Family Business Succession Lawyers in Thailand
Pass on the business without passing on the dispute
Pass on the business without passing on the dispute
Family businesses rarely fail to reach the next generation because the children cannot run them. They fail over questions nobody settled while the founders were still here: equal shares, or shares for those who work in the business; what the children outside the company receive; how far a child's spouse is involved; and who decides when siblings disagree. Where nothing is written down, Thai law supplies default answers, and they are rarely what the family intended — shares pass to statutory heirs in the order the law sets, company decisions stall while an estate administrator is appointed, and dividends can become marital property of someone outside the family. We work with the family from the first conversation through to the documents that make the outcome hold — family constitution, articles, shareholders' agreement, wills and share transfers — drafted to say the same thing, with the tax cost of each option worked out alongside our accounting team before anything is transferred.
What we cover
What a family constitution is — and what makes it enforceable
A family constitution records how the family intends to own and govern its business, from the values it holds to the rules it will use to decide real questions. No Thai statute is written for it, so on its own it works as a moral commitment and as evidence of the family's intentions rather than as a contract enforceable clause by clause. Families that get value from one build it in two layers. The first is the constitution itself, written in the family's own language so every member can follow it. The second moves the rules that must be enforceable — who may hold shares, who is offered shares first when someone sells, which decisions need a special majority — into the company's articles, registered with the registrar, and a shareholders' agreement signed by every member. A constitution drafted separately from the legal documents, with no one checking that the two agree, is the most common reason a carefully written charter fails on the day a dispute arrives.
The three circles of a family business
The most widely used lens for family businesses is the three-circle model developed by Tagiuri and Davis: three overlapping circles for family, ownership and business. Each person sits in one, two or all three, and each position wants something different. A child who works in the company but holds no shares wants pay and decision-making authority. A sibling who holds shares but does not work there wants dividends and information. A non-family manager wants a clear mandate. A spouse who holds no shares sits only in the family circle, yet influences almost every decision. Most conflict therefore is not about anyone being wrong; it comes from people looking at the business from different positions. Our first task is to map where each family member sits, then write separate rules for each position: pay follows the job, dividends follow the shares, and information rights follow being a shareholder. Once those three stop being mixed together, many long-running arguments answer themselves.
The questions a working constitution answers
There is no template that fits every family, but a constitution that works answers a recognisable set of questions. Who may hold shares — blood relatives only, or spouses and adopted children too? What qualifications or outside experience must a family member have before joining the company, and are they paid for the role or for being family? How much profit is paid out as dividends and how much is reinvested? Which decisions belong to the family council, which to the board and which to the shareholders' meeting? When a member wants out, who buys the shares, and at a price calculated how? And when members disagree, what happens before anyone goes to court? These questions are easy to answer while nobody stands to gain or lose, and very hard once something has happened — which is why the work is best done while the founders can still lead the conversation.
A family holding company: benefits, and the costs to work out first
Families with several companies often place a holding company above them, so that family members own shares in one company rather than many. Succession and control are then handled at a single level, transfer rules live in one set of articles, and dividends paid up from the operating companies may be wholly or partly exempt from tax depending on the size and duration of the holding — so profits can be kept for reinvestment at family level without first being paid out to individuals. What needs working out first is the cost of getting there. Moving shares or land into a holding company is a transfer that may carry income tax, specific business tax or stamp duty, and transfer fees — land usually being the most valuable and most expensive item to move. A holding company also adds a layer of accounting and meetings, and it does not resolve family disagreement by itself; it gathers every disagreement into one company. Without good articles and a shareholders' agreement it can make decisions harder, not easier. For families that already have a holding company, the next step is usually the rules inside it.
Passing shares to the next generation: gift, sale or will
How to transfer shares to children, and what tax applies, depends on the route. A lifetime gift is made by a share transfer instrument signed by transferor, transferee and a witness, then entered in the company's share register — after checking whether the articles restrict transfers. Gifts between parents and children carry an annual exempt portion, with tax on the excess, and the transfer instrument attracts stamp duty, so many families give in stages over several years. A sale to a child below real value looks cheaper but risks the difference being reassessed. Holding shares until death and passing them by will keeps the founder in control to the end, but the shares then sit in the estate until an administrator is appointed, voting at shareholders' meetings can stall in the meantime, and heirs receiving high-value estates may face inheritance tax on the portion above the threshold. The right answer is usually a combination, and it has to start from what the shares are really worth — in a company holding land or retained profits, often far above their par value. We set the order of transfers and calculate the tax cost of each route with our accounting team before anything moves.
Pricing shares when someone wants out: agree the formula first
The hardest family business disputes are rarely about who buys the shares; they are about the price. Agree the formula while no one is selling and most of that problem disappears. Valuation methods differ widely in result. Book value is simple but usually understates reality, especially where the company holds land recorded at historical cost. Net asset value adjusted to market suits companies that mainly hold assets. Methods based on earnings or future cash flow suit operating companies with steady profits. Beyond the method, the agreement should say who values the shares, when a valuation must be refreshed, whether a minority stake without control is valued lower, and how payment may be spread, so that buying out a member does not drain the company of the cash it needs to operate. The events that trigger the formula belong in the agreement too — resignation, death, divorce or the bankruptcy of a member. We run each formula on the company's actual financial statements so the family can see the outcome before choosing, and bring in an independent valuer for land where a formal valuation is needed. The same valuation also serves as the basis for the tax cost of passing shares to heirs.
When heirs hold different nationalities
Many families who speak to us in English are mixed: a Thai company founded by a Thai parent, a foreign spouse, and children who may hold Thai nationality, another nationality, or both. Nationality matters because Thai law counts foreign shareholding. A company in which foreigners hold half or more of the shares is treated as foreign under the foreign business rules, and a company whose foreign shareholding passes the land-law limits cannot hold land. Passing shares to a spouse or child without Thai nationality can therefore move a company across a line it was never designed to cross — sometimes in one planned transfer, sometimes only on a death, when shares pass by will or by law. Children who hold Thai nationality, including dual nationals, count as Thai for these tests. A succession plan should map who is Thai and who is not before deciding who receives what, and use structures that keep the Thai side lawful. It should never rely on a Thai shareholder holding shares on behalf of a foreigner, which Thai law treats as an offence.
Spouses, marriage and the family's shares
The subject families least like to raise is what marriage does to shares. Shares a child receives as a gift or inheritance are, as a rule, the child's personal property. Dividends those shares pay during the marriage, however, are marital property, and so are new shares bought with marital money such as accumulated dividends. On divorce or the death of either spouse, marital property is divided, which can give someone outside the family a claim on shares or on money tied up in the company. There are several layers of protection. A prenuptial agreement must be made at the time the marriage is registered; it cannot be made afterwards. The articles can require consent for share transfers and give existing shareholders a right to buy first. And a deed of gift or a will must not contain wording that turns what is given into marital property by accident. Setting the same rule for every child from the start means no one feels singled out.
When siblings disagree
Family business disputes that reach court usually start with something no one wrote an exit for: siblings holding equal shares who cannot decide, or a shareholder outside management who feels they never see the figures. Minority shareholders already have statutory rights — to call a meeting, to inspect minutes, to challenge an improper resolution — but those rights tend to be used after the relationship has broken down. Better protection comes from mechanisms agreed in advance: a list of matters needing a special majority, regular information for shareholders who do not manage, a procedure for deadlock, a pre-agreed way to value shares when someone leaves, and mediation or arbitration before litigation. Our lawyers have acted in disputes between heirs and between shareholders, so we draft with the assumption that the document may one day be read in a courtroom.
Preparing a successor, or choosing professional management
Succession involves two questions that are often treated as one: who will own the business, and who will run it. An heir does not have to be the manager; many families keep their business by being good owners and letting professionals run it. Where an heir will lead, agree the criteria before anyone's name is mentioned — experience outside the family company, a first role whose results can be measured against clear targets, a mentor who is not a parent, and a staged transfer of authority in which the founder moves to chair the board or to an advisory role. Where the family appoints a non-family chief executive, it still sets direction through the board and a list of matters reserved for shareholder approval, while the executive needs a clear mandate, reporting against agreed indicators, and incentives tied to long-term performance rather than a single year's profit. We help set the criteria, the indicators, the board structure, the reporting family shareholders should receive, and the documents that make all of it effective.
Trusts and foundations in Thailand
Families used to trusts elsewhere often ask for one here. Thai law does not permit a private family trust of the kind common in many other countries, outside narrow statutory exceptions in the capital markets, and a Thai foundation must serve a public-benefit purpose rather than distribute to family members. The same effect is built instead from several tools used together: a holding company whose articles restrict share transfers, a shareholders' agreement, wills with conditions, and other rights over property — such as a usufruct that lets parents use land for life after ownership has passed to the children. Where there are assets or heirs abroad, a foreign structure can sit alongside or above the Thai companies, but the Thai layer still has to work under Thai law, including the foreign-shareholding rules above.
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Frequently asked questions about Family Business & Succession
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Further reading
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