To give each with a concise definition, an Acquisition happens when a company “buys” another company and a Merger occurs when a company “combines” with another to form one company. Combination of companies also happens during an acquisition but what differentiates a merger from the former is that the latter combines with another company without the need for that company to “purchase” the other.
4 Stages of Acquisitions
Typically, there are four (4) stages in the company acquisition in Thailand.
- The first stage involves both the buying company and the company to be acquired to enter into a Memorandum of Understanding (MOU) or Letter of Intent (LOI). It is during this stage in which the confidentiality and the binding terms must be reflected under the Memorandum of Understanding.
- As a measure to make sure that it is buying a good company, the acquiring company conducts due diligence on the target company with the purpose to uncover any issues on the said business, the properties it owns, its legal stature as a company and its financial standing among others.
- The third stage generally involves the negotiation of both parties with the acquiring party includes the concerns brought about by due diligence.
- When everything has been successfully negotiated upon and settled, the last stage is about both parties preparing for the Sales and Purchase Agreements plus any other important documents needed for the acquisition. These documents will be signed and affixed with the companies’ seals and then validated basing on the Civil and Commercial Code of Thailand.
6 Processes of Mergers
- Not less than 14 days before company will have their own shareholder’s meeting, each should notify their respective shareholders through mail giving notice of the details about the shareholder’s meeting. Apart from that, notices should also be posted at a local newspaper.
A special resolution can be reached only if more than ¾ votes of the total shares of those present is achieved.
- After each company reached their own resolutions, they will need to register their Special Resolutions about the planned merger within 14 days.
- Each company will then need to notify the public about the planned merger by advertising it at a local newspaper.
- Within 60 days, both businesses will then need to send notices by registered mail to their companies and await whether an opposition for the merger will arise.
- When the 60-day grace period lapses, the shareholders’ meeting for both business will be held to decide and agree on the details pertaining to the recently merged companies.
- Within 14 days after the merged resolution has been approved, the newly merged company will need to be registered.
Mergers, Acquisitions and Thai Law
Basing on the short descriptions above, the processes involved in Mergers and Acquisitions in Thailand may seem to be very manageable but in reality, both can really be very complicated.
However, these can managed well by consulting with reputable and highly experience corporate lawyers in Thailand.