledge or consent - and if they do it will be illegal - and you will have a legal right to challenge any such action in a court. 2 Link to comment Share on other sites More sharing options...
schietkop Posted March 23, 2015 Share Posted March 23, 2015 Read some books to start with, if you dont have money for a lawyer, so it seems..... Link to comment Share on other sites More sharing options...
JackJD Posted March 23, 2015 Share Posted March 23, 2015 YOU HAVE NO BUSINESS DOING ANY BUSINESS IN THIS COUNTRY IF YOU DON'T HAVE SENSE ENOUGH TO FIND A GOOD (I SAID GOOD!) THAI LAWYER TO ANSWER YOUR QUESTIONS. As a retired American lawyer, I would put a low value on "free" legal advice in this section. IN LIFE, YOU GET WHAT YOU PAY FOR - SOMETIMES! Link to comment Share on other sites More sharing options...
zaZa9 Posted March 23, 2015 Share Posted March 23, 2015 If I would buy 49 % of an existing, functioning and strong selling Thai Company - what would it mean for me? it means you own 49% of a Thai company, which is less than the 51% required to be a majority stake holder, further if your a foreigner 49% is the maximum percentage you can hold in Thai company. Honestly if your getting into this and not sure what your getting into, which by you post seems you don't, I wouldn't be putting any money up until you do figure it all out, its called due diligence otherwise you could end up owning 49% of nothing If you unsure of contracts and shareholders agreements, you better get yourself a lawyer of your own choosing as if your asking on here what to look out for, you had better be careful because you don't know what your looking at, spending a some decent money up front for a good lawyer will pat dividends in the long run First post I have replied to in 3 months and I get a message saying I cant post again so quickly and must wait six seconds to add new reply. Well anyway, as I tried to say, don't invest because you will more than likely lose your money. Nobody, in my opinion, can trust anyone here besides themselves to count the money before it is siphoned off into someone else's pocket. Who do you trust here not to rip you off? No names come to mind; I thought so. me either. Don't be foolish. keep your money and invest elsewhere. You sure as heck will not be able to hire an expat book keeper or office manager... This is a very good point When I had my business here I was constantly signing documents presented to me by my accountant written in Thai that I didnt understand One day a friend actually signed away his business to an unscrupulous book keeper without knowing it and later a judge was very willing to believe he had happily given all of his business ( plus a new company car ) to his Thai book keeper for free! "Have ALL documents translated before you sign !" , you may say Well I did that a couple of times , but I later found out that the translation was wrong! My accountant wasn't dishonest like my friends' , but she was occassionaly negligent - didnt matter , either way the farang lost money My advice is to invest where you fully understand the laws and language and you have citizenship Link to comment Share on other sites More sharing options...
Soutpeel Posted March 23, 2015 Share Posted March 23, 2015 There's some good stuff here on the technical position, but, then, there's real life. A lot will depend on what business. In fact I'm not even sure we're talking about a business, rather than a way forward in property purchase. Where the technical position runs out is when we start to consider governance in reality. I don't know for Thailand, but my guess is that governance could be questionable.. My guess is, also, that standards of governance vary widely; and that different industries are very different in terms of what is usual by way of governance. But, industry may be too grandiose term to use, here. It could be that noodle stall. Equally, it could be a fairly sizable bar. Imagine trying to unpick that. Just think of the financial statements, alone. A fair representation? In a cash industry? How's the tea money represented? ......................... So, without knowing the business behind the question, it's more-or-less impossible to answer, except with a pile of leagise, which may well mean zit in practice. WOW I have read some real waffle in my time, but these few paragraphs are up there as regards well written BS... are you a "business consultant" by any chance, lots of words with say absolutely nothing, but they sound good 1 Link to comment Share on other sites More sharing options...
sead Posted March 23, 2015 Share Posted March 23, 2015 Its like buying a cake for your money but you cant eat it before asking your mum for permission Link to comment Share on other sites More sharing options...
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