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Thailand’s economy is driven by foreign investment and the export industry. This means that the Thai government allows foreign companies to set up and operate in Thailand subject to the Thai laws on business or investment. Foreign Business Act is the main Thai law in defining foreign ownership. Most foreign investors will set up their companies in Thailand, qualify and avail of some incentives from the Board of Investment and share ownership of the company with local Thai business partners. You can read an article on foreign business investment in Thailand here.
There are also those investors who would infuse some amount equivalent to the stock or share allowed by the Thai law to be owned by foreigners. Only 49% of the company’s ownership may be held legally by a foreign investor. Acquisition of a private limited company can be done through the purchase of shares by a foreign corporation and/or a private Thai company.
Who can Purchase the Shares
The foreign-buyer company should fall into at least one of the categories below:
Types of Shares
There are two types of shares: common and preferred shares. Multiple voting or varying dividend shares are allowed. Non-voting shares are not permitted. To know more about common and preferred shares, you can click here.
For the Private Limited Company: The minimum par value of each share is THB 5. Share certificates may be named or bearer, but bearer shares may be issued only for fully-paid up shares. Treasury shares are prohibited.
For the Public Limited Company: All shares must be issued as named certificates.
Sale or Transfer of Shares
Under the Thai law, the sale of shares is considered valid and legal if both the transferor and the transferee execute a share transfer instrument certified by at least one witness. Following such execution of the share transfer document, certain subsequent formalities are required such as recording in the register of shareholders, canceling and re-issuing share certificates and filing a new list of shareholders with the Registrar.
Before executing the transfer, the buyer should conduct due diligence on the target company to determine the soundness of the company and that all documentary requirements are in order. If satisfied with the findings, the buyer will enter into a share purchase agreement with the seller of share in order to set forth the terms and conditions of the sale, representations and warranties, etc.
Acquisition of share does not require pre-approval from any authority unless the business is subject to specific laws, which state otherwise. In general, selling shareholders could be subject to income tax based on the capital gain, if there’s any. The share transfer document is subject to stamp duties at 0.1% rate, of the selling price or the paid-up value of shares, whichever is greater.
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