Foreigner with 80% majority shareholder?!

[Sunmaster]

Hi

Have you ever heard of a new company being registered, where unlike the usual 49%, a foreigner was allowed to be the majority shareholder with 80%?

[ThaiBunny]

As I understand it, under the Treaty of Amity US citizens are exempt from the shareholder provisons of the Alien Business Law of 1972 - but I may be wrong https://2016.export.gov/thailand/treaty/index.asp

[Sunmaster]

No Americans involved.

[ThaiBunny]

1 minute ago, Sunmaster said:

No Americans involved.

Perhaps if you gave some details people might be able to understand what you're after.  The answer to the question you actually asked is in my answer.

[Sunmaster]

Basically, I (an accountant did it for me) have registered a new company, 1 foreigner (me) and 2 Thais. I've got 80% and the rest is divided among the Thais.
Now, from what I knew, foreigners where allowed only 49%, with the exception of Americans, like you correctly stated.
The registration documents have been approved by the government, so everything seems legit. 
I'm just surprised this was even possible.

PS: I'm not American.

Edited April 10, 2019 by Sunmaster

[ThaiBunny]

You can't seriously expect a definitive answer without someone conducting a thorough examination of all of the documentation?  Go ask another lawyer if you're uncertain

[Sunmaster]

I was just curious to know if others know or have such a business setup as well. But thanks for trying.

[kingstonkid]

16 hours ago, Sunmaster said:

I was just curious to know if others know or have such a business setup as well. But thanks for trying.

The  short answer is legally  no it can not  be done.   BUT this is LOS.

 

I would definitely have a different liar  oops lawyers check it out 

[justin case]

anyone knows why americans get so much more here in thailand .... I have a clue about the why

 

but then, why not give to people from switserland 

 

 

[Damrongsak]

4 minutes ago, justin case said:

anyone knows why americans get so much more here in thailand .... I have a clue about the why ...

Hansum.  And the GIs partied hard when they were stationed there or on R&R. 

[Peterw42]

17 hours ago, Sunmaster said:

Basically, I (an accountant did it for me) have registered a new company, 1 foreigner (me) and 2 Thais. I've got 80% and the rest is divided among the Thais.
Now, from what I knew, foreigners where allowed only 49%, with the exception of Americans, like you correctly stated.
The registration documents have been approved by the government, so everything seems legit. 
I'm just surprised this was even possible.

PS: I'm not American.

You probably have 80% of voting etc but not 80% ownership. 

 

Edited April 11, 2019 by Peterw42

[PerkinsCuthbert]

2 hours ago, justin case said:

anyone knows why americans get so much more here in thailand .... I have a clue about the why

 

but then, why not give to people from switserland 

 

 

A more serious answer relates to the post-WWII fear of the communist spread from China and Russia into SE Asia - the so-called domino theory; the US government, hot on the heels of McCarthyism and assorted 'red scares', pumped billions into Thailand, its government and its military (much of which was, naturally and as usual, embezzled) in an effort to make Thailand strong enough to resist the march of communism, and to win hearts and minds in what was still an almost totally rural population. In reciprocation, Thailand entered into treaties and agreements with the US; the company ownership exception for Americans is one such incidence. 

[Srikcir]

2 hours ago, Peterw42 said:

You probably have 80% of voting etc but not 80% ownership.

Possible.

Corporate structure can be adjusted to protect foreign investment by limiting the Thai shareholder's rights. Under Section 1111 CCC these details have to be officially registered in conformity with the resolution of the statutory meeting. After this has been accomplished, the preferential rights attributed to preferred shares cannot be altered at any later point in time (Section 1142 CCC).

 

The law does neither describe or define the type or scope of preference nor does it allocate the preferred shares to the Thai or non-Thai shareholders. A typical preference share structure could be:

1. The foreign shareholders hold in total 49% of common shares and the Thai shareholders own 51% preference shares.
2. Preference shareholders have one vote for ten shares held, while ordinary shareholders have one vote for one share held,

https://pugnatorius.com/preference-shares/

[Sunmaster]

80% of the shares.

[timendres]

1 hour ago, Sunmaster said:

80% of the shares.

I have seen companies with two "classes" of shares - common and preferred.

If I remember correctly, the common shares were to meet the 51% Thai ownership requirement, while the preferred shares were to provide for better distribution of dividends.

[eisfeld]

You can register a company with more than 50% foreign ownership no problem, nothing special required. You just can't properly conduct business or generate revenue. Preparational work is OK. This is because it's possible to get BOI sponsorship or a Foreign Business License to allow majority foreign ownership and you have to register the company first before you can go to the BOI for approval. Basically a company registered in Thailand with majority foreign ownership will be treated like a foreign company and without BOI approval or a FBL, you can't conduct business.

 

So now you have a company which you own 80% of but can't yet use it to do much (yet). What's your intended use of said company?

[Snow Leopard]

1 hour ago, Sunmaster said:

80% of the shares.

Bingo. Voting shares. 

[jasonsamui55]

My wife created a company whose sole purpose was to sponsor our nanny for a b visa and work permit. B visa issued 5 years ago and annual work permits renewed each despite no bank account and no revenues and no employees and no activity. That aside, one day we wanted to me as an owner and director of the company so we had to sit with the accountants and we noticed that my wife, not Thai and not American, owned 60% of the company and the two Thai nominee shareholders owned 20% each. I can’t read Thai at all but saw the names and numbers with % signs next to them, it was pretty clear, and pointed out to the accountant’s assistant. And she became embarrassed and said “sorry ka, we make mistake” and just brushed it aside as if it was no big deal. And 2-3 years later the biz still exists and sponsors the nanny for a visa each year.

[eisfeld]

2 minutes ago, jasonsamui55 said:

My wife created a company whose sole purpose was to sponsor our nanny for a b visa and work permit. B visa issued 5 years ago and annual work permits renewed each despite no bank account and no revenues and no employees and no activity. That aside, one day we wanted to me as an owner and director of the company so we had to sit with the accountants and we noticed that my wife, not Thai and not American, owned 60% of the company and the two Thai nominee shareholders owned 20% each. I can’t read Thai at all but saw the names and numbers with % signs next to them, it was pretty clear, and pointed out to the accountant’s assistant. And she became embarrassed and said “sorry ka, we make mistake” and just brushed it aside as if it was no big deal. And 2-3 years later the biz still exists and sponsors the nanny for a visa each year.

The way you describe it, seems to be clearly illegal though. I wouldn't recommend doing this.

[Sunmaster]

I think I got an answer: for 100% exporting businesses, a foreigner can own up to 100% of the shares.

[BigFun]

Only possible if :

a) you are American, as has been mentioned or 

b) possibly under a BOI scheme, limited to certain areas of activity. 

 

The 51/49 thing is to make the company a Thai company. Different share structures are not forbidden, just much much harder to meet requirements. 

 

Other than that, share types and distribution are shown in the share table page and voting rights need to be addressed in the Kor Bangkab document also.

 

From my limited knowledge. 

[BigFun]

On 4/11/2019 at 1:49 PM, eisfeld said:

The way you describe it, seems to be clearly illegal though. I wouldn't recommend doing this.

The nanny IS the employee and cost of the company. Technically the company is set up to provide nannying services, whether profit is turned or not. You WILL need to file annual returns or the company will be frozen and called, 'abandoned'.

 

Shares are noted in companies from # to # I.e. amounts, not %'s

[jasonsamui55]

On 4/11/2019 at 1:49 PM, eisfeld said:

The way you describe it, seems to be clearly illegal though. I wouldn't recommend doing this.

Maybe, but it was created by a lawyer to address the issue of “I need to get a visa for my nanny to live here legally” so I assume they know what they are doing.

 

[jasonsamui55]

2 hours ago, BigFun said:

The nanny IS the employee and cost of the company. Technically the company is set up to provide nannying services, whether profit is turned or not. You WILL need to file annual returns or the company will be frozen and called, 'abandoned'.

 

Shares are noted in companies from # to # I.e. amounts, not %'s

Yes, it’s some sort of professional nanny/babysitter service. We had to submit pictures initially of kids beds and toys and books. Her title is quite generically called “manager” and I do have to pay the law firm about 20-25k thb each year to file annual tax forms and registration fees and then another 15k each year for work permit.

[eisfeld]

7 hours ago, BigFun said:

The nanny IS the employee and cost of the company. Technically the company is set up to provide nannying services, whether profit is turned or not. You WILL need to file annual returns or the company will be frozen and called, 'abandoned'.

 

Shares are noted in companies from # to # I.e. amounts, not %'s

The company probably doesn't meet the 4:1 Thai:Foreigner ratio and even if it does, using nominee shareholders or fake staff isn't really allowed either.

[eisfeld]

4 hours ago, jasonsamui55 said:

Maybe, but it was created by a lawyer to address the issue of “I need to get a visa for my nanny to live here legally” so I assume they know what they are doing.

 

Don't ever assume a lawyer here follows the law. Plenty of stories of them setting up illegal company structures. They don't really care, in the end the company owner is liable, not the lawyer.

[Naam]

On 4/11/2019 at 12:36 PM, Snow Leopard said:

On 4/11/2019 at 11:05 AM, Sunmaster said:

80% of the shares.

Bingo. Voting shares. 

not voting shares but voting RIGHTS.

[MiNombreEsFicticious]

On 4/10/2019 at 3:23 PM, Sunmaster said:

Basically, I (an accountant did it for me) have registered a new company, 1 foreigner (me) and 2 Thais. I've got 80% and the rest is divided among the Thais.
Now, from what I knew, foreigners where allowed only 49%, with the exception of Americans, like you correctly stated.

When you say "80%" are you talking about preference shares? Are your shares fully paid up, and did the total add up to 80% of registered share capital? Have you seen the official Thai document that lists each shareholder by name, address and number of shares / % ownership (farang name are written in Thai, so you may not recognize your own name)? Do you have everyone's share certificates in your possession? 

[jasonsamui55]

On 4/12/2019 at 10:47 PM, eisfeld said:

The company probably doesn't meet the 4:1 Thai:Foreigner ratio and even if it does, using nominee shareholders or fake staff isn't really allowed either.

No nominees and no fake staff. My Thai maid and gardener are the owners.

[eisfeld]

3 minutes ago, jasonsamui55 said:

No nominees and no fake staff. My Thai maid and gardener are the owners.

You said yourself there are 2 Thai nominee shareholders with 20% each. And your wife who is not Thai owns 60% and that your nanny is foreign as well and got a work permit for this company. Now you say the maid and gardner are the owners? It's all a bit confusing.

 

If your maid is employed by the company and is foreign then you need 4 Thai staff which you say there aren't. Something doesn't add up.