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BANGKOK 25 April 2019 01:36
jacklh

conflict with thai shareholder director - how to go about

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question - i have a company with a 51% thai shareholder and 49% for me (foreigner).

 

thai shareholder never paid up actual money - but 'borrowed' from me - we have a sharepledge / loan agreement, which im not sure has any value

 

we are both directors. however i'm the only one with authority to make decisions or with bank access. thai director is not a nominee however and used to have a (semi-) active role in the company, though very part-time / occasional.

 

the thai shareholder director following a conflict wants money or threatens to 'make life hard'

 

I know it is possible for me to raise capital, give shares to a new thai shareholder I trust, to effectively dillute the share of current 51% shareholder and have the 51% on my side?

 

but

 

1. what's the best way to go about this quickly and quietly? do we need to announce / send registered mail? what happens if this is not done?

2. does current thai shareholder have first right to purchase shares? can company director decide otherwise?

3. am i able to remove Thai director after i have 51% on my side, to avoid this person from having control over my company?

4. am i able to mark certain shares as common / preferential afterwards to further reduce rights of current shareholder?

 

 

any help / thoughts are appreciated, fun running a business in .th like this

 

 

 

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What does the company do, owns real estate, runs a profitable business, gives you a WP ? Its unclear, does the Thai guy now want to sell his 51% and no longer be part of the company? Wants 51% of the companies capital, assets etc

You cant create more than 100% shares, 100% of the shares are already accounted for. You cant sell/give another 51%. 

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8 minutes ago, Peterw42 said:

You cant create more than 100% shares, 100% of the shares are already accounted for. You cant sell/give another 51%. 

You have authorised share capital and issued share capital but I think the OP understands that.

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21 minutes ago, Briggsy said:

You have authorised share capital and issued share capital but I think the OP understands that.

Doesnt that start to go into the definition of a (illegal) Thai nominee, owns 51% of the shares on paper but through structuring and controls doesn't own 51% of the shares.

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1 minute ago, Peterw42 said:

Doesnt that start to go into the definition of a (illegal) Thai nominee, owns 51% of the shares on paper but through structuring and controls doesn't own 51% of the shares.

No, that is a separate issue that is usually achieved through having different classes of shares or ensuring certain key documents are under lock and key.

 

Authorised share capital is the maximum share capital that can be issued under the articles of incorporation. Issued share capital is the capital from shares currently issued. The OP says, "I know I can raise capital, give shares to a new Thai shareholder." It is possible that all the authorised shares have not been issued and that is why he states that. Alternatively he could get the articles of incorporation amended to increase the authorised share capital if it has already been issued.

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First of all go to the police and make a report. Even if they do nothing at least the complaint is recorded for future reference. An unwarranted demand with menaces is blackmail. Of course I am assuming that your business is completely above board but if he did not put any money up and you 'loaned' him money and he still has 51% of the shares then something is not correct with that arrangement. Is he asking for money he feels may be due to him by virtue of his 51% ownership? 

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7 hours ago, notagain said:

This should be a pinned topic. NEVER START A BUSINESS IN THAILAND.

NEVER TRUST A THAI would be more like it

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when you started the company did you use a lawyer to draw the bylaws, shareholders rights, object of the company, shareholders rights and obligations, etc.

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To avoid this very thing happening to me I put 2% of the shares in the accountant's secretaries name along with her signing a power of attorney to me.

.The judge accepted my control of the company

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@blackcab said, what I was going to ask about; What about the third shareholder?

 

9 hours ago, jacklh said:

4. am i able to mark certain shares as common / preferential afterwards to further reduce rights of current shareholder?

I think you need to expand the nominal shareholder capital to do that – but check with a lawyer – when I did it, we (the law firm) expanded the shareholder capital. However, that requires more than simple majority at a general meeting.

 

In another Thaivisa thread some years ago, a poster suggested to make preferred shares to a Thai, for example holding 2 percent of the shares, as shares with no voting rights in return of a fixed yearly dividends; where 4 percent was mentioned, i.e. with 2 million baht capital 2 percent of the shares would be 40,000 baht nominal shareholder capital, and 1,600 baht in guaranteed annual 4 percent dividend. This could be a better solution than giving a foreign shareholder preferred shares with 10 votes, whilst normal shares have one vote.

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2 hours ago, seancbk said:

 

So you'd recommend all the foreign businessmen with successful businesses in Thailand close them down do you?

 

 

How many of them are happy running a business here?

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