Corporate, Mergers and Acquisitions
Corporate Law
Our partners have 40+ years of experience practicing corporate law. Our corporate law practice deals with general and specific foreign ownership rules, incorporation, corporate acquisitions, due diligence, shareholders rights, corporate governance, and secretarial.
Our corporate practice regularly advises on general corporate matters such as foreign investment strategies, shareholder agreements managerial control strategies, economic control strategies, foreign business licensing, representative offices, and agencies.
Several factors can influence a corporate transaction, and in this sense, no two corporate transactions are alike. The interaction between various stakeholders, employees, directors, the local community, and regulatory bodies plays a role.
However, Thai corporate law does share common legal characteristics with various jurisdictions. They are:
- A Thai corporation is a separate legal personality (often referred to as a juristic person).
- Shareholders’ personal liability is limited to the value of their shares in the corporation.
- Shares are transferable.
- Thai corporations have delegated management under a board of directors.
Clients also benefit from our other areas of expertise combined with our corporate practice, such as those in the Telecoms, Media, Technology sector, including, but not limited to, preferential tax benefits, waivers from certain foreign ownership limitations, and other government-sponsored investment incentives.
Some examples of our corporate experience:
- Advised a Singapore-based telecommunications operator on its corporate structuring to resell a telecommunication/ISP system to connect Myanmar and Thailand on terrestrial and submarine networks, including operating and maintaining networks inside Thailand. Achieved a first in terms of a regulator allowing a Type I operator to lease dark cable and offering IIG services.
- Advised, negotiated, and handled all transaction documentation for a NYSE, Russell 1000 Component listed US-based telecoms operator entering the Thai market, including: advised, structured and implemented entry into the Thai telecoms market; advised on corporate structuring to comply with the Thai Telecommunications Act and the Thai Foreign Business Act; guided client through the process with the National Broadcasting & Telecommunications Commission and achieved acquisition of a Telecommunications License (4-month process); prepared all materials and applications in compliance with the Foreign Business Act, and negotiated the process with the Thai Ministry of Commerce to acquire a Foreign Business License; coordinated the process between the Ministry of Commerce and the National Broadcasting & Telecommunications Commission and guided various client departments (Finance, Regulatory, Corporate Compliance, Data Privacy, Human Resources, Networks and Technical) through the process from their multiple perspectives and disciplines as to Thai legal and regulatory requirements.
- Regularly advise a publicly-traded food manufacturer exporter on international law and trade issues.
- Regularly advise an NYSE S&P 500 component manufacturer on legal, tax, and corporate law issues concerning its operations in Thailand.
- Regularly advise a Nikkei 225 component, TOPIX Core 30 component manufacturing company on its corporate secretarial contract negotiations and copyright issues regarding its manufacturing operations in Thailand.
- Represent and advise a Stock Exchange of Thailand food and beverage manufacturing company on general corporate and securities law matters.
Below is a detailed explanation of the differences between a merger, acquisition, and amalgamation under Thai law.
Definition: A merger involves two or more companies combining to form a single entity, where one company typically absorbs the other(s), and the absorbed company ceases to exist. In Thailand, mergers are governed by the Civil and Commercial Code and the Public Limited Companies Act for public companies.
Key Features:
- Requires shareholder approval (at least 75% of shares present at the meeting).
- The surviving company assumes all assets, liabilities, and obligations of the merged entity.
- Common in strategic consolidations to enhance market position or operational efficiency.
Example: Company A merges with Company B, with Company A continuing as the surviving entity, absorbing Company B’s operations.
Acquisition
Definition: An acquisition occurs when one company purchases a controlling stake (e.g., shares or assets) of another company, which may continue to exist as a subsidiary or be fully integrated. Governed by the Securities and Exchange Act and related regulations in Thailand.
Key Features:
- Involves the purchase of shares or assets, often requiring due diligence and regulatory approvals (e.g., from the Securities and Exchange Commission for public companies).
- The acquired company may retain its legal identity or be dissolved.
- Common in takeovers or expansions into new markets.
Example: Company A buys 51% of Company B’s shares, gaining control while Company B operates as a subsidiary.
Definition: An amalgamation is a specific type of merger where two or more companies combine to form an entirely new legal entity, with all original companies ceasing to exist. This is regulated under the Civil and Commercial Code in Thailand.
Key Features:
- A new company is created, inheriting assets and liabilities of the amalgamating companies.
- Requires shareholder approval and registration with the Ministry of Commerce.
- Often used for equal partnerships or to rebrand combined operations.
Example: Company A and Company B amalgamate to form Company C, a new entity with combined resources.
Below is a comparison of an asset-based takeover versus a company acquisition, including pros and cons for each.
Definition: An asset-based takeover involves purchasing specific assets (e.g., property, equipment, intellectual property) and, optionally, selected liabilities of a target company, rather than acquiring the company itself.
Process in Thailand:
Governed by the Civil and Commercial Code and specific regulations (e.g., tax laws).
Requires negotiation of asset transfer agreements, due diligence, and approval from the target company’s board and shareholders (if significant assets are involved).
Registered with relevant authorities, such as the Department of Business Development for certain asset transfers.
Pros:
- Selective Acquisition: Buyer can choose specific assets, avoiding unwanted liabilities (e.g., debts or legal disputes).
- Flexibility: Easier to integrate specific assets into existing operations without complex corporate restructuring.
- Lower Risk: Avoids inheriting hidden liabilities or problematic corporate history.
Cons:
- Incomplete Acquisition: May not include critical intangible assets (e.g., brand reputation, client contracts) unless explicitly included.
- Complex Valuation: Determining fair value for individual assets can be challenging and time-consuming.
- Regulatory Hurdles: Certain assets (e.g., land) may have restrictions for foreign buyers under Thailand’s Foreign Business Act.
Definition: A company acquisition involves purchasing a controlling stake (shares) or the entire company, including all assets, liabilities, and operations, making the target a subsidiary or fully absorbed entity.
Process in Thailand:
Regulated by the Securities and Exchange Act (for public companies) and the Civil and Commercial Code.
Requires due diligence, shareholder agreements, and compliance with the Stock Exchange of Thailand (SET) or Anti-Monopoly regulations if applicable.
May involve a tender offer for public companies or share purchase agreements for private firms.
Pros:
- Comprehensive Control: Acquirer gains full ownership of the company’s assets, contracts, and operations, including brand and market presence.
- Operational Continuity: Retains existing corporate structure, employees, and customer relationships.
- Strategic Growth: Enables rapid market expansion or diversification through established entities.
Cons:
- Inherited Liabilities: Buyer assumes all debts, legal issues, and obligations, increasing risk.
- Higher Costs: Acquiring an entire company is often more expensive than selecting specific assets.
- Regulatory Complexity: May require approvals from multiple authorities (e.g., SEC, Office of Trade Competition Commission) and compliance with foreign ownership limits (e.g., 49% in restricted sectors under the Foreign Business Act).
Asset Disposals and Seller Representation
We also represent shareholders and corporate groups in the disposal of subsidiaries, business units, or individual assets. This includes structuring divestitures, negotiating transaction terms, preparing sale and purchase agreements, and coordinating legal due diligence processes.
Our team regularly advises on corporate spin-offs and restructuring transactions designed to separate business lines, prepare companies for investment, or facilitate strategic exits.
Definition: An asset disposal involves the sale of specific assets or a business division rather than the shares of the company itself. Assets may include real estate, equipment, intellectual property, contracts, or operating business units.
Structure: In an asset transaction, the buyer typically acquires selected assets and may assume certain liabilities. The selling company continues to exist after the transaction unless it is subsequently wound down.
Use in Practice: Asset disposals are often used when companies sell a particular business line, divest non-core operations, or restructure corporate groups.
Definition: A share disposal involves the sale of shares in a company or subsidiary to a third party. The buyer acquires ownership of the legal entity itself, including all of its assets, contracts, and liabilities.
Structure: Share disposals are commonly used when selling a complete operating business or when foreign investors exit Thai subsidiaries.
Considerations: Transactions typically involve share purchase agreements, shareholder approvals, and legal due diligence covering the company’s operations and liabilities.
Definition: A corporate spin-off separates a business unit or operating division into a new legal entity. Shares in the new entity may be retained by existing shareholders or transferred to investors.
Use in Transactions: Spin-offs are often used to separate business lines prior to investment, joint ventures, or strategic sales.
Strategic Purpose: This structure allows companies to isolate business units, improve operational focus, and facilitate future transactions.
Definition: A divestiture involves the sale or transfer of assets, subsidiaries, or business divisions as part of a broader corporate restructuring.
Use in Practice: Companies may divest operations to focus on core activities, comply with regulatory requirements, or prepare a corporate group for investment or sale.
Legal Work Involved: Divestitures often involve corporate restructuring, asset transfers, contract assignments, regulatory approvals, and negotiation of transaction agreements.
Additional Corporate Services
In addition to mergers and acquisitions, our corporate practice regularly advises companies and investors on a wide range of transactional and operational matters.
Contract Drafting and Review
We assist clients with the drafting, review, and negotiation of commercial agreements including service agreements, supply contracts, distribution arrangements, shareholder agreements, joint venture agreements, and other operational contracts used in cross-border business activities.
Legal review is particularly important where contracts involve foreign parties, cross-border payments, exclusivity arrangements, intellectual property licensing, or long-term commercial obligations. Agreements drafted under foreign law or adapted from foreign templates often require modification to ensure enforceability under and compliance with Thai law.
Our team regularly advises on risk allocation, liability provisions, termination rights, dispute resolution clauses, and regulatory compliance, ensuring commercial contracts are structured to protect the client’s business interests.
Employment and Management Arrangements
Our team advises on employment agreements, executive and management compensation structures, restrictive covenants, and employment-related considerations that often arise during acquisitions, corporate restructuring, or foreign investment in Thailand.
Legal review is particularly important for senior management contracts, non-compete and non-solicitation clauses, termination provisions, and compensation structures tied to equity or profit participation. These arrangements often require careful drafting to ensure enforceability under Thai labor law.
We also advise companies on employment issues that arise during corporate acquisitions, asset transfers, or business restructurings, including employee transfers, severance obligations, and compliance with Thai labor regulations.