Transfer Company Nominee Shares To Thai Spouse

[Lazy Sod]

The following is a recent quote from the Commerce Minister, “Foreigners using shell companies to buy housing are violating two laws. One, the Land Act that forbids foreigners from holding land and two, the Foreign Business Act by using nominee structures. I recommend that they restructure.”

Question: Can those of us married to Thai’s restructure as follows as a relatively easy way to get the Company off the radar screen?

Change the shareholding to 51% Thai spouse, and 49% foreign spouse (with 5 other Thai shareholders holding only one share each). This surely makes the Company “Thai” and so it complies with the Land Act. It seems to me that the wife is not a nominee (she will really own 51% and she will really have 51% of the voting rights) and so it also complies with the Foreign Business Act.

OK, someone could say, “where did the wife get the money from”, but you could say, “I gave it to her because we're married."

BTW This question relates to Companies that already own a house (I’m not proposing this as an option for new purchases). I realize that the Thai spouse gains control of the company with 51% voting rights, but that’s ok for me, I just want to retain some equity in the house.

[Paul MBMG]

The following is a recent quote from the Commerce Minister, “Foreigners using shell companies to buy housing are violating two laws. One, the Land Act that forbids foreigners from holding land and two, the Foreign Business Act by using nominee structures. I recommend that they restructure.”

Question: Can those of us married to Thai’s restructure as follows as a relatively easy way to get the Company off the radar screen?

Change the shareholding to 51% Thai spouse, and 49% foreign spouse (with 5 other Thai shareholders holding only one share each). This surely makes the Company “Thai” and so it complies with the Land Act. It seems to me that the wife is not a nominee (she will really own 51% and she will really have 51% of the voting rights) and so it also complies with the Foreign Business Act.

OK, someone could say, “where did the wife get the money from”, but you could say, “I gave it to her because we're married."

BTW This question relates to Companies that already own a house (I’m not proposing this as an option for new purchases). I realize that the Thai spouse gains control of the company with 51% voting rights, but that’s ok for me, I just want to retain some equity in the house.

firstly that might not be a very good way to retian equity - unless there are minority protections written into the company regulations and documents then 51% can be worth the same as 100% and well I imagine that you can guess what that makes 49% worth....

In theory a transfer of such shares to your wife in respect of a company that owns land shoudl be supported by documenst to substantiate that she paid you for these - haven't heard of any routine cases being challenged but do you really want to get away with something that might be legally valid on the basis that it might not be challenged (that's what created this mess in the first place).

I think that institutional shareholders and a suitable worded set of company documenst would provide a far better solution (but you'd have to get off the counch!

[Lazy Sod]

I think that institutional shareholders and a suitable worded set of company documenst would provide a far better solution

Thanks for your input Paul. But surely the institutional shareholder is basically another nominee unless they actually pay for their shares? First time I've heard of this option, and to be honest without knowing the details I think it would be easier to argue that the wife is not a nominee.

[Lazy Sod]

do you really want to get away with something that might be legally valid on the basis that it might not be challenged

To answer your question, yes I really want to get away with anything that quickly and easily solves this in the short to medium term.

There are lots of husband and wife JV companies out there, some of them own land, some don't, some of them are Thai-Thai, some of them are Thai-Foreign. It seems really simple, if the Company owns land then the foreign shareholding must be 49% or less, and the Thai shareholders must not be nominees.

The commerce minister said, "I recommend they restructure". Seems to me he's offering a way out, seems he's saying, "don't use nominees". This issue of whether or not the Thai spouse is classed as a nominee is therefore critical to this issue.

Back to original question, does anyone know if the Thai wife would be classed as a nominee or not? I personally think it would be very difficult for a government official to say she is a nominee, especially if she has 51%+ voting rights and is a director and joint signatory, why? because (to me at least) she's evidently not a nominee in these circumstances.

[solo siam]

I think the term nominee in their context is really someone who...

i) Doesn't have the financial ability to realy own the shares.

ii) Doesn't really have any sort of link or relationship to the business in any way.

iii) Just signs their name when asked to.

Its entirely practical that a Farangs wife will have the financial clout and interest to be a major shareholder.

[Lazy Sod]

I think the term nominee in their context is really someone who...

i) Doesn't have the financial ability to realy own the shares.

ii) Doesn't really have any sort of link or relationship to the business in any way.

iii) Just signs their name when asked to.

Its entirely practical that a Farangs wife will have the financial clout and interest to be a major shareholder.

Yes, that's what I thought. And there's nothing illegal about giving your wife money or shares in a Company as far as I know.

[johnnyk]

I think the term nominee in their context is really someone who...

i) Doesn't have the financial ability to realy own the shares.

ii) Doesn't really have any sort of link or relationship to the business in any way.

iii) Just signs their name when asked to.

Agree, this is really the smell test.

Its entirely practical that a Farangs wife will have the financial clout and interest to be a major shareholder.