Selling out of a fragile structure properly.

Selling is a proper answer, not a defeat

Owners often treat a sale as the failure option, to be considered only when every attempt to keep the property has been exhausted. That is the wrong frame. Where counsel advises that a holding cannot be brought into a lawful form on the available facts, or that the routes which would work require capital, participants or conditions the family does not have, a sale is the outcome that resolves the position. It converts an asset with an unanswered question into cash, and it ends the exposure of the Thai parties in the structure at the same time.

The distinction that matters is between an orderly sale and a forced one, and it is not a distinction about the property. It is about who set the timetable.

The sequence that protects the price

An orderly exit runs in a fixed order, and every step out of place costs money.

• Instruct independent Thai counsel and obtain a written opinion on the structure, before any agent is appointed.
• Correct whatever counsel advises can lawfully be corrected, and understand precisely what cannot.
• Assemble the disclosure file: corporate records, title documents, funding and remittance history, filings, and a chronology.
• Take advice on Thai transfer duties, withholding and any business tax that may arise, and on your own home country position from your advisers at home.
• Obtain a proper valuation, so that the price is anchored to evidence rather than to hope or to a buyer's opening position.
• Appoint an agent, and brief them accurately on what will be disclosed and when.
• Negotiate last, with the file already complete.

The common error is to reverse the first and sixth steps. An owner appoints an agent, finds a buyer, and only then discovers what the file contains, at which point the discovery is shared with a counterparty who is by then in a stronger position than the seller. Everything after that is a reaction.

Disclosure, and what it is not

Disclosure in a sale of this kind means telling the buyer what the position is, in the form and at the time counsel advises. It is not optional, it is not a negotiating variable, and it is not something to be managed by timing. There is no version of a legitimate transaction in which a seller allows a buyer to acquire an asset on an understanding the seller knows to be incomplete. Beyond the legal consequences, which can include the transaction unwinding later on terms far worse than any discount agreed now, it exposes the seller personally and it exposes the Thai parties in the structure who have no say in the matter.

Counsel will advise on what must be disclosed, to whom and when, and on any obligation to disclose to a person or body other than the buyer. Follow that advice as given. Where a seller is unsure whether something is material, the answer is to tell counsel and let counsel decide, not to resolve the doubt privately in the seller's own favour.

Pricing reality

A seller should expect a structural question to affect the price, and should understand why the effect is larger than the underlying cost. A buyer prices an unresolved question at his worst plausible case, adds the fees and time he expects to spend on it, and adds something further for the difficulty of reselling until it is resolved. The seller can reduce that discount in only one way, which is by removing the uncertainty: a clean written opinion, a complete file, and correction of everything correctable before marketing. What the seller cannot do is argue the discount away once the buyer has found the question himself.

Tax and transfer costs are questions, not assumptions

A transfer in Thailand attracts government fees and taxes whose incidence depends on the transaction type, the holding period, the valuation applied and the identity of the parties, and whether the sale is of the property or of the shares in a company that holds it changes the analysis entirely. Which taxes arise, at what rates, on which value, and how they are allocated between buyer and seller by agreement, are questions for Thai counsel and the Revenue Department. Separately, the seller's own country will have its own treatment of the disposal and of the proceeds, including possible reporting obligations on remittance, and that is a question for the seller's advisers at home. These two conversations should happen in parallel, early, because the net figure after both is the only number that actually matters to the family.

The composite, and the observation

This is a composite drawn from situations advisers in this market see repeatedly, not an account of any individual client. Two owners hold comparable villas in the same area through comparable structures, and both are advised that their holdings cannot be brought into a lawful form on their facts. The first instructs counsel, corrects what can be corrected, prepares a complete file with a written opinion, values the property, and goes to market eighteen months later with an answer to every question. The second waits, and comes to market after a director change has triggered a filing enquiry, with a buyer's lawyer asking questions and a bank review running at the same time.

Both sell. The property is the same in each case and so is the location. What differs is who controlled the timetable, how many parties were watching, and how much of the negotiation was spent on the house rather than on the structure. The routes available to an owner do not vanish with time. What changes is the price of each one, and that change runs consistently in one direction.

How the office handles an exit

Asia Global Partners is a private office and not a law firm, and gives no legal advice. On an exit the office instructs independent Thai counsel, coordinates the accountant and the valuer, assembles the disclosure file across whatever countries hold the records, keeps the family's advisers at home aligned on the home country consequences, and manages the sequence so that nothing reaches a counterparty before it has reached the seller. A confidential structure review is where an orderly exit begins, and it is the step that determines everything that follows.

This article is general information and not legal advice, and no sale should be structured on it. Instruct independently instructed Thai counsel on your own facts, be complete with them, and follow their advice on disclosure. Verify company and filing requirements with the Department of Business Development, transfer and title requirements with the Land Department, and transfer duty, withholding and business tax with the Revenue Department together with your own advisers at home.

This briefing is general information, not legal, tax or investment advice. Thai rules change frequently and individual cases differ. Verify current requirements with the relevant authorities, including the Immigration Bureau, the Board of Investment, the Land Department, the Department of Business Development and the Revenue Department, and take advice on your own facts before acting.