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Company Due Diligence in Thailand

Company Due Diligence in Thailand

The companydue diligence procedure in Thailand is recommended to business people who intend to purchase an already existing company on the market or to merge with such a company.

The companydue diligence procedure in Thailand represents a detailed analysis of an already existing company on the market that an attorney undertakes on behalf of a client interested to purchase it or merging with it.

It is a multi-step process that focuses on several key areas, all with the purpose of identifying potential risks associated with the merger or purchase.

The company due diligence procedure is highly recommended by our lawyers in Thailand, as it can protect you from any future problems.

You can find out more about the types of due diligence below, as well as the situations in which they are useful.

If you wish to know more about the investment and business environment in Thailand, please reach out to our team of experts. We can help foreign investors obtain a business visa, in addition to other services.

Types of company due diligence in Thailand

Foreign investors who acquire an already operating business face certain risks which can be avoided if a lawyer in Thailand effectuates the accurate company due diligence procedure for them.

Here are a few company due diligence activities in Thailand we can perform:

•    Researching if the company has any outstanding liabilities, like taxes, rent, salaries, or other expenses related to them;
•    Researching whether the business has acquitted its account obligations in Thailand, like monthly accounts and half year or full year balance sheets;
•    Researching if the company is opened appropriately and if there are any changes that might be required in its organization;
•    Researching if the rights of the business claim are legal and valid.
Several verifications are noteworthy and the overall due diligence process will often be composed of more than one analysis.

Our team lists the main types of company due diligence in Thailand:

  1. Administrative: the number of offices, any branches or representative offices, as well as an outline of the operational costs;
  2. Financial: provides a thorough understanding on the company’s financial situation, a transparent view of the financial statements, projections, inventory, debtors and creditors, etc.
  3. Tax: all the taxes the companies is subject to in Thailand, any cases pending with the tax authorities, if any, any unpaid taxes, as well as relevant information on past or pending audits;
  4. Intellectual property: a comprehensive list of the intellectual property assets belonging to the company; any pending trademark, copyright or patent applications, any disputes related to intellectual property.

The due diligence phase also includes a verification of all of the company’s documents. This is part of the legal verification and will include an examination of the Articles of Association, the minutes of the Board Meetings (for the past year or more, as relevant), a copy of the shares certificates, licensing for franchising agreements (if any), an analysis of all material agreements and bank loans, if applicable.

In addition to the important verifications above, as part of the company due diligence in Thailand, our team can also verify the human resources of the target company (total employee analysis, employment contract analysis, policies, issues concerning employees and others), as well as perform a verification of the company’s environmental permits and licenses, if any.

An option following the due diligence process is to provide information on the treatment of personnel during and after the merger process.

Please keep in mind that the list below should be used for informative purposes only. Each case is different and, by working with a team of experts such as our attorneys in Thailand, you can ensure that the analysis is personalized according to your specific corporate investment project. 

The due diligence process in Thailand 

Until a purchase contract is signed, the buyer may well be considered a competitor. Several steps are required during the verification phase and our team briefly lists these below:

  • project analysis, whether it is a merger or an acquisition;
  • financial pre-analysis;
  • complete document verification;
  • risk analysis;
  • first offer and monitoring.

Our team of lawyers can assist you throughout the purchase phase, from the very first stages, through the due diligence verification, as well as with making the merger/purchase offer and engaging in signing the needed agreements or making the needed negotiations.

In order to perform a proper company due diligence in Thailand, the foreign investor who intends to buy the business can expect the following information to be offered by the seller:

  • Company setting up and previous share transfer instruments;
  • Trade contracts and main assets;
  • Company documents consisting of shareholders meetings, managers resolutions and so on;
  • Leases and other contracts;
  • Investment promotion by the Board of Investment (BOI) of Thailand;
  • Human resources;
  • Financial statements;
  • Licenses;
  • Taxes;
  • Other documents. 

The essential documents will be provided at each stage of the verification. Our team can supervise the process and represent the buyer’s interests during the merger or acquisition.

For foreign investors interested in buying a ready-made or shelf company in Thailand, our team will provide the needed verification to ensure that the company is a safe purchase.

In most cases, shelf companies in Thailand are legal entities that have been incorporated and registered according to the local laws, but which have not been yet used for trading. This means that they have a clean history, no debts, and obligations, and are available for trading as soon as the ownership transfer is complete.

Our attorneys in Thailand provide complete services to investors who wish to buy a ready-made company and verify its status.

Company management in Thailand

Once the sale/purchase or transfer of ownership is complete, the new company owner will be the one to be liable for the company and its operations in the country.

While the liability is limited according to the chosen type of legal entity, investors in Thailand need to keep in mind that they are to comply with several rules for accounting, reporting, and taxation.

Our tax lawyers in Thailand outline the most important issues concerning corporate taxation:

  • 20% the standard corporate income tax rate;
  • Small and medium companies can be subject to progressive corporate income tax rates of 0% of 15%, based on their net taxable profits; conditions apply;
  • 10% withholding tax on dividends, however, this can be exempt under the Revenue Code or other provisions;
  • Value added tax at a standard rate of 10% or 0% for some types of goods and services.

We invite you to contact our Thai lawyers for a consultation in regard to effectuating a company due diligence in Thailand

In addition to our corporate services, we can also assist those who are interested in residency or immigration in Thailand.