What constitutes a nominee shareholder?

[new123321]

Firstly not sure if this is the right section?

 

I've been reading and reading but not seen anything that fits my position.

 

Me and my Thai GF opened a company about 7 years ago with a few purposes, she owns 51%, me 48% and a family member of mine owns 1%. When this company was created we DID NOT show 2 million baht capital and simply paid the capitalisation fee, I have a work permit and have had for 7 years, always paid tax etc and got yearly extension based on support of my Thai son for 7 years. The company is genuine paying salaries and turning over funds.

 

I am not the director, my Thai GF is if this make any differences.

 

Over the past 2 years out company has saved about 900k baht (and paid taxes on profits last year) which is enough to buy a small townhouse  that I have seen including the land.

 

Now from my understanding this is not an issue, the company would buy out of profits however would my Thai GF be considered a nominee as she did not pay up the 51% of shares of the original 2 million? That being said I did not 'invest' anything either.

 

I always considered a nominee to be someone paid to act as a shareholder but now I am not sure?

 

I would admit in private to 'controlling the company' in terms of financial decisions etc and my Thai GF signs at the bank without question.

 

Aside from this I would like to make an investment in the company to purchase land for a new building to be used as the office location, about 1.2 million. This investment would come directly from me - would this be OK?

 

I don't want to get tripped up in years to come based on a misunderstanding of the rules thinking everything I was doing was fully above board.

 

I always though one could in theory buy up the 49% of a land holding public company and purchase another 2% through Thai NVDR and effectively control the company and its assets - this could then mean different rules for some than for others?

 

Am I OK in what I'm doing/planning or not????

 

 

[mrboats]

Yes as stated before you will have to take yourself out of the company to purchase the land/building

this can only be purchased by 100% thai owned company

when its done then you can reinstate yourself back in the company and i suggest you become the 49% Director

when you purchase the property you can make it a loan from you to the company...that way you protect your investment as your registered loan is paid off first should the assets be sold

i cannot see any problem regarding illegal nominees as you know the people in the company ....i suggest the 1% also has their signature on the company minutes that will be required to purchase any property

[jippytum]

quote..I am not the director, my Thai GF is if this make any differences

 

If you own 48% of the company you are a director

 

[blackcab]

1 hour ago, jippytum said:

If you own 48% of the company you are a director

 

No, you are a shareholder.

 

A director must be authorised at a General Meeting by a vote of the shareholders. With a 48 per cent holding other shareholders could vote against the motion (assuming there are no preference shares in the 48 per cent block).

 

In Thailand company directors are listed on page 1 of the company DBD document.

 

Shareholders are listed on the บอจ5.

[TravelerEastWest]

2 hours ago, mrboats said:

Yes as stated before you will have to take yourself out of the company to purchase the land/building

this can only be purchased by 100% thai owned company

when its done then you can reinstate yourself back in the company and i suggest you become the 49% Director

when you purchase the property you can make it a loan from you to the company...that way you protect your investment as your registered loan is paid off first should the assets be sold

i cannot see any problem regarding illegal nominees as you know the people in the company ....i suggest the 1% also has their signature on the company minutes that will be required to purchase any property

Are you certain about the 100% Thai ownership?

 

I thought the rule was majority Thai ownership for land and anyone can buy buildings?

[mrboats]

100% certain land can only be purchased by 100% thai company

have done this many times....each time I've had to remove myself from the company

many foreigners get alarmed when their name is not initially on the company registration 

that is why it gets added later

[TravelerEastWest]

5 minutes ago, mrboats said:

100% certain land can only be purchased by 100% thai company

have done this many times....each time I've had to remove myself from the company

many foreigners get alarmed when their name is not initially on the company registration 

that is why it gets added later

 

Interesting - what I have read is that a more than 50% Thai owned company is considered a Thai company and allowed to own land. Although some land offices have different percentages that they will sign off on - example they may allow a sale to a 61% Thai owned company.

 

Did your lawyer show you the Thai law that says only 100% owned Thai companies can buy land?

 

Or do you know which law it is?

[mrboats]

I don't use lawyers much to do these transactions....because I've don't it many times i know the procedures

At the land offices it could be selective....i only experienced pattaya and chaing mai/rai offices

At these offices you have no chance to transfer if its not 100% thai owned...in fact to many questions get asked which are best avoided

its also best if you don't get out of the company just before acquiring land...to many difficult questions to be answered also

[khunPer]

5 hours ago, mrboats said:

Yes as stated before you will have to take yourself out of the company to purchase the land/building

this can only be purchased by 100% thai owned company

when its done then you can reinstate yourself back in the company and i suggest you become the 49% Director

when you purchase the property you can make it a loan from you to the company...that way you protect your investment as your registered loan is paid off first should the assets be sold

i cannot see any problem regarding illegal nominees as you know the people in the company ....i suggest the 1% also has their signature on the company minutes that will be required to purchase any property

I'm not sure about that, 100% Thai owned, but it's been common knowledge that some Land Offices would not transfer land to companies with more than 39% foreign ownership. I've been transferring land three times to company name, in two different Land Offices, both with 49% foreign ownership – but the laws may have changed recently...

 

Furthermore in reply to OP:

To my knowledge your Thai GF is not a nominee, as she's a majority shareholder – i.e. she can control the company if no preferred shares with additional votes are issued to foreign shareholders – and she's also registered director of the company. (I'm in a kind of similar situation, with my Thai GF being director, but our shareholder capital is fully paid.) 

 

Nominees are normally minority shareholders, giving proxy on their votes to third party – typically this was done with the (now) older Thai company limiteds, where 7 shareholders was required, and some staff from the lawyer's or accountant's office became proxy-shareholders. The rules changed some years back to 3 shareholders only, but also that proof of funds is required (I've not yet heard about any proof claimed, but other posters may have experience).

 

Your accountant or lawyer can probably give you more up-to-date advise, also about buying and transferring property, if it's in their area, as local knowledge about Land Office practice is good to know. First you need to due some due diligence, as some Land Office's will calculate tax and transfer fee from their stated value, whilst other's will do it from real sales value only; the latter method can be more costly in taxes and fees, and a contract must be shown as proof. Furthermore you'll need to know if the Land Office accept's 49% foreign ownership; otherwise you shall first transfer shares to a Thai – eventually your GF that already owns the majority – and revert the transfer after land transfer has been registered; such a process will cost little various fees. Normally seller pays tax, and buyer pays transfer fee, but state that clearly in the contract with seller, so an argumentation in Land Office is avoided. You'll need a so-called "meeting report" for the Land Office to prove the Bord of Directors has approved the transaction – your accountant or lawyer will do that for you, often a fee is 500 baht (perhaps 1,000) for a meeting report – and the director signing on behalf of the company limited shall have full power; a not later than 6 month old certified print of company registration, showing among other directors and shareholders, is needed for the Land Office.

 

When transferring the land (property) you can at same time declare a loan on the title deed, being just like a mortgage, for your 1.2 million baht investment loan to the company limited; you may need a lawyer to do the correct paperwork, but can probably use a standard Thai loan agreement, which can be obtained in may paper stores (your GF should know). This servitude is your guarantee that the land cannot be sold or transferred, without the loan – and eventually interest – has been paid in full. The loan shall appear both on the land deed and in the company books.

 

I think the NVDR is a SET (Stock Exchange of Thailand) option only, never hear about it for a private held company limited, which to my knowledge always shall have 51% Thai ownership. Other methods mentioned are preferred shares, where one possibility is preferred shares with 10 votes, held by a foreign owner, giving a voting majority at the General Meeting against the ordinary shares with 1 vote only. This method however, is not in the spirit of the Law, but has to my knowledge, so far not been tested at Court. Another method, kindly mentioned by a TV-poster, is to issue preferred shares without voting rights to Thai shareholders, but instead giving a guaranteed dividend of for example 4% a year; i.e. the foreign owners shares, typically 49%, has a voting majority at the General Meeting. But talk to your lawyer about what method is the best to use at present.

 

Wish you good luck with you project...

Edited September 9, 2017 by khunPer

[blackcab]

In my experience you don't need a 100 per cent Thai owned company to buy land. I have come across varying percentages (between 51 and 61 per cent Thai owned) where the Land Office will conduct the transaction.

 

This makes some sense. For example, imagine a company with 4 shareholders and an equal amount of shares. If 1 shareholder fell out with the other 3 shareholders, they could sell one single share to a foreigner. If there was a 100 per cent Thai ownership rule, the entire company would be put in a position where it could not buy land just because one share was owned by a foreigner.

[TravelerEastWest]

16 hours ago, blackcab said:

In my experience you don't need a 100 per cent Thai owned company to buy land. I have come across varying percentages (between 51 and 61 per cent Thai owned) where the Land Office will conduct the transaction.

 

This makes some sense. For example, imagine a company with 4 shareholders and an equal amount of shares. If 1 shareholder fell out with the other 3 shareholders, they could sell one single share to a foreigner. If there was a 100 per cent Thai ownership rule, the entire company would be put in a position where it could not buy land just because one share was owned by a foreigner.

 

My Thai CPA explained it to me as Blackcab writes and Khun per remembers.

 

I am sure that MrBoats has had bad land department experiences as he writes but it is not the law unless the law has recently changed?

 

In the end it pays to have  good local CPA and/or lawyer. I prefer CPAs as they tend to be more reliable and less expensive.

 

As a sidenote I was told in Bangkok that the company that employs you needs a VAT account to sponsor a workpermit.

 

Maybe in Bangkok but not elsewhere in Thailand.

[Naam]

On 9/9/2017 at 9:44 AM, mrboats said:

Yes as stated before you will have to take yourself out of the company to purchase the land/building

this can only be purchased by 100% thai owned company

false information!

[natway09]

A nominee shareholder is anyone who has  their name as a shareholder who has not paid for them

period

[khunPer]

2 hours ago, natway09 said:

A nominee shareholder is anyone who has  their name as a shareholder who has not paid for them

period

Believe some Thai company limiteds has nominee shareholders only, as there's no demand to fully pay the shareholder capital; however, a shareholder, when the shareholder capital has not been fully paid, is still liable for the capital he/she/it is due, nominee or not...

 

Meaning according to Google:

nominee

nɒmɪˈniː/

noun

 

1. 1.

   a person who is nominated as a candidate for election or for an honour or award.

   "an Oscar nominee"
2. 2.

   a person or company, not the owner, in whose name a stock, bond, or company is registered.

   "an offshore nominee company"