gaff Posted August 20, 2018 Share Posted August 20, 2018 Hello, A company is allowed to buy a land when it is for business purpose, but can you confirm that it is not a problem if: - the company buys the land just after being created, in the purpose of building and opening a real business on it (restaurant for example) - money comes from a foreigners who owns 49% of the company and shareholders are all members of the same Thai family (Thai citizens who will also work in the restaurant) - some of the Thai shareholders will use their own money to invest, but I will invest the % of the ones who do not have enough money Please no comment about viability of business or scam or anything, I am not interested in any opinion about this topic and will ask to mods to delete any of these posts, I just want to talk about the legality of buying a land right after having created a company. Thank you for your experience. Link to comment Share on other sites More sharing options...
gaff Posted August 20, 2018 Author Share Posted August 20, 2018 Thank you Dogmatix to have replied on another thread: I don't think the Land Department would have a problem with allowing a transfer of land to a newly formed company, if it passed some simple sniff tests. Mainly because there is so much cheating going on in land transactions, land officers are obligated to interview all buyers and sellers and ask simple questions such as whether the buyer is sure he knows the correct location of the plot (land officers upcountry have told me they get complaints every day from buyers who were deceived about the location of the plot they bought) and whether the seller has been paid in full yet. Since 2006 they have also been obliged to do much more thorough interviews of corporate buyers where there is any foreign involvement or a suspicion of it. So, if it is a newly formed company and there is a foreign shareholder or director, there will be detailed questions about the sources of funds of the Thai shareholders to buy the shares and the company's business plans that require the purchase of the land, as well as the company's sources of funds to buy the land, being share capital or debt. If, for example, the new company which has a foreign shareholder and director is buying land in an industrial estate to build a factory, I can't imagine there would be a problem, even the foreign director ends up with a small apartment in the factory building. Of course, they are on alert in resort areas when companies even without foreign involvement come in to buy residential land or a pre-build house in developments they know have been targeted at foreign buyers. Thai buyers rarely buy homes through companies as it is generally tax disadvantageous to do so, particularly when the company sells it, and they would not want to create an accounting burden in addition, if the company has no real business. A credible Thai director might be able to convince them he is buying a house to use as a home office, if there is no visible foreign involvement. Even if there is, he should be able to get it approved, if he can show he has his own source of funds and a business plan that doesn't sound like nonsense. Also remember that there is considerable variation between different land offices, depending on who the head of registrations is. I have done transactions in a number of land offices in different provinces and have found big variances in procedures between land offices in adjacent catchment areas in the same province. Some even skip the obligatory interview completely while others give the third degree and ask for a ridiculous level of documentation. Link to comment Share on other sites More sharing options...
Dogmatix Posted August 20, 2018 Share Posted August 20, 2018 A newly formed company buying land to build a restaurant should pass muster in most Land Offices, in my opinion, provided that the location is credible for a restaurant and the Thai shareholders can show their independent sources of funds, if there are foreign shareholders or directors. Link to comment Share on other sites More sharing options...
blackcab Posted August 21, 2018 Share Posted August 21, 2018 Moved to the Real Estate forum for specialist advice. Link to comment Share on other sites More sharing options...
khunPer Posted August 21, 2018 Share Posted August 21, 2018 9 hours ago, gaff said: - the company buys the land just after being created, in the purpose of building and opening a real business on it (restaurant for example) - money comes from a foreigners who owns 49% of the company and shareholders are all members of the same Thai family (Thai citizens who will also work in the restaurant) - some of the Thai shareholders will use their own money to invest, but I will invest the % of the ones who do not have enough money To my experience and knowledge... "- the company buys the land..." Yes, the company can buy land just after being created, but some Land Office may not accept more than 39% foreign shareholders. Some lawyers advise to have shares moved/traded before a land deal, to meet that demand, and later transferred back. A local law firm with experience in property will know the best way to handle thing at the local Land Office, as there might be slightly difference from district to district. "- money comes from a foreigners who owns 49%..." Normally a Thai company limited with foreign shareholders will have a capital of minimum 2 million baht, paid in cash. The Land Office normallt don't ask where money comes from, but you should probably make a loan agreement with the company for the money invested in and, and have that loan declared as a servitude on the land at Land Office. That's what my lawyer suggests, so do check with a local law firm having experience in companies and properties, and knowing the procedures at the Land office in question. All shareholders can to my knowledge be same family. Read more about a foreign controlled Thai company with a majority Thai shareholding here: Overview Property Law Thailand. "- some of the Thai shareholders will use their own money..." No, expect that each shareholder need to show proof of funds invested in company stocks, to avoid nominee shareholders, which are illegal. I would presume that a loan from a foreigner is not "proof of funds"; however, an experienced business law firm might be able come up with some suggestions. Read more about restrictions on the use of Thai nominee shareholders here: Starting a Business in Thailand | Foreign Business Law in Thailand. Wish you good luck with your project...? Link to comment Share on other sites More sharing options...
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