If I would buy 49 % of an existing Thai Company - what does it mean for me?

[Suradit69]

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.

"if someone buys a Condo, what is thai owned, he buys even less than 49% of this legal entity ..."

Not sure what you mean by this. I personally bought 100% of my condo. Maybe you mean the percentage of units owned in a building by farang (usually) has to be fewer than some percentage? I bought my condo as an individual from a Thai owner and it is totally mine.

[nithisa78]

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

Sir, He is looking for legal advise on TV and you use the word humbly. The next post will be asking what that menas. Then dictionary. etc.

[maidee]

i hope you are not paying 100% value of the company, but only the part you might eventually own

[wvavin]

Cut the whole story very very short. 49% means just one thing and that is you do not have the final say in whatever you do in this company. Clear?

[BKKdreaming]

simple question

could I buy 49% for myself and 5% for a Thai living overseas who I trust ?

and then have control ?

[TravelerEastWest]

Doublephil has given you good advice - start with a good CPA (not a lawyer) that speaks English.

Also this statement is very interesting:

"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."

From what I recall common shares normally have voting rights and not preferred shares.

But perhaps I am completely wrong, or perhaps something is different here in Thailand? - if someone can comment that would be great.

[Robert24]

simple question

could I buy 49% for myself and 5% for a Thai living overseas who I trust ?

and then have control ?

you can have full control with 49%.

[Luxfare]

Doublephil has given you good advice - start with a good CPA (not a lawyer) that speaks English.

Also this statement is very interesting:

"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."

From what I recall common shares normally have voting rights and not preferred shares.

But perhaps I am completely wrong, or perhaps something is different here in Thailand? - if someone can comment that would be great.

I believe you're right. Many of the big foreign companies out here have on paper 49% with some Thai national owning the other 51% however their 49% of shares are preferred shares and hold more voting rights....or something to that affect.

To be fair, the OP is not going to be able to make an executive decision until he sees a professional lawyer......I only know a tiny bit of Thai law and I doubt many on TVF know much more than I do. He still hasn't stated which type of business it is....for all we know little Ning has offered half her girly bar for 200,000thb in which case hiring a lawyer wouldn't be worth it.

[Robert24]

I think fletchsmile was spot on. additionally I recommend the following:

1) see a lawyer to go through all legal details

2) perform a proper due diligence. Remember you not only buy 49% of assets but also liabilities. Liabilities can come in different form, not only financially but can also be of legal nature.

Personally I prefer starting a company fresh from scratch but you certainly can buy an existing company. Just be thorough with your due diligence.

[F4UCorsair]

Don't ask here.........get a lawyer. If you're contemplating buying into a business you won't control you need more than personal anecdotes...you need facts!!! Spend a little and maybe save a lot.

Remember the 'advice' you receive for nothing is worth exactly that.

Edited March 23, 2015 by F4UCorsair

[SheungWan]

simple question

could I buy 49% for myself and 5% for a Thai living overseas who I trust ?

and then have control ?

you can have full control with 49%.

I would humbly suggest that you have full control with 'er 51%

[sir charles IV]

Means the other guy(s) own the other 51% Einstein!

[Robert24]

you can have full control with 49% or even less. I own 49% in my company and have full control.

many people post things here with little insight. As I mentioned before, I recommend you speak to a lawyer for the legal set up.

[fletchsmile]

A few other observations:

Yes a decent qualified account with experience in Thailand would also be able to help. Qualified accountants have also studied basic company law. An accountant would also be better at assessing the economic value of the situation whereas a lawyer would be better on the legal rights and obligations. OP did seem to be more inteterested in his legal rights so a lawyer might be useful for that petspective tho.

The downside with going to a lawyer direct first off. Lawyers are particularly good at 2 things: 1. charging fees 2. Covering their own backsides and ensuring you get specific advice in a defined field only, which limits any comeback if they haven't addressed what you really want and wider issues on questions you should perhaps have asked but didn't. Simply put going straight could be an expensive education. Then being in Thailand no guarantee you've got the right level of advice from the right person at a decent price

Makes sense to do some research first and have a better idea of what you're asking and why.

So asking on here as part of that process is no bad thing. There are some educated qualified people on here. Plus people with experience to share for free. The problem as highlighted is many people chipping in have none of these. That's the way forums are. So OP needs to then sort the wheat from the chaff.

To be honest OP is not very clear at all what he's looking for and hasn't outlined the scenario well. If he wants decent answers he needs to invest a bit more time in asking decent questions with the right level of info.

He really does need to expand more. Otherwise he'll be doing that in a lawyers office being charged for it.

As mentioned. Firstly understand and describe the scenario.

What are the rights to the shares? for example:

If he doesn't know, I suggest asking:

- what type/class of shares is he buying? Ordinary or Preference?

-What voting rights do they have? Normal one vote one share? No votes? Preferential/ special or enhanced rights?

-What dividend rights will they bring. Variable non-guaranteed like ordinary shares or fixed rates like pref shares. Are they cumulative or not?

- in liquidation what are the rights (and obligations). Is it a limited company? Or unlimited? Or a parnership he is investing in? Then where do his shates rank.

-What other types and classes of shares are out there are who holds them? Yes a set of accounts could help with some of the above but why not just ask first?

It really isn't clear either whether it's a specific opportunity or he's just bouncing ideas of what could be done. The answers will be different.

BTW I would suggest to OP and anyone interested in starting up in Thailand to read:

"Start Up and Stay Up in Thailand by Roy Tomazawa" (spelling?). The 1998 version I have was a great read to get an idea before wasting money on professional fees. Some of it is defintely out of date now and there may be a later version. But either way it would give a good flavour of issues to consider and help structure thoughts and questions before wasting money on fees unnecessarily.

A lawyer will likely be necessary later or perhaps an accountant if simple structure. But do your research first and understand and be as clear as you can what you're actually asking.

Cheers

Fletch

Edited March 24, 2015 by fletchsmile

[khundon]

If I would buy 49 % of an existing, functioning and strong selling Thai Company - what would it mean for me?

It would mean you will be sorry you did it.

[TravelerEastWest]

Doublephil has given you good advice - start with a good CPA (not a lawyer) that speaks English.

Also this statement is very interesting:

"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."

From what I recall common shares normally have voting rights and not preferred shares.

But perhaps I am completely wrong, or perhaps something is different here in Thailand? - if someone can comment that would be great.

I believe you're right. Many of the big foreign companies out here have on paper 49% with some Thai national owning the other 51% however their 49% of shares are preferred shares and hold more voting rights....or something to that affect.

To be fair, the OP is not going to be able to make an executive decision until he sees a professional lawyer......I only know a tiny bit of Thai law and I doubt many on TVF know much more than I do. He still hasn't stated which type of business it is....for all we know little Ning has offered half her girly bar for 200,000thb in which case hiring a lawyer wouldn't be worth it.

Luxfare,

Do you mean the common shares have the voting rights? Pfd shares typically have some financial preference but not voting unless I am not remembering accounting 101 from years ago.

If a non Thai owns 49% of the company as common shares and a Thai owns 51% as pfd shares then the common shares should have all the voting power and control.

Of course as a practical matter if the investment is small it will be more of a hobby and possibly not worth hiring anyone to give advice.

Although for no more than 5,000 baht you could get a very smart Thai CPA who speaks English to advise you about most of what you need to know and they can quickly and easily setup a company if you need that.