Need Advice....

[stevieff]

My thai wife and I would like to shut our company down due to pending amendents to the FBA. We don't want our share-holders to have equal voting rights. We would sell the land to her mother and then do a 30 year lease from her. We can't sell it to my wife, since she is co-director. I have contacted my attorney there to ask him to prepare the documents, but no answer from him. I have sent subsequent e-mails and telephoned him, but still no response. We are not in Thailand currently, so I worry a little bit. Should we contact another attorney? Constructive advice only please. Please no "I told you" so thread-smashers.

[backflip]

Contact Sunbelt Asia.

[Arkady]

My thai wife and I would like to shut our company down due to pending amendents to the FBA. We don't want our share-holders to have equal voting rights. We would sell the land to her mother and then do a 30 year lease from her. We can't sell it to my wife, since she is co-director. I have contacted my attorney there to ask him to prepare the documents, but no answer from him. I have sent subsequent e-mails and telephoned him, but still no response. We are not in Thailand currently, so I worry a little bit. Should we contact another attorney? Constructive advice only please. Please no "I told you" so thread-smashers.

Will the Land Dept refuse to register a transfer to a director? If so, why doesn't your wife simply resign as a director and you can get her removed from the list of directors at the Commerce Ministry? Also consider a usufruct agreement for your lifetime rather than a 30 year lease. See other thread.

[stevieff]

My thai wife and I would like to shut our company down due to pending amendents to the FBA. We don't want our share-holders to have equal voting rights. We would sell the land to her mother and then do a 30 year lease from her. We can't sell it to my wife, since she is co-director. I have contacted my attorney there to ask him to prepare the documents, but no answer from him. I have sent subsequent e-mails and telephoned him, but still no response. We are not in Thailand currently, so I worry a little bit. Should we contact another attorney? Constructive advice only please. Please no "I told you" so thread-smashers.

Will the Land Dept refuse to register a transfer to a director? If so, why doesn't your wife simply resign as a director and you can get her removed from the list of directors at the Commerce Ministry? Also consider a usufruct agreement for your lifetime rather than a 30 year lease. See other thread.

Thanks for the advice. It's my understanding that a company can not sell the land to a current director, I could be wrong, just what I have been advised. Your point about having her resign as a director is a good one. Also, I will consider usufruct versus lease, though I don't think it's necessarily a perfect alternative.

[solo siam]

Why not put the majority of voting rights in your wifes name?

[stevieff]

Why not put the majority of voting rights in your wifes name?

Thanks, Ben. Actually thought about that, but that would give my wife control over the company, and thus, the land. We wouldn't need a company then, since she's Thai and can own land free-hold. Companies are really only for the foreigner's security.

[backflip]

I think that it's terrific that you trust your wife so much. It is really heart-warming.

You posted that you wanted to shut down the company and sell the lan to your wife, and that would give her control, right? I think you're trying to out-think your wife, and your brain is dying from the lack of oxygen.

Edited February 12, 2007 by backflip

[stevieff]

I think that it's terrific that you trust your wife so much. It is really heart-warming.

You posted that you wanted to shut down the company and sell the lan to your wife, and that would give her control, right? I think you're trying to out-think your wife, and your brain is dying from the lack of oxygen.

I really couldn't care less what's heart-warming to you or not. The fact is, there's no point in having her control a company when it's not necessary to have a company, she can own land free-hold. I started the company before we were married and then made her co-director when we were married. Now with the pending changes in the law, I think it's appropriate we shut down the company. Got it? It's not a trust issue at all, nor am I trying to out-think my wife.

[astral]

I was under the impression that a company cannot sell and asset, such as house to

the wife of an existing director..............

Too much like the tactics of the previous Prime Minsiter.

[stevieff]

I was under the impression that a company cannot sell and asset, such as house to

the wife of an existing director..............

Too much like the tactics of the previous Prime Minsiter.

That's been my impression as well, though others have suggested my wife step down as co-director, and the company could sell the land to her. Would save us a lot of trouble if that's true.

[Arkady]

I was under the impression that a company cannot sell and asset, such as house to

the wife of an existing director..............

Too much like the tactics of the previous Prime Minsiter.

I am not sure what is the basis for this. Does the Land Dept refuse to make the transfer to a director or his wife? There are mechanisms for public companies to make related party transactions which normally involve the related parties recusing themselves from the vote. If the two directors are husband and wife, there is no one left to vote at a vote meeting. Perhaps no one would vote at all at a shareholders' meeting to approve the related party transaction, if you just have a few people from the lawyer's office with one share each in addition to the husband and wife holding almost 100% between them and they cannot vote. Anyway I doubt that the Land Dept cares who buys the property as long as an authorized director signs the S&P agreement and some one pays the tax. The related party transaction issue usually is an issue for minority shareholders who are unhappy with the transaction and may want to sue the directors.

Now here comes the point that you may want to watch out for. A voluntary wind-up is not necessarily a straight forward process because it invites the Revenue Dept to come and inspect the company to see if there is any tax they can collect before it is dissolved. You will have to do a final audit and your auditors will want to see that the declared sales price was actually paid into the company and the sales price will have to be at least the appraised value of the property in the Land Dept. In addtion to the tax payable at the Land Dept on transfer the company will be liable for tax on the difference of the appraised value at the time of sale and the time of purchase and the Land Dept ups these appraisals every two years. After the sale of the property you will need to recycle out the funds your wife paid for the property. If you lent money to the company, you can repay loans tax free. Any profit on the sale after tax can be paid as dividends to yourself and your wife as shareholders after deducting the flat 10% tax on dividends. Anything else is the company's capital (usually 2 million baht) which you can only pay back to the shareholders (tax free) after dissolving the company. Maybe you should lend this to yourselves as loans to directors but you will have to pay some interest and tax on this and after 5 years the Revenue Dept may decide that the loan was actually personal income and tax you on the whole lot - probably best to make it a loan to your wife to allow you to disappear from the company altogether. Coincidentally, the Revenue has a five year statute of limitations to go back and inspect companies' tax filiings they have already approved. Some accountants advise keeping the company dormant for five years before dissolving it for this reason. In this case they would not be able to revisit the tax from your property sale, if you kept the compay dormant for five years after the sale. Even if you don't want to wait for five years before applying for voluntary liquidation, the liquidation process will take 1-2 years. If you have no use for the company after sale, transfer all your shares to your wife and resign as a director. If you have no shares, you will not be in breach of the FBA while waiting for the company to be wound up during a period that it is exposed to inspection by the Commerce Ministry as a result of having no operating income.

[stevieff]

I was under the impression that a company cannot sell and asset, such as house to

the wife of an existing director..............

Too much like the tactics of the previous Prime Minsiter.

I am not sure what is the basis for this. Does the Land Dept refuse to make the transfer to a director or his wife? There are mechanisms for public companies to make related party transactions which normally involve the related parties recusing themselves from the vote. If the two directors are husband and wife, there is no one left to vote at a vote meeting. Perhaps no one would vote at all at a shareholders' meeting to approve the related party transaction, if you just have a few people from the lawyer's office with one share each in addition to the husband and wife holding almost 100% between them and they cannot vote. Anyway I doubt that the Land Dept cares who buys the property as long as an authorized director signs the S&P agreement and some one pays the tax. The related party transaction issue usually is an issue for minority shareholders who are unhappy with the transaction and may want to sue the directors.

Now here comes the point that you may want to watch out for. A voluntary wind-up is not necessarily a straight forward process because it invites the Revenue Dept to come and inspect the company to see if there is any tax they can collect before it is dissolved. You will have to do a final audit and your auditors will want to see that the declared sales price was actually paid into the company and the sales price will have to be at least the appraised value of the property in the Land Dept. In addtion to the tax payable at the Land Dept on transfer the company will be liable for tax on the difference of the appraised value at the time of sale and the time of purchase and the Land Dept ups these appraisals every two years. After the sale of the property you will need to recycle out the funds your wife paid for the property. If you lent money to the company, you can repay loans tax free. Any profit on the sale after tax can be paid as dividends to yourself and your wife as shareholders after deducting the flat 10% tax on dividends. Anything else is the company's capital (usually 2 million baht) which you can only pay back to the shareholders (tax free) after dissolving the company. Maybe you should lend this to yourselves as loans to directors but you will have to pay some interest and tax on this and after 5 years the Revenue Dept may decide that the loan was actually personal income and tax you on the whole lot - probably best to make it a loan to your wife to allow you to disappear from the company altogether. Coincidentally, the Revenue has a five year statute of limitations to go back and inspect companies' tax filiings they have already approved. Some accountants advise keeping the company dormant for five years before dissolving it for this reason. In this case they would not be able to revisit the tax from your property sale, if you kept the compay dormant for five years after the sale. Even if you don't want to wait for five years before applying for voluntary liquidation, the liquidation process will take 1-2 years. If you have no use for the company after sale, transfer all your shares to your wife and resign as a director. If you have no shares, you will not be in breach of the FBA while waiting for the company to be wound up during a period that it is exposed to inspection by the Commerce Ministry as a result of having no operating income.

Very good advice, Arkady. Moderators should pin this for other who seek to shut their companies down (I'm fairly

certain there will be some of those in the upcoming months).