What should a Share Purchase Agreement (Thai Company) include under Thai law?

1. Definitions and Interpretation
2. Sale and Purchase
3. Purchase Price and Payment
4. Conditions to Closing
5. Period Before Closing
6. Closing
7. Seller's Warranties
8. Buyer's Warranties
9. Warranty Claims and Limits
10. After Closing
11. Costs, Stamp Duty and Taxes
12. Confidentiality
13. Notices
14. General
15. Governing Law and Disputes

• Get the Company's current affidavit (company certificate) from the DBD, its articles of association, the latest list of shareholders and the audited accounts for the year ending …. Check that the Seller is recorded as holder of shares numbered ….
• Read the articles for any rule that the board must approve a transfer, or that other shareholders may buy first. Get those approvals or waivers in writing before Closing (Clause 4.1(b)).
• The Seller should list every known debt, dispute and tax issue in the Disclosure (Clause 7.12), with enough detail for the Buyer to assess it (Clause 7.1). A matter that is properly disclosed cannot later be claimed as a breach of the warranties. A matter that is hidden can be.
• If the Company owns land, or has a right to buy land, list it in the Disclosure. Otherwise the Seller warrants in Clause 7.11 that the Company owns no land in Thailand.

The Schedule is the share transfer instrument. Under Section 1129 of the Thai Civil and Commercial Code, a transfer of shares in a private limited company must be made in writing, signed by the transferor and the transferee, with a witness certifying each signature. The transfer takes effect against the Company and third parties only when the Company records it in its register of shareholders.

• Sign the instrument by hand at Closing, not by electronic signature. Each signer signs in front of a witness, and the witness writes their name clearly.
• Write the date of signing in the instrument. If the price or the share numbers change before Closing, prepare a new instrument.
• A company signs through its authorised director or directors, with the company seal if its registration requires one. If the Company's affidavit requires two directors to sign together, fill in the second director so that both sign this Agreement for the Company.

• At Closing, the Company records the Buyer in its register of shareholders and gives both sides a certified copy (Clause 6.4).
• The Company issues a new share certificate in the Buyer's name within 7 days (Clause 6.5). Each share certificate is itself subject to stamp duty of 5 baht, paid by the holder.
• Keep the old certificates cancelled, not destroyed, with the instrument.

• Update the list of shareholders (form Bor.Or.Jor.5) that the Company files with the DBD, as required by law (Clause 10.1). The share transfer itself is not "registered" with the DBD. It is recorded in the Company's own register.
• Register the resignation of … and the appointment of the new directors with the DBD. This Agreement requires it within 14 days after Closing (Clause 10.2). Also change the bank signatories on the same day as Closing.

The share transfer instrument is a dutiable instrument under the stamp duty schedule of the Revenue Code (item 2, transfer of shares). The duty is 1 baht for every 1,000 baht, or part of 1,000 baht, of the paid-up value of the shares or the price stated in the instrument, whichever is higher. There is no cap. The price in this Agreement is … …. For example, a price of THB 2,000,000 means stamp duty of THB 2,000. If the price is in a foreign currency, confirm the baht amount with your accountant or the Revenue Department before Closing.

Under the Revenue Code the transferor is the person liable for the duty. Clause 12.2 says who bears the cost between the parties: (calculated by the system from the figures entered) Pay the duty at or before signing. An instrument that is not fully stamped cannot be used as evidence in a Thai civil case until the duty and the surcharge are paid (Section 118 of the Revenue Code).

• The Seller pays tax on any gain from the sale (Clause 12.3). The rules differ for Thai individuals, Thai companies, foreign companies and non-resident individuals. Ask a Thai tax adviser before Closing.
• If the Seller is a foreign company or a non-resident individual, the Buyer may have to withhold Thai tax from the price and file it with the Revenue Department. A double tax treaty may reduce or remove it. Agree the amount in writing before Closing, as Clause 12.3 requires.
• The tax is usually calculated on the Seller's gain, so the Buyer needs to know what the Seller paid for the shares. Under Clause 12.3 the Seller must give evidence of that cost, and a certificate of tax residence if it relies on a tax treaty, at least 10 Business Days before Closing. Without it, the Buyer may withhold on the full price. Check the rate with a Thai tax adviser.
• A price far below the real value of the shares may be reassessed by the Revenue Department.

• If, after the transfer, foreigners hold half or more of the Company's shares, the Company is treated as a foreigner under the Foreign Business Act B.E. 2542 (1999). Some businesses then need a Foreign Business Licence or Certificate before the Company may continue them. This Agreement makes that licence a condition to Closing (Clause 4.1(c)).
• Land. Under section 97 of the Land Code, a Thai company is generally treated as a foreigner for land ownership if foreigners hold more than 49 per cent of its registered capital, or if foreigners make up more than half of its shareholders. Such a company generally may not keep land it owns. If the Company owns land, check the shareholding after the transfer against both limits before Closing, and ask a Thai lawyer before you sign.
• Holding shares on behalf of a foreigner (a "nominee") is a criminal offence for both the nominee and the foreigner. The Buyer confirms in Clause 8.4 that it buys for its own account.
• If the Buyer pays from abroad, keep the bank's foreign exchange transaction form showing the purpose "purchase of shares". It is useful evidence of foreign investment later.

Escrow

• Appoint the escrow agent in writing at least 10 Business Days before the Closing Date (Clause 3.2). If it has not been appointed, or has not accepted, by then, the price is paid directly at Closing instead.
• Check that the escrow agent is a bank or holds a licence under Thailand's Escrow Act, and that it accepts share purchase deals. Ask for its fees and its standard escrow agreement early.

If the case goes to a Thai court

• A Thai court works in Thai. A Party that relies on this Agreement, or on English documents, in a Thai court must file a Thai translation certified as accurate. This also applies when an arbitral award is enforced through a Thai court. Budget for this cost, which a translation agency usually charges per page. Clause 15.8 says the English text prevails over any translation, so have the translation checked carefully.

• This Agreement signed by all three parties, and the signed and stamped share transfer instrument
• The approvals and waivers under Clause 4.1, and the board resolutions of any company party
• The certified copy of the updated register of shareholders and the new share certificate
• Proof of payment of the price and of the stamp duty, and, if the Buyer withheld tax, the Seller's cost evidence (Clause 12.3) and the withholding tax certificate, and the creditor's written release of the Seller's guarantees (Clause 10)

Compiled from the notes that accompany the English contract templates on this site, published by Phuwara Krobtaku (ภูวรา ครอบตะคุ), Thai attorney-at-law, licence no. 477/2558. The short answer and summary at the top of this page are put together by the site from the template's clause headings and notes. Statutes are quoted only in the official Thai text: Thai is the only official language of Thai legislation, and an unofficial translation can mislead. Article registry OKC-86D00D. If you reuse this content, please credit the author and link to the original.