Buying Out an Existing Business in Thailand
Buying out an existing business, rather than starting one from scratch, is one possible option for foreign entrepreneurs in Thailand. One advantage for foreign entrepreneurs who choose to buy out an existing business is that the immigration and work authorization procedures may be smoother than if they started a new business.
Foreign entrepreneurs must officially employ four Thai employees before they will be able to extend their business visas for up to one year. Normally, the Immigration Bureau will also require evidence that Social Security contributions and Employee Withholding Tax have been already been paid for those employees. However, existing businesses may already have the necessary number of Thai staff and evidence prepared.
Another concern if one decides to buy out a business is what type of legal assistance is needed. Generally speaking, a lawyer can provide the following services:
- due diligence,
- contract drafting and/or review and
- registration of the corporate restructuring.
Just as one would perform due diligence when purchasing property, it is also prudent to perform due diligence when buying an existing company. A lawyer will be able to verify details regarding the target company, such as its registration details, current shareholder list, current directors, and recent financial balance sheets. Furthermore, proper due diligence should include a verification of whether the company owes any back taxes or is facing any legal proceedings (such as bankruptcy).
Secondly, a lawyer would be able to assist in drafting and preparing the share transfer agreements and a contract detailing any other terms and conditions regarding the sale of the company.
Finally, a lawyer would also be needed to prepare the legal documents and government forms necessary to register the restructuring of the company, which includes the registration of a new shareholder list, the registration of a new board of directors, the drafting of a company resolution to authorize the new owners to access the corporate bank account, as well as other possible amendments, such as new company bylaws and corporate objectives.
If one decides to buy out an existing business in Thailand, the assistance of a lawyer is absolutely vital since one is making a large investment in a country that is not one’s own. Furthermore, the Sellers will normally have lawyers representing their own interests. Therefore, it is within the interests of the Buyer to have legal representation on his or her side as well.
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Category: Business in Thailand, Company Law, Company Registration
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Siam Legal is an international law firm with experienced lawyers, attorneys, and solicitors both in Thailand law and international law. This Thailand law firm offers comprehensive legal services in Thailand to both local and foreign clients for Litigation such as civil & criminal cases, labor disputes, commercial cases, divorce, adoption, extradition, fraud, and drug cases. Other legal expertise of the law firm varied in cases involving corporate law such as company registration & Thailand BOI, family law, property law, and private investigation.
