Strategies For Foreign Controlled Landowning Companies

[dada]

Hi all,

I have one of the Thai ltd co's they are cracking down on, I use it to rent out my house, hold on to prpoerty and am gradually moving into importing goods (from a lower cost country into Thailand).

I also have a bunch of land that I bought in the name of my company. My land, house and my oceanfront condo (my name though) are all located in a popular resort area of Thailand.

What can I do besides running around in circles screaming and shouting?

My company is set up with me as 39% owner, the main Thai partner has something like 56% they are a builder but not mine. There are also five 1% each Thai shareholders. I have been named as the sole director of the company, the only one authorized to sign for and enter into contractual agreements on behalf of the business using the company seal.

I have proxy voting rights from the main Thai partner granted to me.

Does this make my company illegal due to having "proxy voting" to achieve a majority?

I also have a presigned sales agreement from the main Thai partner selling her shares to my designee.

I have always thought it risky having this Thai majority shareholder lurking in the backgound.

Since I have two minor half Thai children I realize this is a way out . How can I best exploit this avenue for my own and their gain?

Should I sell my shares to my children? Who then will vote their shares?

There is an estranged bg Thai wife who is out of the picture for now(mother child A) with no rights in the company (I guess not unless I die) and an educated Thai female as GF (mother child , no rights either.

Ultimately I guess I will need to do a will assuming I can't divorce the estranged wife, cutting her out.

Can I get rid of the company all together, it costs money every year to hold it open.

Is there any secure way for me to maintain control and stay within the letter and spirit of the law?

How about the Treaty of Amity? No help in this situation?

Any constuctive comments or whatever appreciated.

[Arkady]

Hi all,

I have one of the Thai ltd co's they are cracking down on, I use it to rent out my house, hold on to prpoerty and am gradually moving into importing goods (from a lower cost country into Thailand).

I also have a bunch of land that I bought in the name of my company. My land, house and my oceanfront condo (my name though) are all located in a popular resort area of Thailand.

What can I do besides running around in circles screaming and shouting?

My company is set up with me as 39% owner, the main Thai partner has something like 56% they are a builder but not mine. There are also five 1% each Thai shareholders. I have been named as the sole director of the company, the only one authorized to sign for and enter into contractual agreements on behalf of the business using the company seal.

I have proxy voting rights from the main Thai partner granted to me.

Does this make my company illegal due to having "proxy voting" to achieve a majority?

I also have a presigned sales agreement from the main Thai partner selling her shares to my designee.

I have always thought it risky having this Thai majority shareholder lurking in the backgound.

Since I have two minor half Thai children I realize this is a way out . How can I best exploit this avenue for my own and their gain?

Should I sell my shares to my children? Who then will vote their shares?

There is an estranged bg Thai wife who is out of the picture for now(mother child A) with no rights in the company (I guess not unless I die) and an educated Thai female as GF (mother child , no rights either.

Ultimately I guess I will need to do a will assuming I can't divorce the estranged wife, cutting her out.

Can I get rid of the company all together, it costs money every year to hold it open.

Is there any secure way for me to maintain control and stay within the letter and spirit of the law?

How about the Treaty of Amity? No help in this situation?

Any constuctive comments or whatever appreciated.

Good idea to pool advice on this. Hopefully those wanting to take the moral high ground in this amoral country will put their "I told you so" posts in other threads.

Re structure of company. It sounds to me illegal in that you seem to have used Thai nominees to form a company for the purpose of getting around the FBA and Land Code. It is not clear how you have secured control of the nominee's proxy votes but it is probably OK for companies without land holdings under the existing law but won't be under the new law. For companies with land the Thai shareholders must be genuine investors who have paid for their shares and control their own proxy votes under existing laws. In addition to breach of the Land Code, you are in breach of the FBA and they could charge you with carrying on an Annex 1 activity too i.e. renting out land. Pre-signed undated share transfer agreements are also illegal and the nominees can have the transfer voided by a court.

Re restructure. First of all, the Treaty of Amity will not help this case as ownership of land is specifically excluded in the treaty but you could set up a new treaty company for your import business, if you wanted, assuming you are American. There is nothing I am aware of in the law to stop minor children owning shares in a company. Thais often give shares in their businesses to their children. But I suspect it could be construed as a nominee arrangement to own land. Any one know? I think you probably get to vote their shares as their guardian which would support the notion it is a nominee arrangement. I am also not sure what is the position of a Thai wife owning shares in the company. Is this allowed in the same way as she is allowed to own land? I suspect not because, unlike land purchases by a Thai spouse, there is no provision to make a declaration that the shares are her separate property. Therefore, she may be subject to scrutiny to see, if had enough money to buy the shares without your help.

Outright ownership of the land by your children or Thai gf might be a safer way to go, assuming you can make the transfer without triggering an investigation into the existing ownership structure. There is a provision in the land code for minor children of aliens to buy land but it is, as you might expect, worded unclearly, "3.3 In the case where a Thai national with an alien ex-spouse who is divorced or has ceased to cohabit or a Thai national who is a minor child of an alien applies for entering into a juristic act for the purpose of acquiring land, if an inquiry reveals no circumvention of law, the competent official will proceed with the registration of rights and juristic act." Does anyone what "a circumvention of the law" is in this context? Selling to your Thai gf is certainly possible under the 1999 amendments to the Land Code, if you make a joint declaration that you have no claim on the property. With the declaration you don't need to show that she used her own money. The amendments covers cohabitees as well as registered spouses. If you marry your gf, you will have a right to inherit the property as a statutory heir, although this requires the Minister of Interior's approval to register you but you definitely have the right to the proceeds, if he refuses to register you which is likely. All other things being equal, it would be best to marry her and have her formally will the property to you, while you in turn will it to your children. You are not entitled to inherit the land if you are not married, even if you the legal heir in her will. If you this route, you can also lease or usufruct the land from her for 30 years. But there is some expense and tax involved and she could get a court to void the lease later on the grounds that you forced her into an unfair arrangement, using your influence as her husband.

If you find you can transfer the property to your children, that would be your safest route. The next best would be to transfer most of the shares to them but, if transferring the property to them doesn't work, this probably won't either. Then I would say transferring to your gf after marrying her and setting up the wills. If none of these work for you, consider restructuring the company so that your shareholding is reduced further, even to zero, and you are no longer an authorized signatory and maybe not even a director. This takes the company off the radar screen but you can still hold pre-signed share transfer forms to change the shareholding to your children or others in future, even though there is no guarantee here. You can maybe lease from the company then, if you don't mind paying the tax. If you no longer appear as a director, shareholder or authorized signatory, it might be OK to have your gf and kids own all the shares. This is still a nominee arrangement but is likely to attract less attention. You would still need to put business through the company to avoid it getting struck off but you don't need VAT registration, if less than B1.8 m a year revenue and you don't want a work permit. Of course, you can wind up the company, if you no longer need it. The process would involve verifying that it doesn't owe any thing to the revenue dept or others.

I expect a lot of others are in a similar situation with Thai wives, gfs or children. Opinions?

[quiksilva]

I also think that the outright ownership of the land by the children / mother b would be the best option and even better if married. The only thing I would add to it is to seek expert legal counsel to verify the points and questions raised by Arkady's excellant post.

[samtam]

Wouldn't it be safer to ask a proper lawyer?

[GuestHouse]

Wouldn't it be safer to ask a proper lawyer?

Prefarably not the one that advised you in the first place.

[Arkady]

Wouldn't it be safer to ask a proper lawyer?

Prefarably not the one that advised you in the first place.

If you can find good one, please let us all know what he or she says. Most of them are krap in Thailand and helped get farangs into the situation they are in today by downplaying the risks in order to get their fees.

I forgot to mention that any one with Thai nominees that are not really close friends of many years standing should seriously consider nixing them and completing your restructure before the new FBA law is past. The new law with provide a 90 day amnesty for Thai nominees to report themselves. They have the incentive of being able to grab your property. Thai laws normally take at least a year but the signs are the govt wants to pass this one quickly and passing through the NLA will be a formality once its through the Coucil of State.

[Nawtilus]

The problem I believe with land/companies etc in under age childrens names is that they are not able to authorise things and any requirements for this then have to go to court for permission, time and money.

Does anybody know how a childs rights are used within a company. How does a child authorise a sale or transfer etc.

[Dupont]

Its a good thread, but one thing I have noticed recently is how many people are bothered enough to post.

When this was first mooted, the threads were swamped. Now most people are not worrying about it, or if they are, not saying much about it. Most of us are at the stage where we don't give a sh1t.

They'll only screw the economy up so much and they will be out, whoever they are.

Remember "Money Number One" ? Nationalism is only popular at the moment as it hasn't noticibly cost anyone any money yet. People loose money and the Nationalism is history, believe me, to many Thais at the top of the pile, own too many Land, Property, Law Firms, and all the run off businesses that make money when somebody buys a house.

[dada]

Thanks for the in depth and well thought out reply Arkady.

These are hard questions and somebody has to ask them,

I appreciate all of your responses.

[Arkady]

The problem I believe with land/companies etc in under age childrens names is that they are not able to authorise things and any requirements for this then have to go to court for permission, time and money.

Does anybody know how a childs rights are used within a company. How does a child authorise a sale or transfer etc.

That sounds right. I am pretty sure a child could not be an authorised signatory. I have only seen this close up where children were given shares in a listed company by their parents. I assume that documents to buy and sell the shares are signed by their parents as legal guardians. This must also be true, if children own land directly. A farang parent signing for them intuitively sounds as if it is asking for trouble. However, many land transfers were signed for by foreigners as a company's authorised signatory before things got tightened up.

[Arkady]

Its a good thread, but one thing I have noticed recently is how many people are bothered enough to post.

When this was first mooted, the threads were swamped. Now most people are not worrying about it, or if they are, not saying much about it. Most of us are at the stage where we don't give a sh1t.

They'll only screw the economy up so much and they will be out, whoever they are.

Remember "Money Number One" ? Nationalism is only popular at the moment as it hasn't noticibly cost anyone any money yet. People loose money and the Nationalism is history, believe me, to many Thais at the top of the pile, own too many Land, Property, Law Firms, and all the run off businesses that make money when somebody buys a house.

I think the initial shock is past and those affected are quietly waiting and seeing what happens with the new FBA. But now is the time to be working out your options and planning, if you are affected.

[Dupont]

Its a good thread, but one thing I have noticed recently is how many people are bothered enough to post.

When this was first mooted, the threads were swamped. Now most people are not worrying about it, or if they are, not saying much about it. Most of us are at the stage where we don't give a sh1t.

They'll only screw the economy up so much and they will be out, whoever they are.

Remember "Money Number One" ? Nationalism is only popular at the moment as it hasn't noticibly cost anyone any money yet. People loose money and the Nationalism is history, believe me, to many Thais at the top of the pile, own too many Land, Property, Law Firms, and all the run off businesses that make money when somebody buys a house.

I think the initial shock is past and those affected are quietly waiting and seeing what happens with the new FBA. But now is the time to be working out your options and planning, if you are affected.

Your right Akady, It's a practical thread with hopefully some positive useful discussion.

An Idea of mine was to buy the land from the company with a bank mortgage. Wouldn't the bank then own the land? Theres got to be money in a Thai company setting up a system to do this.

[quiksilva]

or to give it to a trusted Thai and you act as their mortgagor. The mortgage can then be registered at the land office and the title can not be sold without your permission.

Edited January 31, 2007 by quiksilva

[Naam]

Its a good thread, but one thing I have noticed recently is how many people are bothered enough to post.

When this was first mooted, the threads were swamped. Now most people are not worrying about it, or if they are, not saying much about it. Most of us are at the stage where we don't give a sh1t.

They'll only screw the economy up so much and they will be out, whoever they are.

Remember "Money Number One" ? Nationalism is only popular at the moment as it hasn't noticibly cost anyone any money yet. People loose money and the Nationalism is history, believe me, to many Thais at the top of the pile, own too many Land, Property, Law Firms, and all the run off businesses that make money when somebody buys a house.

well spoken Dupont!