Buying land on Koh Samui

[xylophone]

42 minutes ago, khunPer said:

And there – "operating companies" – you have the answer to your doubt...????

I have no doubts KP as a real operating company which has a business that gives a return to shareholders, with the correct shareholder set-up and abides by the law has no problem with acquiring property/land for that company, but no matter how you look at it the farang/foreigner does not own the land.

 

But I think you will find that the second "Big C" post mostly referred to those practices undertaken by farangs in order to "buy" land through a nominee company...….an illegal set-up.

 

No doubts about it...…..a foreigner (with the exception the Investment visa 40 m baht method) cannot legally own land in Thailand, no matter how many "workarounds" are put in place by hopefuls.

[BigC]

On 12/9/2018 at 9:15 AM, xylophone said:

I disagree, as faux/Thai nominee companies are illegal and the following applies...……"the setting up of a company whose sole use is for the purchase of property/land is illegal". 

 

No ifs or buts or "might work" about it, illegal plain and simple.

 

As for "real" operating companies, well the company can purchase property/land provided if it has the requisite number of shareholders who have invested funds (whether their own or through loans as they are still liable for that debt) and is set up correctly.

 

The company must be at least 51% Thai owned through its share structure and no matter what chicanery is involved in allocating preference shares/voting rights etc, the overall structure makes it Thai owned and the farang may have a control but does not own the land.

 

It all comes down to the basic tenet "that foreigners cannot own land (apart from the 40 m baht investment route) in Thailand" and no matter what 'structures" are attempted/put in place to try and circumvent that, it always applies.

 

All newbies and others should be aware of the above before they think that they can own land in Thailand and just because "others have done it", doesn't make it right and they stand to lose everything in a worst case scenario.

A limited company must have a minimum of 3 share holders. 

 

Its not illegal. 

 

I am rhe the managing director and no one can do anything with my company without my say so. 

 

If others have done this then why are all not in jail ? Why hasn’t our land been seized ?

 

if you own 49% and 2 more share holders own the difference they can never have more than you. 

 

Plus if you have thai family you can allow your thai children to be shareholders also

 

i have had land and houses for best part of 20 years and no problem infact I have made my money back in the expense by now so even if my land was seized which it won’t be unless I was sued or something then it doesn’t matter. 

 

Some people get confused and buy land in  their thai wife name then lease the land back to them but the thing is that this isn’t just illehal but pointless as the lease won’t be recognized in court because of conflict of interest plus if hey are married then bough the land then everything they own is 50 50 anyway 

 

 

[xylophone]

18 minutes ago, BigC said:

A limited company must have a minimum of 3 share holders. 

 

Its not illegal. 

As for "real" operating companies, well the company can purchase property/land provided if it has the requisite number of shareholders who have invested funds (whether their own or through loans as they are still liable for that debt) and is set up correctly.

 

As I stated above, if your company is a company which operates as a company producing something, paying taxes etc then the company can buy land/property in its name HOWEVER if the sole purpose of that company is to buy/own land/property then that is illegal under Thai law and it is clearly written thus.

 

27 minutes ago, BigC said:

If others have done this then why are all not in jail ? Why hasn’t our land been seized ?

No matter what someone has done and not been "found out" yet makes no difference, as they have broken the law, and some "nominee" companies have been investigated and paid the price. Every so often there is a clampdown on these companies.

 

No problems if your company is set up within the law, if not then you and others are taking a gamble, remember...................

"the setting up of a company whose sole use is for the purchase of property/land is illegal".

 

And that is it.

 

[jak2002003]

31 minutes ago, BigC said:

A limited company must have a minimum of 3 share holders. 

 

Its not illegal. 

 

I am rhe the managing director and no one can do anything with my company without my say so. 

 

If others have done this then why are all not in jail ? Why hasn’t our land been seized ?

 

if you own 49% and 2 more share holders own the difference they can never have more than you. 

 

Plus if you have thai family you can allow your thai children to be shareholders also

 

i have had land and houses for best part of 20 years and no problem infact I have made my money back in the expense by now so even if my land was seized which it won’t be unless I was sued or something then it doesn’t matter. 

 

Some people get confused and buy land in  their thai wife name then lease the land back to them but the thing is that this isn’t just illehal but pointless as the lease won’t be recognized in court because of conflict of interest plus if hey are married then bough the land then everything they own is 50 50 anyway 

 

 

I hope your company does not need a literate managing director.  Also hope you have all the legalities sorted out for YOU to OWN the land, and nobody comes knocking at you door to investigate things or wanting money, or if you even got a divorce in the future, etc.

 

I would have advised you to lease the land for 30 years and built a house that you can own.  I think putting your children as shareholders can't be right either.  

 

 

[khunPer]

4 hours ago, xylophone said:

As I stated above, if your company is a company which operates as a company producing something, paying taxes etc then the company can buy land/property in its name

–And that is how it works, active companies that makes a profit and pays tax; as I've replied to you before, but you continue to mention the a decade ago outdated nominee companies...????

 

4 hours ago, jak2002003 said:

I think putting your children as shareholders can't be right either.

No, that is fully legal – minors can own shares as registered shareholders, and also own land title deeds – and it works (I talk from experience with both shares and land)...????

[xylophone]

8 hours ago, khunPer said:

–And that is how it works, active companies that makes a profit and pays tax; as I've replied to you before, but you continue to mention the a decade ago outdated nominee companies...????

 

No, that is fully legal – minors can own shares as registered shareholders, and also own land title deeds – and it works (I talk from experience with both shares and land)...????

"but you continue to mention the a decade ago outdated nominee companies".

 

The nominee company practice is still in existence and is being utilised at this very moment by farangs who are being assisted by lawyers to set these companies up. In fact a friend has just sold his house to another farang who has used the nominee company structure........they are alive and in existence as can be witnessed by several posts here and on other threads.

 

In addition it has often been stated that the majority of farang owned properties use the nominee company route, that is why the Thai Ombudsman issued this not too many months ago, so not an outdated concern...........

 

Thai ombudsman Siracha Charoenpanij said earlier this month that he was drawing up "carrot-and-stick" legislation to protect the country from illegal foreign nominee ownership.

 

Under Thai laws, foreign nationals are not allowed to own residential land. They can, however, buy apartments so long as no more than 49 per cent of a development is owned by foreigners. They can also purchase detached villas, but while they can own the house, they cannot own the land the house is on and are only able to lease it for 30 years at a time.

 

To get around these restrictions, some have entered into complicated structures whereby a company is set up to purchase the land. A Thai national holds the majority of shares in that company, but in reality may have no financial interest in the company and may own it on behalf of the foreign buyer.

 

It is these such "nominee ownership" arrangements that the government now wants to crack down on, and Charoenpanij has also proposed a reward – of 20 per cent of the land’s value when sold – for those providing information about illegal ownership. His plans also include penalties for lawyers or consultants who advise foreign buyers on nominee structures".

 

Also there are convoluted shareholding structures dreamed up to try and circumvent the foreign ownership rules........but the overarching Thai law preventing foreign ownership of land prevails.

 

And that is why I continue to mention it. However I'm sure that your company follows the rules as you say......and good luck if you do.

 

A company that owns a real estate property must be a normal active company running a business and show business activity, hold yearly shareholding meetings, file yearly balance sheets and correct accounting, and as a partly foreign owned company must comply with foreign business laws. It cannot be a dormant property holding company merely holding land on behalf of the foreigner.

 

 

[khunPer]

4 hours ago, xylophone said:

The nominee company practice is still in existence and is being utilised at this very moment by farangs who are being assisted by lawyers to set these companies up.

Yes, they are outdated, so not really of any interest for someone establishing a new company limited, where nominees cannot be used (accepted).

 

Your long quote is concerning "49% developments" – i.e. business, where the condo aspect were used for individual land plots and houses – which has been published up for scrutinizing long time ago; it's not about individual companies that owns one plot of land only.

 

Owner's of "old" nominee companies. where the ownership (shareholders) has not been brought up-to-date with new regulations – minimum 3 shareholders (instead of 7) that can show proof of funds – risks scrutinizing, but that is not of any interest for new company formations, in accordance with, what you state...

4 hours ago, xylophone said:

A company that owns a real estate property must be a normal active company running a business and show business activity, hold yearly shareholding meetings, file yearly balance sheets and correct accounting, and as a partly foreign owned company must comply with foreign business laws. It cannot be a dormant property holding company merely holding land on behalf of the foreigner.

 

It you read my various posts concerning the possibility of using the company limited-method, I always state that the company limited-method for a foreigner owing a land plot is not the intention of the law, and furthermore I always say that the company shall have other activities than just owing one plot of land. I never recommend it, but explain facts only...????

[BigC]

On 11/1/2018 at 6:57 PM, xylophone said:

If you read and understood my post then the only legal way is through a bone fide company structure, which has not been created solely to own property/land. Sure you can own a house, but not the land it sits on, so not an ideal situation.

 

Plenty on the thread I mentioned to inform you, so a good read for all who believe they own land with the property.

You cannot own the land but the company can limited company mean your need minimum 3 directors. You can own 49% so the other 2 it’s impossible for them to vote you out as your signature should be needed for all company purchase and sales.

 

if you buy a house in a company name and you live in it. If you have zero income no work permit such as a marriage visa retirement visa extra and Zero profit then it’s obvious the company hasn’t been set up to money launder. If you have proof of income as to where you got the money to make the purchase then you won’t be in trouble 

 

if you use you house to give yourself a work permit then pay yourself a wage and staff that don’t exist then you could be investigated for money laundrying

 

if you run a company such as house for rent without the right licenses then you can be arrested if your a thai or forang.

 

there has been cases in more serious levels of mass amount of Thai nominees which were more involved in deeper criminal conspiracies but these cases shouldn’t be confused with the average person who wants to buy a house and retire or someone who just wants to buy a villa. I would trust company more than a thai spouse 

 

 

[xylophone]

53 minutes ago, khunPer said:

Yes, they are outdated, so not really of any interest for someone establishing a new company limited, where nominees cannot be used (accepted).

 

Your long quote is concerning "49% developments" – i.e. business, where the condo aspect were used for individual land plots and houses – which has been published up for scrutinizing long time ago; it's not about individual companies that owns one plot of land only.

 

Owner's of "old" nominee companies. where the ownership (shareholders) has not been brought up-to-date with new regulations – minimum 3 shareholders (instead of 7) that can show proof of funds – risks scrutinizing, but that is not of any interest for new company formations, in accordance with, what you state...

 

It you read my various posts concerning the possibility of using the company limited-method, I always state that the company limited-method for a foreigner owing a land plot is not the intention of the law, and furthermore I always say that the company shall have other activities than just owing one plot of land. I never recommend it, but explain facts only...????

I think we are somewhere near the same page but I don't fully understand the following (perhaps a language difference?)....

 

Yes, they are outdated, so not really of any interest for someone establishing a new company limited, where nominees cannot be used (accepted)

 

The nominee company structure route is still being used by the vast majority of farangs who buy property here, so this method is not "outdated" but is still in use and is illegal.

 

Perhaps you meant that new company structures set up the correct way with proper shareholding and evidence of funds invested, which include an operating business, are not are not to be confused with those of someone who wants to establish an illegal structure (I.e. nominee company)?

 

Or this?..........Owner's of "old" nominee companies. where the ownership (shareholders) has not been brought up-to-date with new regulations – minimum 3 shareholders (instead of 7) that can show proof of funds – risks scrutinizing, but that is not of any interest for new company formations, in accordance with, what you state...

 

"Old" nominee companies irrespective of the number of shareholders and proof of funds are still illegal if the company was set up for the sole purpose of acquiring the land/property and have no other business interest. 

 

So you agree that:- A company that owns a real estate property must be a normal active company running a business and show business activity, hold yearly shareholding meetings, file yearly balance sheets and correct accounting, and as a partly foreign owned company must comply with foreign business laws. It cannot be a dormant property holding company merely holding land on behalf of the foreigner.

 

Yes?? Then we are on the same page, as the saying goes. 

 

PS. The quote regarding the 49% shareholding of condominiums was nothing more than something that the ombudsman covered in his quote, mainly for reference I would suppose.

[xylophone]

1 hour ago, BigC said:

if you buy a house in a company name and you live in it. If you have zero income no work permit such as a marriage visa retirement visa extra and Zero profit then it’s obvious the company hasn’t been set up to money launder. If you have proof of income as to where you got the money to make the purchase then you won’t be in trouble 

I'm afraid that you may have misunderstood some aspects of a farang purchasing a house/land in a company name, because it is not primarily about money laundering.

 

Also it doesn't matter if you can show where you got the money from, because again that is irrelevant in the context in which you quote it.

 

It is the shareholders (you included) who have to show where they got the money from, and it has to be theirs, or borrowed in their name via a bank (not given by you, and the money trail can be followed by the authorities to ensure that the funds/money are from the shareholders) and the company which is buying the property/land must be a normal active company running a business and show business activity, hold yearly shareholding meetings, file yearly balance sheets and correct accounting, and as a partly foreign owned company must comply with foreign business laws. 

 

It cannot be a dormant property holding company merely holding land on behalf of the foreigner.

 

Furthermore the Thai shareholders must hold a minimum of 51% of the company, so together they can override the wishes of the farang shareholder, as happened to a friend who lost his villa and land because of this. 

As a reference, the recent posts between Khun Per and I do contain some information which may be of help.

[khunPer]

4 hours ago, xylophone said:

I think we are somewhere near the same page but I don't fully understand the following (perhaps a language difference?)....

 

Yes, they are outdated, so not really of any interest for someone establishing a new company limited, where nominees cannot be used (accepted)

 

The nominee company structure route is still being used by the vast majority of farangs who buy property here, so this method is not "outdated" but is still in use and is illegal.

 

Perhaps you meant that new company structures set up the correct way with proper shareholding and evidence of funds invested, which include an operating business, are not are not to be confused with those of someone who wants to establish an illegal structure (I.e. nominee company)?

 

Or this?..........Owner's of "old" nominee companies. where the ownership (shareholders) has not been brought up-to-date with new regulations – minimum 3 shareholders (instead of 7) that can show proof of funds – risks scrutinizing, but that is not of any interest for new company formations, in accordance with, what you state...

 

"Old" nominee companies irrespective of the number of shareholders and proof of funds are still illegal if the company was set up for the sole purpose of acquiring the land/property and have no other business interest. 

 

So you agree that:- A company that owns a real estate property must be a normal active company running a business and show business activity, hold yearly shareholding meetings, file yearly balance sheets and correct accounting, and as a partly foreign owned company must comply with foreign business laws. It cannot be a dormant property holding company merely holding land on behalf of the foreigner.

 

Yes?? Then we are on the same page, as the saying goes. 

 

PS. The quote regarding the 49% shareholding of condominiums was nothing more than something that the ombudsman covered in his quote, mainly for reference I would suppose.

Thanks for comments.

 

I don't think we disagree that much, but it seem to be difficult for me to explain to you, that shareholders today shall show proof of their funds – from where they legally can afford to have fund to invest in their shares – and thereby they are not nominees; whilst in the old company limited with minimum 7 shareholders, no proof of funds were required, and thereby nominee shareholders. They were often employed in the law firm that just had an ID-card put in for registration, and signed a power of attorney for voting rights, and signed a blank and undated share transfer document. The saying at that time was that the less you knew each other, the better.

 

All old companies should have their registered shareholder list updated to "real" shareholders, which could be minimum three, instead of seven.

 

The Thai company limited I'm shareholder in, was set-up by a law firm (at Phuket) after the "old" easy ongoing method, with only two real shareholders out of seven; could have been one farang only, i.e. me. However, we got it in legal order here at Samui in time by changing the five nominee shareholders to real shareholders, a total of four real shareholders, so one more than required by minimum. There are also none power of attorney for voting rights.

 

I know that people, who are forming a company limited today, need themselves to find shareholders that can show proof funds, as the law firms – at least on the island where I live – won't supply any nominee shareholders anymore. The fact is, that your nominee company limited cannot be established today, but some old company limited might not have been brought in legal order; however that is of no interest at all for someone that ask for information about forming a new company limited anno 2018 or later, especially as finding 51% "real" shareholder capital might be difficult.

 

So far company limited scrutinizing has been mainly for developments (sometimes called "projects") – like the case you mention with the Ombudsman – and not for individual companies. This is of no interest or value for an individual that seek information about forming a small company limited.

 

As long as a company limited runs as a business, and follows the regulations – i.e. meeting reports, annual general meeting. ongoing accounting, semi-annual tax reports, audited annual reports filed in time, showing a profit and paying some company tax – and furthermore have other activities than owing one plot of land leased out to the major shareholder and director, then it's an active company, and no reason for concern.

 

It might be confusing when you repeat warnings about something that is possible today only, if one buy the shares in an older outdated nominee company limited to take over a property; an often used method, as the land title deed won't change owner.

 

You can say as I say, that it's not the intention of the law if a foreigner use a company limited with the single purpose of owing a plot of land in Thailand. However, do we know of any cases where a small company limited, used to own a single plot of land with legal title deed, and lease it out to a foreigner, has been scrutinized by the authorities..?

 

I'm sorry to hear about your friend that lost his villa because of Thai shareholders having 51% majority – you have shortly mentioned it before – but not knowing details, it's difficult to comment; however, you say it was because of voting right, so not because of it being nominee company limited. It is possible in various ways to secure one's "investment" in a company limited – including methods for vote majority – so might be that your friend did not get the best legal advice from a solicitor?

I have in my previous posts shortly mentioned some of the methods that I know about from my legal advisers, an experienced real estate solicitor might know additional ways.

????

[BigC]

I know my land is my land because I do dohnuts in the car park every night 

 

if it wasn’t my land I would be nicked 

 

I also walk around naked through he trees like Tarzan 

[xylophone]

12 hours ago, khunPer said:

I don't think we disagree that much, but it seem to be difficult for me to explain to you, that shareholders today shall show proof of their funds – from where they legally can afford to have fund to invest in their shares – and thereby they are not nominees;

Not difficult because the fact that shareholders have to show proof of funds and where they came from is something I have always mentioned in my posts!! Perhaps the confusion occurs because I have referred to them as "nominee companies" when I should have said said shareholders in a false/faux/sham company!

 

And the change to that type of shareholding is only part of the problem because it is not just the shareholding alone which determines whether a company is a real one or not, it is whether the shareholders are investing in a real/operating company or not. This because some companies have been set up with the correct shareholders (and funds), but with no real company, however they have been structured to show that the house and land is the "business" of this company and the fact that it is leased out to someone, thereby produces an income which thereby makes it a real company producing something.

 

This is just another way round the regulations, usually set up by lawyers, and still contravenes the purpose of the act/law with regards to foreign ownership.

 

12 hours ago, khunPer said:

So far company limited scrutinizing has been mainly for developments

12 hours ago, khunPer said:

The fact is, that your nominee company limited cannot be established today,

I do have to disagree with you on your point about the company limited scrutinising being only for developments, because it was recently in the news that the authorities were cracking down on any nominee -type companies and in fact several small companies here were investigated and closed down and they were not building/developments.

 

Somewhere in a related press release, it was mentioned that foreigners who had been using the Thai nominee company method to buy land/property were in the frame to be investigated, which made a lot of people a bit nervy, to say the least!

 

You say that the fact is that a nominee company cannot be established today, however we have seen on similar threads here that posters have been advised by their lawyers that they can, and here I could take you to any number of lawyers who would set up a Thai nominee company for you without questioning anything, so they are still alive and well despite what anyone may think.

 

12 hours ago, khunPer said:

As long as a company limited runs as a business, and follows the regulations – i.e. meeting reports, annual general meeting. ongoing accounting, semi-annual tax reports, audited annual reports filed in time, showing a profit and paying some company tax – and furthermore have other activities than owing one plot of land leased out to the major shareholder and director, then it's an active company, and no reason for concern.

Totally agree with you here.

 

12 hours ago, khunPer said:

however, you say it was because of voting right, so not because of it being nominee company limited.

Finally, on the subject of my friend and his losing of his villa/land (thank you for your commiserations) it was because of the fact that his villa and land purchase were set up through the nominee company route and when he had to go to court to sue his solicitor for a malpractice with regards to his property, the judge ruled that he had no case to bring against the solicitor because his original purchase through a nominee company route had been illegal in the first place, so he had no ownership claim on it whatsoever.

 

He had participated in an illegal activity and he lost everything as a result of this. The whole situation is a little more complicated than this, but this is the crux of the matter.

 

So we are not that far apart it seems, and the only reason I keep on mentioning the sham/faux company set up is because it is still being used extensively afaik and I believe foreigners should be aware/warned that they should not consider this method, because when/if the crackdown comes there will be a lot of sad and unhappy foreigners out there and with no comeback whatsoever.

[xylophone]

11 hours ago, BigC said:

I know my land is my land because I do dohnuts in the car park every night 

 

if it wasn’t my land I would be nicked 

 

I also walk around naked through he trees like Tarzan 

LOL.............up to you as the saying goes. Make hay whilst the sun shines!! 

 

And look at the posts between Khun Per and me for some insights.

 

 

[khunPer]

Thanks for your comments.

 

4 hours ago, xylophone said:

And the change to that type of shareholding is only part of the problem because it is not just the shareholding alone which determines whether a company is a real one or not, it is whether the shareholders are investing in a real/operating company or not. This because some companies have been set up with the correct shareholders (and funds), but with no real company, however they have been structured to show that the house and land is the "business" of this company and the fact that it is leased out to someone, thereby produces an income which thereby makes it a real company producing something.

It's fully legal to form a company limited that buy property and rent it out, but – I repeat again – it's not the intention of the law if a foreigner use a company limited with the single purpose of owing a plot of land in Thailand.

 

4 hours ago, xylophone said:

I do have to disagree with you on your point about the company limited scrutinising being only for developments, because it was recently in the news that the authorities were cracking down on any nominee -type companies and in fact several small companies here were investigated and closed down and they were not building/developments.

 

Somewhere in a related press release, it was mentioned that foreigners who had been using the Thai nominee company method to buy land/property were in the frame to be investigated, which made a lot of people a bit nervy, to say the least!

Interesting, if that's anything else but the "old" company limited-structures I mentioned...

Quote

Foreign investors holding property through shell companies using Thai nominees have been warned to restructure their holdings or face prosecution. The Commerce Minister Krirk-krai Jirapaet told foreign journalists at a dinner talk on Friday: 'Foreigners using shell companies to buy housing across the country 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'.

Quote is from "Foreigners warned on land ownership in Thailand" dated 29th Januar 2007 with reference to the news-article linked in the quoted post (cannot mention here due to Forum-rules); do you have any links to the news stories you refers to, as I seem to have missed them, and a Google search not instantly gives me any hits.

 

There was a nationwide law firm, DFDL, with a branch in Bo Phut on Samui, that was checked recently, but I don't recall we ever heard anything about any action against small company limiteds acting in accordance with the present law.

 

You agreed in that as long as a company limited runs as a business, and follows the regulations – i.e. meeting reports, annual general meeting. ongoing accounting, semi-annual tax reports, audited annual reports filed in time, showing a profit and paying some company tax – and furthermore have other activities than owing one plot of land leased out to the major shareholder and director, then it's an active company, and no reason for concern.

 

5 hours ago, xylophone said:

Finally, on the subject of my friend and his losing of his villa/land (thank you for your commiserations) it was because of the fact that his villa and land purchase were set up through the nominee company route and when he had to go to court to sue his solicitor for a malpractice with regards to his property, the judge ruled that he had no case to bring against the solicitor because his original purchase through a nominee company route had been illegal in the first place, so he had no ownership claim on it whatsoever.

 

He had participated in an illegal activity and he lost everything as a result of this. The whole situation is a little more complicated than this, but this is the crux of the matter.

Thanks for further details. However, a question comes to mind if your friend's company was an "old" nominee "shell company" – to use the word from above official quote – as you state the judge ruled against your friend because of "the nominee company route"; which we both seem to agree in is illegal. And how come that you friend ended up with a malpractice case against his lawyer – i.e. you mentioned before the 49% voting rights as the reason – there seem to be more information necessary to understand what happened.

????

[xylophone]

1 hour ago, khunPer said:

It's fully legal to form a company limited that buy property and rent it out, but – I repeat again – it's not the intention of the law if a foreigner use a company limited with the single purpose of owing a plot of land in Thailand.

Well that is a grey area that has been discussed here for some time, even amongst lawyers/law firms because as a few law firms have said, the company has to be an operating company before it purchases land/property and to be an operating company it has to have a business before it purchases the property/land in the first place – – more like a chicken and egg situation which I don't think I've ever seen fully settled although I did find this amongst the archives: – 

 

The Thailand Alien Business act is quite specific, and there is a blanket offence of circumventing land ownership laws that means anything that appears to allow foreigners to own houses is actually illegal.

 

The general consensus of opinion, as I recall, was that this setup was constructed by lawyers as another "workaround" and would be viewed with "suspicion". 

 

PS. This from a legal website regarding the company structure: The company must register 2,000,000 THB of capital per foreigner (half if married to a Thai) and must employ 4 Thai staff per foreign employee. This is normally required by the Department of Labour.

 

1 hour ago, khunPer said:

Interesting, if that's anything else but the "old" company limited-structures I mentioned...

You keep mentioning the old company limited structures, however even as we write, new companies are being set up with Thai nominees, with the intention of a foreigner buying land/property, so it is not an old company structure per se, it is a structure which is in common use now (although we know it's illegal it is still being practised).

 

1 hour ago, khunPer said:

Thanks for further details. However, a question comes to mind if your friend's company was an "old" nominee "shell company" – to use the word from above official quote – as you state the judge ruled against your friend because of "the nominee company route"; which we both seem to agree in is illegal. And how come that you friend ended up with a malpractice case against his lawyer – i.e. you mentioned before the 49% voting rights as the reason – there seem to be more information necessary to understand what happened.

Indeed, my friends company was constructed by a lawyer using the Thai nominee route, which as I said is still common practice, which in turn bought the land and villa in its name.

 

The lawyer and a cohort therefore "owned" 51% of the company and basically sold the house and land to another person in a fraudulent transaction and were able to do so because they were majority shareholders and signatories (or convinced the land office that they were).

 

The court ruled that the purchase was illegal in the first place, so my friend had no rights to it and lost it.

 

I really don't want to go too deeply into case because I haven't seen my friend for a couple of years now and for all I know, he may even be viewing this on Thai Visa and I don't want to be seen to be betraying a trust. 

 

However suffice it to say that everything I have said to date about this is absolutely true and does in some ways reflect other stories of a similar nature which are fairly commonplace here.

 

 

[xylophone]

All of this (our posts) become “academic” as the saying goes, as something has just occurred to me from another way of looking at the Thailand/land ownership discussion.

 

But firstly KP, may I thank you for your cordial interchanges on this subject, always nice to discuss these things in a civil manner.

 

In the original post, the poster enquired as to buying land on Koh Samui and my reply, and those of some others, was that a foreigner cannot buy/own land in Thailand, and this led to the ensuing thread of which both you and I have been major contributors (rightly or wrongly).

 

Having said that, nothing has changed in as much that Thai law states that a foreigner cannot own land in Thailand (this apart from the 40 million baht investment route) so if a foreigner newbie were to ask the following questions the answers would have to be as in accordance with Thai law:

 

Question: Can a foreigner buy land in Thailand?

Answer: No, a foreigner cannot buy land in Thailand, but can be a minority shareholder in an operating Thai company that can.

 

Question: Can a foreigner own land in Thailand?

Answer: No, a foreigner cannot own land in Thailand, but can be a minority shareholder in an operating Thai company that can.

 

Question: Can a foreigner use a Thai nominee company structure to "buy" a house/land here?

Answer: No, a foreigner cannot use a Thai nominee company to buy a house/land as it is not legal.

 

So I think that covers it all and no matter how many foreigners may suggest or think that they own land in Thailand, in fact they do not because they have to abide by Thai law which essentially states that a foreigner cannot own land here, in addition, any way found to try and circumvent that law can be considered illegal.

 

This being the case I don't really see any other reason to carry on this "discussion" any more and I do wish you well with your business KP.

 

Edited December 20, 2018 by xylophone

[khunPer]

On 12/19/2018 at 1:21 PM, xylophone said:

The Thailand Alien Business act is quite specific, and there is a blanket offence of circumventing land ownership laws that means anything that appears to allow foreigners to own houses is actually illegal.

No, a foreigner can own a house, but not the land under the house – apart from special situations like 40M baht "investor visa" – however the foreigner can lease or otherwise be allowed to use a land, and have a superficies right to build and own a house.

 

On 12/19/2018 at 1:21 PM, xylophone said:

You keep mentioning the old company limited structures, however even as we write, new companies are being set up with Thai nominees, with the intention of a foreigner buying land/property, so it is not an old company structure per se, it is a structure which is in common use now (although we know it's illegal it is still being practised).

That's your statement...

 

On 12/19/2018 at 1:21 PM, xylophone said:

PS. This from a legal website regarding the company structure: The company must register 2,000,000 THB of capital per foreigner (half if married to a Thai) and must employ 4 Thai staff per foreign employee. This is normally required by the Department of Labour.

What you are quoting has nothing to do with a basic company limited formation, it's the demand when applying for one foreign Work Permit, and two Thai employees only when the foreigner is married to a Thai. For each additional foreign worker the shareholder capital need to be raised with 1 million and 4 – or 2 – more Thai employees.

 

However, many choose that structure – 2 million baht fully paid shareholder capital, and by time two or four Thai employees (one can be a wife) – as they wish a Work Permit in a performing company.

 

On 12/19/2018 at 1:21 PM, xylophone said:

Indeed, my friends company was constructed by a lawyer using the Thai nominee route, which as I said is still common practice, which in turn bought the land and villa in its name.

 

The lawyer and a cohort therefore "owned" 51% of the company and basically sold the house and land to another person in a fraudulent transaction and were able to do so because they were majority shareholders and signatories (or convinced the land office that they were)...

I remember some quite similar news stories i read some years back about a Brit (I think) on Phuket. Anyway it was about fraud by lawyer – and voting rights and nominees, as you say – so seem like some mistakes, which I shall not try to judge. It's anyway one of the few odd horror-stories, not the main route.

 

Numerous people however has no difficulties, and in the areas I have experience from, I don't recall any reports about any problems – but might be that people here are merely doing it by the book.

????

[khunPer]

9 hours ago, xylophone said:

All of this (our posts) become “academic” as the saying goes, as something has just occurred to me from another way of looking at the Thailand/land ownership discussion...

...

Yes, your post is the the plain truth.

 

It's also what you can read I always say in my various replies. But I also mention how the so-called company limited-structure can work, and I always specify that using a nominee, or "shell company", is not legal; or at least the intention of the law.

 

Many foreigners use the company limited method to get access to use land like an owner in Thailand, and it can work well, if done by the book; i.e. within the Law. There are more to it, than we discussed here, where my original reply was some level of explanation to @BigCs post, which you challenged.

 

And thanks for the civil discussion, I appreciate that. Such debate might always open new angles to view things from, and input of further knowledge...

[xylophone]

20 hours ago, khunPer said:

Yes, your post is the the plain truth.

 

It's also what you can read I always say in my various replies. But I also mention how the so-called company limited-structure can work, and I always specify that using a nominee, or "shell company", is not legal; or at least the intention of the law.

 

Many foreigners use the company limited method to get access to use land like an owner in Thailand, and it can work well, if done by the book; i.e. within the Law. There are more to it, than we discussed here, where my original reply was some level of explanation to @BigCs post, which you challenged.

 

And thanks for the civil discussion, I appreciate that. Such debate might always open new angles to view things from, and input of further knowledge...

Continuing our civil discussion....................I have to say that I wonder what the farangs who have "bought" their house and land through the Thai nominee company route can do about this situation, as the government has said they need to restructure, but thinking this through, it is a very difficult proposition indeed.

 

Before I get onto that, I look at the many estates full of foreign-owned houses here and know full well that the majority of these were purchased through the Thai nominee company route. In fact in the Soi where I lived, of the 50 houses there, almost all were owned by foreigners and only one was set up through a valid company route.

 

Indeed the solicitor nearby made a lot of money from the foreigners who were buying their house/land this way and still continues to charge fees for annual reporting, this despite the fact they are bogus non-operating shell companies.

 

I believe the other large Sois would follow that pattern, otherwise there would be hundreds if not thousands of small operating companies/businesses around here, which there aren't. Of course there will be those houses which are owned by the foreigner's Thai wife, but again if these were purchased by money given to the wife by the foreigner, that is also an illegal action.

 

Now to get back to my original point how does a foreigner who has "bought" his house and land through the Thai nominee company actually restructure successfully?

 

I say this because if he gets rid of the Thai nominees and wants to employ two Thai shareholders, who would want to invest in something which was not a company, but was in fact a house and land, "purchased" illegally.

 

These two new Thai shareholders would have to stump up with funds for the new company set up, which indeed is not a company at all because it produces nothing, it is just a house and land supposedly owned by the foreigner, so they will get no return on their investment, and indeed it's quite possible that the house and land are now nowhere near as valuable as they were when first bought!

 

As I see it, there is absolutely no upside or legal way for this to happen. Even if the company was dissolved, and a new company needed to be set up, this company is still not an operating company producing anything, and will only "own" the property, so in that respect is still illegal.

I am afraid that the foreigners who went down this "ownership" (Thai nominee company) route may have allowed themselves to be backed into a corner should the government crackdown occur, which has often been mooted.

 

IMO it is a combination of things which have come together and which could well end up to be the "perfect storm" – – – foreigners who are used to being able to purchase their house and the land that goes with it in their own country, so thought they could do the same in Thailand; real estate agents who told them that they could, and lawyers who were only too willing to accept fees to set up Thai nominee companies, and of course the corrupt officials at the land offices who allowed this to happen for an under-the-counter payment. 

 

This government department was also noted by the ombudsman to be one of the most corrupt in Thailand along with the police.

 

From my perspective, and from the majority of posts on subjects like this, renting or leasing or the usufruct methods are the only way to go from a peace of mind and the safety/security of money aspect, because as we have both agreed there is no way that a foreigner can own land here............have use of the property/land yes, but then this can also be achieved in the other methods I have noted.

 

On a final note, some folks may suggest that foreigners who "bought" their land/house through the Thai nominee company route should have known better and/or done their research first, but that is too simple a statement because even lawyers were and are setting these companies up and reassuring foreigners that everything is "above board"..............so a newbie would think that the lawyer would be giving good/safe advice, but then again that is not always the case because after all, TIT.  

 

 

 

[khunPer]

2 hours ago, xylophone said:

Of course there will be those houses which are owned by the foreigner's Thai wife, but again if these were purchased by money given to the wife by the foreigner, that is also an illegal action.

Not really – it's her house, and only her house. Some land offices wish the foreigner to sign a declaration that it's the Thai wife's money and land, so the foreigner later cannot claim anything.

 

There's to my knowledge no gift tax in Thailand, so easy to give a gift to a Thai partner, like we sometimes hear stories about others got a 10 million baht house from their farang...????

 

Some properties have a usufruct registered on the title deed at the land office, giving a foreigner the right to use the land (the fruit of the land) for a 30-year period, or for life. Even the land is sold and/or transferred, the usufruct will still be in place, and shall be acknowledged by a new owner.

 

In case of divorce – and of course if the house has be acquired during marriage and therefore is common property – the property shall be split 50/50; i.e. either the wife will but the now ex husband out, or the hose shall be sold, and the outcome shared.

 

In case of death, a foreigner can in heritage land-and-house, but need to sell it within 12 month.

 

2 hours ago, xylophone said:

Now to get back to my original point how does a foreigner who has "bought" his house and land through the Thai nominee company actually restructure successfully?

There might be several ways of restructure an old nominee shell company limited – lawyers might know smart ways, we plain shareholders are not aware of, including using juristic persons – but the simple process, which I know about, also from experience, is to use the blank and pre-signed tranfer documents to get rid of the old up to six remaining Thai nominee shareholders.

 

The now open 51% of shareholder capital need to be owned by one or two Thai nationals – one, if there are two foreign shareholders. A major 48% shareholder could be a wife, and/or child/children under guardian. The remaining 3% is often such a low value – in a 2 million baht set-up it's 60,000 baht, which is so easy to prove that no one will ask for proof – and those shares could even be preferred shares, where there are no voting rights, but instead a guaranteed annual dividend of for example 4%, i.e. 2,400 baht. There are also other ways of using preferred shares.

 

Now the foreigner owns 49% of the shareholder capital, and 49% of the of voting rights; whilst Thai shareholders own 51% of the shareholder capital and 48% percent of the voting rights. The foreigner has simple voting majority.

 

If there's an active Thai partner, the set-up might be 49% foreign owner, and 49% Thai partner that shall be able to show proof of funds for the investment, plus 2% preferred shared owned by a third Thai sleeping partner, that is guaranteed a dividend.

 

By that procedure the company limited has changed from a nominee shell.

 

A company limited can have one or several directors – board members – where one or some can sign for the company alone, whilst others need to sign two together, or some can sign only with limited power. A managing director can be appointed or employed to run the day-to-day business. This, and above mentioned preferred shares, are ways to protect investors.

 

Being an active company limited, it need to have other activities than ownership of one property – land or land-and-house – and one lease income from a major foreign shareholder only. There are several ways for running an active company, and show it in the accountant's books, and in annual statement, including paying tax of the profit.

 

A benefit using the company limited ownership for property is, that you sell shares, and not property, when changing owner. The property in question could be an investment luxury villa for renting out – there are numerous real-life cases like that where I live – and I know of situations where such property had changed owner two, and even three times just during the construction process. It's real business, and registered as a "general objective" – »Buy, produce, receive, hire, hire-purchase, own, possess, improve, use and manage in other matters so that any property includes fruits of the property« and »Sell, transfer, mortgage, pledge, exchange and dispose of the property in other matters«  – in the company limited's list of "particulars of the objectives". 

 

A company can legally own several properties, and have several kind of business activities, not only property, just it's listed in the "particulars of the objectives".

 

Above is examples only, but from real life, as I only know a (very) limited number of cases; there might be several other ways to do it that I don't know about, or there might not be...????

 

If some law firms still offers nominee shell companies I cannot say, but it's my impression, from where I live, that people establishing a Thai company limited need to find "real" shareholders themselves.

 

4 hours ago, xylophone said:

From my perspective, and from the majority of posts on subjects like this, renting or leasing or the usufruct methods are the only way to go from a peace of mind and the safety/security of money aspect, because as we have both agreed there is no way that a foreigner can own land here............have use of the property/land yes, but then this can also be achieved in the other methods I have noted.

Apart from rich people with an investor visa, one can have 49% shares a company limited, where child/children under guardian are among the 51% Thai shareholders; where some of the shares are preferred shares, one or other method; where the company is active in business; a land plot owned by the company is leased for up to 30-years; a separate agreement exist about optional lease for an additional up to 30-year period; a superficies permission has been issued and registered at the land office, i.e. the foreigner can legally own a building/house on the land.

 

I believe that's pretty close to "own" something, and it might be financially better protected than an usufruct; don't forget that in case of divorce, contracts established between husband and wife during marriage could be declared void. However, in both cases there are the possibility of registering a loan as mortgage servitude on the land's title deed; i.e. land cannot be sold or transferred without the loan has been fully paid, including interest.

 

But it's always good to remember, never to invest more in Thailand, than one can survive if needed to walk away from it; i.e. "never invest more than you can afford to loose".

 

Looking in long term, compared to renting a house, it might well equal up between 10 to 15 years; i.e. after 10-15 years it's more expensive to rent something than "own" it...????

[xylophone]

18 hours ago, khunPer said:

Not really – it's her house, and only her house. Some land offices wish the foreigner to sign a declaration that it's the Thai wife's money and land, so the foreigner later cannot claim anything.

 

There's to my knowledge no gift tax in Thailand, so easy to give a gift to a Thai partner, like we sometimes hear stories about others got a 10 million baht house from their farang...

There is a gift tax in Thailand, however it concerns far greater amounts than we are talking about, so not really relevant here.

 

I mentioned the area where Thai wives of foreigners try to own land if money is given to them by the foreigner. In fact the document which has to be signed covers two areas, one being that the Thai wife is actually signing to say that the funds she has to purchase the land are hers and were hers before marriage and again she may be asked to prove this. Funds gifted for the purchase of property can be closely scrutinised and if found to be the case, the whole deal can be invalidated.

 

I would suggest that many foreigners have "bought" their property this way, whether married or not, so under scrutiny it is a grey area indeed and contains an element of risk, especially if one is seen to be lying on a legal document.

 

18 hours ago, khunPer said:

The now open 51% of shareholder capital need to be owned by one or two Thai nationals – one, if there are two foreign shareholders. A major 48% shareholder could be a wife, and/or child/children under guardian

Now here's the thing about Thai lawyers, or any lawyers for that matter, because on the one hand they are responsible for ensuring that the laws of the country are upheld, whereas on the other hand they will also search for grey areas and loopholes to exploit for the benefit of their clients – – and may I say that I do believe this is the case here because there are quite a few grey areas which if came under close scrutiny, would not pass muster.

 

As I understand it a major shareholder in a company cannot be a wife in this instance, mainly because the funds for that shareholding have to be proven as to from whence they came, and the reason for this is so that the foreigner cannot give his wife money to become a shareholder. That is one reason why limited companies have Thai shareholders who have to prove that the funds they have invested are independent of the business (or the owner) in which they are investing.

 

In addition, we are talking about a situation where the non-legal company foreign (Thai nominee company) shareholder has actually undertaken a process through which to acquire a house and land, so irrespective of shareholding/shareholders etc in this new setup, the fact remains that a purchased house and land already exist, and because a limited Thai company can only buy land/property if it has a real operating company, which it doesn't in this case, the whole process is flawed.

 

Furthermore, who would want to invest their own funds into a newly formed company which has already acquired land/property illegally and which may or may not be worth its original purchase price – – may I suggest only the Thai wife of the foreigner, because it is not a viable proposition for anyone other than someone who has a vested interest in this working, i.e. the wife. 
 

18 hours ago, khunPer said:

Being an active company limited, it need to have other activities than ownership of one property – land or land-and-house – and one lease income from a major foreign shareholder only. There are several ways for running an active company, and show it in the accountant's books, and in annual statement, including paying tax of the profit.

 

It has been noted on many legal sites that the overarching law about the legality of limited Thai companies and foreign ownership comes into play when there is any question about the legality of the setup, the shareholding, the capital invested and the business the operating company is in.

 

Translated, it means that if there is any doubt about the whole transaction/setup, then it will err on the side of the law/government.

 

As I noted, the grey areas will only be examined if the company and the company structure comes under scrutiny, and as this has only happened in a few cases in Thailand to date (although close inspection and a crackdown have been mooted) then some folks think they are safe but this quote below is taken from a lawyers website and clearly shows that they do not want to attract the attention of the government in such transactions..... 

 

"Most law firms register companies with foreigners (initially) to only 39% foreign shares to avoid too many checks from the government". 

 

Having said that, the laws are being tightened and companies will be investigated as to their structure and this is quite obvious in the following from other websites.

 

According to the Director, any violation would lead to an investigation and subsequent revocation of any title deed issued contrary to the policy regarding ownership of lands by foreigners. Furthermore, it has been stated that loans granted to Thai spouses using money owned by the foreigner spouse would also amount to a circumvention of the prohibition.

In conclusion, the use of Thai spouses as title holders for their foreign spouses has come under greater control as more requirements and limitations have been set in place to ensure that this practice be abated. However, difficulties may still arise in terms of the proof and evidence needed to establish the origin of the money.

So once again even though clever lawyers are setting up convoluted structures which include shareholders, minors, and all sorts of shareholding chicanery, they would probably fail if a government clampdown was put in place and companies were closely scrutinised by government officials. 

 

If someone wants to take a chance by virtue of the fact that they will never be found out, then so be it, however there are many instances of the foreigner falling foul of Thai law, no matter how well they think they have structured their companies.

 

I would not want to be in a situation where I could lose everything, either possibly or probably, by investing in a structure which is open to a difference between a lawyers interpretation and that of the Government.

 

Edited December 22, 2018 by xylophone

[xylophone]

On 12/21/2018 at 11:07 PM, khunPer said:

But it's always good to remember, never to invest more in Thailand, than one can survive if needed to walk away from it; i.e. "never invest more than you can afford to loose".

Something for newbies to consider KP.

 

Anyway, it has been good to "talk" with you and now that I have gone "off topic" (too much perhaps) I will sign out from this thread and wish you and your family a Merry Christmas and a Happy and Healthy new year.

 

Cheers.

[James Pendragon]

Bobby2... Expect to pay around 3,000,000 Baht per Rai...!

[BigC]

On 12/20/2018 at 8:57 PM, khunPer said:

Yes, your post is the the plain truth.

 

It's also what you can read I always say in my various replies. But I also mention how the so-called company limited-structure can work, and I always specify that using a nominee, or "shell company", is not legal; or at least the intention of the law.

 

Many foreigners use the company limited method to get access to use land like an owner in Thailand, and it can work well, if done by the book; i.e. within the Law. There are more to it, than we discussed here, where my original reply was some level of explanation to @BigCs post, which you challenged.

 

And thanks for the civil discussion, I appreciate that. Such debate might always open new angles to view things from, and input of further knowledge...

Thanks 

You are right you need share capital of 2 mill if you want to give yourself a work permit 

 

Foreigner cannot won land but a Thai company can 

 

A Thai company with 49% share holder and 2 Thai share holders minimum 3 share holder 

 

You would be the managing director 

 

You don't ne3d to have a work permit to have a company 

 

Your a just an investor 

 

Remember if you own 49% and there has to be minimum  of 3 share holders then the other share holders cannot do anything with out yours signature 

 

As long as the Thai people have the money in their bank to afford to be share holders then this in by the book.

 

Also when you open a company bank account only you can withdraw money.

 

Unless you have given authorisation for other share holders to withdraw. 

 

Went down this same road with foreigners owning guns

 

Foreigners cannot own guns

 

I was told that we can

 

The person I was arguing with kept showing me links

 

So I said to settle the argument.

 

" go out buy a gun in your name then prove me wrong "

 

No foreigner I know have a licenced fire arm in their name 

 

Same with land owner ship

 

There are allot of people with land for years with no problem 

 

The evidence is there 

 

If you don't want to believe it or you blame crooked lawyers for lack of common sense the  your choice

 

Me I own a company that owns land for over 15 years and had no investigations and no problems 

 

So all the internet links in the world won't change that 

[xylophone]

26 minutes ago, BigC said:

Foreigner cannot won land but a Thai company can 

Well that's been my argument all along.......as well as that the Thai Nominee company route is illegal and that could backfire badly on folks who used that strategy, whether or not they've been investigated already.