Buying a Business in Thailand
For many there is a dilemma of whether they should buy a business that is already in place or create their own. A lot of that depends on your business model, obviously but also the business you are considering purchasing.
Questions to ask are
- Is it a well-known business?
- Does it have good brand name recognition?
- Does it fit in the business model I have in mind?
- Is the business in a good location?
What are the benefits to purchase an already existing business?
For one, the employees are already in place. Foreigners who want to own a company and have the work permit and non-B visa need least four Thai employees, show evidence of social security contributions and employee tax payments. There is no need to find qualified employees when the business you purchase already has them.
The bank account is already there, no need to start a new one, however you will need a company resolution that authorizes the new owner access to the corporate bank account or accounts.
If the business is licensed those licenses would be transferred to the new owner, this can be valuable and time-saving as FDA licenses, entertainment licenses, hotel license, and other licenses can take quite some time to process. It is important to note that some licenses, such as the TAT license, can restrict foreign participation even further.
Another benefit would be if the business is in a great location, you will need to renegotiate the lease agreement with the landlord, but generally they are willing to stick to the terms agreed upon with the previous owner.
All equipment is in place, no need to fit out a new office or restaurant, all the equipment is in place already.
If the business is well-known you won’t have to spend months and possibly years in building up brand recognition.
It can give you the option to purchase the land the business sits on, however ensure that they are included together in the contract as Thai law restricts foreign ownership of land.
What are the pitfalls a buyer should look out for?
First, it is necessary to do due diligence on the business. Due diligence will help you investigate the company’s accounts, registration details, current directors and shareholders, any liabilities such as unpaid taxes, outstanding loans or debts, and pending legal proceedings. You may want to consider buying the business but not the company and start your own company if this concerns you.
Ensure that the sale and purchase contract lays out your position. Under Thai law, company directors have direct control over the company, the contract should also schedule an extraordinary shareholders meeting for the appointment of a new board of directors and set a deadline for registration of the new board and new shareholders list with the Department of Business Development. These documents will need to be submitted in the Thai language so it is key to make sure you have good legal representation with experienced advisors such as those at Sunbelt Asia Legal Advisors who can ensure that everything is done correctly.
When looking at purchasing an existing business be sure that it does not fall under restricted businesses, if you plan on being a managing partner these are occupations restricted to Thais.
- Newspaper business, radio-broadcasting station or radio/television business.
- Farming, cultivation or horticulture.
- Animal husbandry.
- Forestry and timber conversion from natural forests.
- Fisheries, especially fishing in Thai territorial waters and in specific economic areas of Thailand.
- Extracting Thai herbs.
- Trade and auction sale of Thai antiques or objects of historical value.
- Making or casting Buddha images and alms bowls.
- Trading in land.
Buying a business in Thailand has both positives and negatives but with good legal representation many of these pitfalls can be avoided and with Sunbelt Asia’s legal assistance you can find yourself walking into a turnkey business that will help you get started on your life in Thailand with ease.