{"id":535,"date":"2025-09-28T07:06:47","date_gmt":"2025-09-28T07:06:47","guid":{"rendered":"https:\/\/thephuketnews.net\/WOP\/?p=535"},"modified":"2025-09-28T07:09:19","modified_gmt":"2025-09-28T07:09:19","slug":"avoiding-fly-by-night-companies-in-thailand","status":"publish","type":"post","link":"https:\/\/thephuketnews.net\/WOP\/avoiding-fly-by-night-companies-in-thailand\/","title":{"rendered":"Avoiding fly-by-night companies in Thailand"},"content":{"rendered":"
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In a world of information, the opportunity to check out a company you plan to do business with ought to be straightforward. However, companies and individuals who are experts in acting in good faith, cheating investors and consumers, are generally also very good at controlling the information disseminated about them.<\/strong><\/p>\n

On the flipside, some good companies suffer cyber-attacks in a completely unjustified manner, due to a disgruntled employee or through extortionate and shakedown behaviour which can often be underpinned with \u201cI will set up a website attacking you\u201d or \u201cI will post negatively about you on Facebook etc.\u201d<\/p>\n

How can a foreigner planning to do business with Thais in Thai companies, or with foreigners involved in Thai companies, or with individuals, conduct sensible due diligence and make appropriate enquiries into the standing of those entities? There are some practical and legal checks that can be carried out and it is recommended that neither are missed.<\/p>\n

Can I just conduct a high level online search and learn everything I need to for a small administrative fee?<\/strong>
\nNo. You will find when you conduct this search through an online agent that many of the search results will be blank or out of date for the smaller private companies. It may be the records haven\u2019t been updated, or the company has filed its accounts late. Further, a lot of the information you will get through such a company can also be sourced very quickly through local searches and checks.<\/p>\n

What sort of local checks should I make?<\/strong>
\nYou should check if there is any litigation in the courts lodged against the Thai company you plan to deal with. You should further check if there is any litigation lodged against their directors or their shareholders \u2013 each and every one of them.<\/p>\n

The check should reveal any civil or criminal cases filed. Often some interesting results might come up such as: civil litigation regarding dispute between investors; cheque fraud; failure to pay credit card bills; gambling or drug cases; filing of false documentation with the authorities.<\/p>\n

Clearly if a search reveals any such activity, you should seek advice on whether to inform the other party, or simply walk away from doing business with them. The principle of \u2018innocent until proven guilty\u2019 must be applied in many cases, and it should be noted that other parties can file vexatious cases quite easily, which in itself can damage a reputation even if there is no truth in the case or claims made.<\/p>\n

You should also check the basic details of the company online through the Department of Business Development (DBD) website and obtain from the offices of the DBD the latest shareholders list, or even all historical shareholders lists, so you can track the changes in the company, and the filed accounts of the company as far back as you wish. You should also obtain a copy of the constitution documents of the company and pass these to a lawyer to check and comment on.<\/p>\n

How important is a place of business?<\/strong>
\nThis is still an important aspect of business even with the rise in use of serviced office space and temporary co-located space. Some business people choose not to splash out on grandiose office space simply because they are wise with their money and focused on the real aspects of their business. Further, trends in certain sectors mean that too much office space is wasteful and illogical \u2013 such as the IT sector where business people often utilise space in a clever manner. However, for many, the substance of a company is supported by its presence and roots in countries where it operates. It is so easy now to place a map on a location page on a website and simply represent a wide cover of jurisdictions to make a company seem more successful or more well-established than it really is. Try telephoning the offices on their land lines, try to contact managers or owners of the business and see what kind of communications you encounter. This will be crucial for you doing business with these companies and people in the future. The location of a business can also be a giveaway \u2013 offices on the corners of red light districts are not particularly confidence inspiring.<\/p>\n

Which practical checks should I make?<\/strong>
\nThis is one of my favourite topics. You should never stop checking the status of parties you plan to do business with, and you should continue to check even after you are already doing business together.<\/p>\n

You should ask who their main business contacts are, and see what sort of businesses they are connected and associated with. If the answer you receive cites some very well established and large businesses you should take care to obtain names of the individuals in such a large organisation. You should also test to see whether it would be considered OK for you to talk to such contacts. If the reaction if negative, \u2018flaky\u2019 or hesitant, it may be the contacts are contrived, made up or a lot less substantive than is being represented.<\/p>\n

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They told me they are \u201cwell connected\u201d \u2013 that must be a great asset in a business partner, right?<\/strong>
\nNot necessarily. Well connected can have good and bad connotations. If \u201cwell connected\u201d is meant to mean that the scope of business contacts and the standing of business contacts is strong, that the business contacts operate in the highest sphere of a business segment or market in a principled manner, then that would be a good sign. It is also not unusual in Thailand for high value to be placed on contacts in Government offices, simply to understand the often complex processes and procedures that are not transparent to many.<\/p>\n

However, the negative aspect of a party stating they are \u201cwell connected\u201d can be as follows: the connection is dubious or involves corrupt practices; the connection is there to \u2018protect\u2019 or be an \u2018overseer\u2019 whilst bad or illegal practices are conducted; or the connections may be used against you should you ever have even a simple dispute with your business partner.<\/p>\n

Be careful whom you marry; be careful who you sign a contract with.<\/p>\n

They appear to be very wealthy, surely that means they are successful?<\/strong>
\nDoes your prospective business partner appear to be focused on making you overly comfortable and relaxed before you make a decision? Were you invited to a very expensive hotel lobby for a business meeting but appeared to be steered away from the business and office environment at all times? Are most meetings apparently peppered with alcohol, or offers of it, or seemingly unnecessary fine dining? Are there any credible independent persons who are able to confirm the status and standing of the persons you are dealing with?<\/p>\n

You should question every aspect of the early stages of doing business with someone. Wealth may exist, but it may have been generated by dubious means. Self-made wealth is not necessarily less credible than inherited wealth, but in both cases the manner in which wealth was originally acquired and accumulated will be a clue to the experience you will have dealing with those persons.<\/p>\n

I am told they are from a \u2018good family\u2019. I am from what<\/strong>
\nI consider to be a \u2018good family\u2019 in my country \u2013 that must be a perfect match!?<\/strong><\/p>\n

This all depends of course on the value you attach to the cultural, moral and ethical values of persons and companies you do business with and is therefore a very subjective topic. If you don\u2019t value environmental ethics, then a business which involves forest clearance may sit well with you or you may be fussy about the way in which the forests are cleared and new sustainable use of the land is used, for example.<\/p>\n

If you are presented with an introduction to a \u2018good family\u2019 \u2013 then exercise care and caution as you would anywhere in the world. Make sure you look at the family as a whole \u2013 maybe the father or mother are very successful, but there may be an errant son or daughter who is engaged in illegal activities. Once you become embroiled with such a family, any reputational smear will attach itself to you and your business.<\/p>\n

Your idea of a good family may be of an open-minded, welcoming, politically centric, morally upright and honest group of people. Another person\u2019s idea of a \u2018good family\u2019 may be a family that is in bed with dubious \u2018connected\u2019 persons; or a family that will stop at nothing to acquire more wealth that you can share in if you adopt their standards of behaviour.<\/p>\n

Getting to know a family takes time. Take the time to do so. You can test your relationships deliberately by trying to have a mini-argument about something non-consequential; or ask to borrow a very small sum of money temporarily to see what kind of reaction you get. There are many ways to work out the truth behind such relationships.<\/p>\n

Check everything, and then check again<\/strong><\/p>\n

In summary, your checks on companies and individuals should span legal, commercial, accounting, tax and personal. You shouldn\u2019t overlook checks due to being in a hurry and you shouldn\u2019t feel invasive by asking questions that ordinary business people ask before committing to a business transaction. Do not swap cultural sensitivity for business naivety. This is a fine balance to tread. You may need help with judging how best to proceed.<\/p>\n

By Desmond Hughes, Senior Partner, Hughes Krupica<\/strong>
\nHughes Krupica is a law firm which specialises in Real Estate; Construction; Hospitality; Corporate; Dispute Resolution; and Litigation, operating in Bangkok and Phuket, servicing clients in relation to their business activities in Thailand and in other regions of Asia. www.hugheskrupica.com<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n

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