Joint Ventures

The term "Joint Venture" as used in this chapter refers to a limited company owned principally by two or more corporate shareholders. It differs from a "Joint Venture" referring to an unregistered partnership, which is not a limited company. However, the term "Joint Venture" is often used to describe both forms of business.

Practical Considerations: As a means of facilitating a business in a new country, many companies enter into joint ventures with Thai companies. This business entity is also entered into by foreign companies doing business in Thailand to be in accordance with the rules and provisions stated in the Alien Business Law or the Promotional Certificate issued by the BOI (Board of Investment). Conversely, some Thai business are also motivated to form joint ventures with foreign companies because they require the technology or experience and wish to establish or expand their businesses.

It must be noted that upon entering into a joint venture each side has it's own interests to protect. Foreign companies are concerned about protecting their technology and name while making a profit, and the Thai side, also seeking to profit, must protect it's investment as well. Commonly, the result is that the control of the joint venture and the distribution of the profits are negotiated privately. This is in most cases not filed with any governmental authority. Foreign partners may have their equity interest in the joint venture limited to 49% or less because of legal restrictions stated in the Alien Business Law or conditions attached to a Promotional Certificate issued by the BOI.    

A requirement demanding a super majority (more that 51% of the shares) may be provided by the Articles of Association with regard to matters voted on by the shareholders. Whether a super majority is advantageous or disadvantageous to shareholders is dependent on particular circumstances, and one must weigh the pros and cons carefully before coming to a decision on implementing such a provision. 

 

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