THAILAND Trends and Developments Contributed by: Nattaya Tantirangsi, Kantinan Buraphacheep and Chawit Khiewtai, MSC International Law Office
exemption will be exempted from income tax, VAT and stamp duty, subject to certain conditions. These tax incentives are available for mergers, amalgamation and entire business transfer between limited compa - nies (private or public). Currently in Thailand, however, mergers where one merging entity survives while the other ceases to exist is not an available choice if one merging party is a public company. There are no such tax incentives for business expan - sion or integration as mentioned above for a UJV. This is because a UJV cannot be a party to a merger or an amalgamation because it is neither a private nor a public company. A UJV cannot acquire its own assets, but it can be acquired by another entity if a JV party agrees to sell its stake in the UJV. Either way, no tax incentives, as previously mentioned, are provided. Exit strategy An IJV party may consider selling its shares in the JV company to any third party, subject to the terms of the JV agreement. The share transfer process in Thailand is simple where only a share transfer instrument is duly made and executed. The existing IJV agreement may be revised to suit the needs of the new shareholder. It is normal for an IJV agreement, aka a sharehold - ers’ agreement, to include an “accession” clause from the outset, stating that the leaving party is obliged to have the new shareholder duly entered into the exist- ing shareholders’ agreement prior to its exit.
Since a UJV is basically an agreement between two or more parties, the exit of an existing UJV party means an exit from a JV agreement. The exiting party needs to comply with the exit clause of the agreement, if any, in order for the UJV to welcome a new party. A new UJV may need to be prepared and re-negotiated if there is a change of a UJV party, which can be a time-consuming process. Summary Currently in Thailand, the authors can see that IJVs and UJVs are both popular choices for different rea - sons. An IJV is a good option due to reasons of business continuity, expansion, growth, reputation, and other aspects of a similar nature. UJVs are usually adopted by Thai and/or international corporations for construction projects that last for a certain period of time, and such projects require the expertise of each of the parties. The parties may also form a “consortium” if this would suit their risk profiles better.
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