Merger & Acquisition of Private Companies in Thailand

Despite Thailand’s troubled democracy, Thailand has continued to be bustling with merger and acquisition (“M&A”) activity during the past years, ranging from inbound, outbound to domestic M&A transactions. The latest notable one is the acquisition by Thai-based TCC Group (acting through Berli Jucker PLC) of a 58.56% stake in Big C Supercenter from French-based Casino Group with the total value of approximately Baht 122 billion.

To understand how Merger & Acquisition activity generally works in Thailand, we highlight below the key legal issues that are noteworthy for investors interested in pursuing M&A transactions involving Thai private companies.

Typical Type of Transactions

In Thailand, the terms “merger” and “acquisition” are often used interchangeably in the business context but, from legal perspectives, Thai laws only recognize the concept of “amalgamation” (e.g. A + B = C) and not “merger”. Typically, the legal method to proceed with Merger & Acquisition transactions in Thailand is by way of amalgamation, asset purchase, share purchase or a combination or variation of any of the above three methods (e.g. share swap). Due to complexity and lengthy legal process required by Thai laws on amalgamation, the acquisition of shares or assets in a target company is usually more popular than amalgamation.

Merger & Acquisition

Legal Limitations or Restrictions

Merger & Acquisition transactions in which acquirers are foreign investors are generally subject to a number of Thai legal and regulatory restrictions or approvals. In principle, foreigners are restricted by the Foreign Business Act 1999 from engaging in a wide range of business activities, including most service businesses, except where they obtain a foreign business license or a foreign business certificate, e.g. a promotion certificate from the Board of Investment of Thailand. Further, there exist restrictions on foreign participation in specific sectors, especially in financial institution, telecommunication and insurance businesses.

Merger & Acquisition activity always raises a question as to how and whether the existing employees in the relevant entities should be terminated or relocated, in which case Thai employment laws need to be complied with as well.

Transactional Flow

Irrespective of the legal form of Merger & Acquisition, the transaction should begin with due diligence exercises (at least legal and financial due diligence) and in-depth consultation with professional advisors on the choice of acquisition method, corporate vehicle, funding arrangement and tax matters. Once all of these have been concluded, the legal procedure will then follow. For amalgamation, the required procedure is expressly set out in the Thai Civil and Commercial Code, in particular, a special resolution of shareholders is also required for this purpose. For share and asset acquisition, there is no specific legislation governing their procedures. In general, a sale and purchase agreement in respect of shares or assets will be executed and certain housekeeping matters will then be carried out to perfect it, e.g. the change of shareholders’ names in the share register book.

Merger & Acquisition

Tax Issues

Tax issues are an essential part of Merger & Acquisition transactions and will often be a key determining factor in the choice of transaction and continuing corporate structure. There are two steps for tax issues, both need to be thoroughly planned from the outset. First, on structuring the transaction, the choices of legal method (e.g. share or asset acquisition), corporate vehicle (e.g. local company or non-resident intermediate holding company) and funding (e.g. debt or equity) of the acquisition should be carefully evaluated and consulted with professional advisors so that the acquisition step will be cost-effective, legitimate and commercially practicable. Second, as a going concern upon the acquisition, it is necessary to carefully assess and determine ongoing tax liability of your post-acquisition business in Thailand, in particular such matters as taxes on dividends, corporate income taxes, depreciation, accounting standards, tax losses and transfer pricing should be taken into consideration.

SBC Interlaw is a regional law firm with a reputation for providing the highest quality and result-driven legal services to both corporate and individual clients. To find out how our professionals can help you in merging, acquiring or disposing of businesses in Thailand, please feel free to contact us through the “Contact Us” button at or send an enquiry to our law firm in Thailand.