THAILAND Law and Practice Contributed by: Tirayu Songdacha, Nutchaya Khayan, Piyachat Suwanwihok and Lalita Sriboonruang, MSC International Law Office
9. Exit Strategies and Termination 9.1 Termination of a JV UJV A UJV terminates in accordance with the conditions specified in the JV agreement. Upon termination, the JV must notify the Area Revenue Office or Branch Area Revenue Office within 15 days from the date of cessation of operations, prepare final accounts, and distribute any remaining profits to the JV participants. IJV An IJV may terminate as stipulated in the JV agree - ment or under the CCC. For a private limited com - pany, termination may occur when: • the company was incorporated for a fixed term and that term has expired; • the company was formed for a single specific pur - pose and that purpose has been achieved; • shareholders pass a special resolution to dissolve; • the company becomes bankrupt; or • the court orders its dissolution upon the occur - rence of a specific circumstance such as when the company has a sole shareholder. 9.2 Asset Redistribution and Transfers UJV Key considerations in transferring assets between JV participants include ensuring clear legal ownership and title, determining a fair valuation of the assets, assessing all relevant tax implications, obtaining nec - essary regulatory approvals, and addressing any other applicable legal or contractual requirements. In addition, since contributing assets to a UJV may create encumbrances or obligations over those assets during its operation, it is important to address how such encumbrances will be managed or discharged upon the dissolution of the UJV.
IJV Key considerations in transferring assets between JV participants in an IJV are similar to those applicable to a UJV. However, all assets, whether originally con - tributed to the IJV or generated by the IJV itself, shall remain the sole property of the IJV. Differences between assets originally contributed to the JV by participants and assets generated by the JV itself are that the assets originally contributed to the UJV remain the separate property of each JV par - ticipant, whereas assets generated by the UJV are jointly owned by the participants in proportion with their respective ownership interests. 9.3 Exit Strategy Statutory Provisions Impacting on the Exit of Members For the exit of a UJV’s participants, there is no spe - cific legislation governing such exit. Exit terms are determined entirely by the JV agreement or by the operation of law upon the dissolution or loss of legal capacity of a JV participant. During the exit of an IJV’s participants, the share transfers are subject to the CCC and the company’s AOA. Restrictions on share transfers are permitted if specified in the AOA. The share buy-back mechanism under Thai law is per - mitted only for public limited companies and is subject to the conditions prescribed by law. The JV partici - pants are generally free to agree on exit mechanisms in the JV agreement, provided these do not conflict with mandatory provisions of Thai law. The most common JV exits in Thailand for UJVs include termination clauses under the JV agreement, negotiated withdrawals, and compensation payments, as there are no shares to transfer. For IJVs, common exit methods include share transfers to existing or new shareholders, put and call options, drag-along and tag-along rights, or sales to third parties.
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