Process of closing farang company and selling house on behalf of owner with dementia

[luckysmile]

Hello all

A friend of mine has a predicament that he has been putting of for a few years now and has asked me for some help.

Said friends father married a thai lady about 10 years ago and bought a house under a company name.

About 5 years ago he was diagnosed with dementia, now days he needs 24 hour care, barely speaks, can't use a phone, doesn't remember he is married.

My friend is his fathers power of attorney and looks after everything.

He is constantly asked for money by the fathers wife for "tax".

The wife refused to move to Australia in the early onset of diagnosis and stays in the house with her mother and sister.

My friend would like to know how he would go about selling the house and giving her half of the money , would he have to become the director of the company first, then close the company? Would Thai government recognise his authority to make decisions as power of attorney? Any info would be greatly appreciated i'm sure.

 

[FritsSikkink]

Your friend can't do anything as he owns nothing. 

[metempsychotic]

2 minutes ago, FritsSikkink said:

Your friend can't do anything as he owns 

answers like this are why I ask my lawyers when I have legal questions.

Edited February 3, 2020 by metempsychotic

[mike787]

7 minutes ago, metempsychotic said:

answers like this are why I ask my lawyers when I have legal questions.

I agree...a waste of time and oxygen.  Might as well drink oneself to death...

Edited February 3, 2020 by mike787

[blackcab]

The first thing to do is to find out the current company structure. Who are the shareholders, and what percentage of the company does each of them own? Who are the directors?

 

Once you know this, a shareholder meeting needs to be called. It takes 25 per cent ownership of the company or more to be able to call an EGM. If this isn't an option you will need to wait until the next AGM. A motion calling for the sale of the property should be proposed and seconded, and then a majority of the shareholders (in terms of the percentage of shares that they hold) need to vote for the motion. The meeting minutes need to be recorded and signed.

 

You also need to find out if the company was loaned money to purchase the property. If so there should be a loan agreement in the minutes of the company's meetings. This loan will need to be repaid when the property is sold.

 

At this point the required number of company directors need to put the property up for sale. When a buyer is found, the necessary documentation must be prepared for the land office.

 

Obviously, if the majority of shareholders do not agree to sell them nothing can happen as the shareholders own the company.

[impulse]

2 hours ago, metempsychotic said:

answers like this are why I ask my lawyers when I have legal questions.

 

+1. 

 

He may have options, or maybe not if his wife and family are currently living there and don't want to sell.  And the attorney may be able to suggest a response for the next time the wife asks for tax money.

 

There's real estate law, company law, and family law involved.  Plus, a foreigner thrown into the mix so the probability of immigration law, depending on the guy's visa status.  It can be tough to transact any business on the wrong visa status.  An attorney is called for in cases like this.  But pick a good one...

 

Edited February 3, 2020 by impulse

[Langsuan Man]

This is a real mess especially with the caveat that this has been an ongoing problem: 

 

8 hours ago, luckysmile said:

he has been putting of for a few years now

Which means that we really don't know if the company has been legally maintained for these few years now

 

But let's pay devils advocate for a minute and assume that he already has a lawyer or accountant who has maintained the company  

 

The process is to have the company give the house to the wife, which even though a gift, will require the payment of a very large amount of money to the land office.  This amount will be based upon several factors.  They will start with what the value of the property as was declared when it was registered at the Land Office, then the normal increase in value, as determined by the Land Office's magic sauce, plus what "improvements" (like a house) were made to the property.  Once they come up with the value they will not change the Chanote until that is paid

 

Once the property is in the wife's name the company must be closed.  Depending upon the lawyer / accountant this will also require a substantial amount of money also.  First is the 18,000 THB fee to the Office of Business Development to close the company, then a final accounting and payment of the business tax, and then whatever the legal fees the lawyer/accountant want, which can be as little as 20,000 THB or as much as 50,000 THB to close a company 

 

IMHO, the easiest way out of this mess is to name the wife as Director and all the relatives as stock holders and make them pay the annual accounting fee and the OP's father can just walk away. 

 

If they don't want to do this then get a lawyer to go to court and have the OP's father declared incompetent and they will have to accept the company or loose the house  

 

 

 

 

 

[1FinickyOne]

Ask for a tax bill... from my experience with property tax in Thailand it has ranged from unbelievably low to non-existent... 

[ezzra]

This the results of foreignness putting properties in company structure and installing said spouses relatives as share holders without the foresight that things, sooner or later may go wrong at one point, and they do, and there are thousand of them out there exposed to such problem but they all thing that it's not going to happen to them, not to mention many cases where signatures were faked to issue a new Channot and the property is either sold of mortgaged without the foreigner to even know about it..

[Langsuan Man]

1 hour ago, kenk24 said:

Ask for a tax bill... from my experience with property tax in Thailand it has ranged from unbelievably low to non-existent... 

Transfer tax is a whole different ball game.  Property tax is so low in many places they don't even bother sending out bills

 

[scorecard]

On 2/4/2020 at 4:00 AM, blackcab said:

The first thing to do is to find out the current company structure. Who are the shareholders, and what percentage of the company does each of them own? Who are the directors?

 

Once you know this, a shareholder meeting needs to be called. It takes 25 per cent ownership of the company or more to be able to call an EGM. If this isn't an option you will need to wait until the next AGM. A motion calling for the sale of the property should be proposed and seconded, and then a majority of the shareholders (in terms of the percentage of shares that they hold) need to vote for the motion. The meeting minutes need to be recorded and signed.

 

You also need to find out if the company was loaned money to purchase the property. If so there should be a loan agreement in the minutes of the company's meetings. This loan will need to be repaid when the property is sold.

 

At this point the required number of company directors need to put the property up for sale. When a buyer is found, the necessary documentation must be prepared for the land office.

 

Obviously, if the majority of shareholders do not agree to sell them nothing can happen as the shareholders own the company.

"The first thing to do is to find out the current company structure. Who are the shareholders, and what percentage of the company does each of them own? Who are the directors?'

 

Good point, further has the company submitted the required comany report to the Thai Companies Office every year and all up to dats, also the required accompanying accounting / audit / tax report and all up to date?

 

If not submitted for several years then it's possible the company registration has automatically deleted, therefore there is no registered owner of the property. Needs urgent checking.

[khunPer]

On 2/3/2020 at 4:42 PM, luckysmile said:

My friend is his fathers power of attorney and looks after everything.

Does your friend have a legal power of attorney to act on behalf of his father?

 

On 2/3/2020 at 4:42 PM, luckysmile said:

My friend would like to know how he would go about selling the house and giving her half of the money , would he have to become the director of the company first, then close the company?

The house is owned by a company, so cannot be sold without a bord meeting, or general assembly. Who are members of the bord, i.e. listed as directors – might be only one – and who owns the minimum 51% Thai majority shares?

 

Does the wife own any shares in the company (she might have been used as nominee shareholder)?

 

You friend have two options with company owned property...

 

1) Sell the property – after the paperwork with meeting reports have been fulfilled – pay the taxes, and close the company; the remaining capital should be paid to the shareholders in accordance with their number of shares.

 

2) Sell all shares in the company, the new shareholders will own the house, because they own the company. This method is often used when foreigners are trading property held by a company limited-shell. No transfer fees and property gain tax. Any gain received by the shareholders, when paid for their shares, might be income taxable (only gain from SET listed stocks are tax-free, to my knowledge), depending of how the shares are paid for, i.e. domestic and/or off-shore.

 

A Thai company limited would have minimum 3 shareholders, and minimum 51% of the shares are owned by Thais. Older company limited's used as shell for holding of property for a foreigner often used Thai nominees as shareholders, but to my common knowledge these shares still represent a value. You cannot legally take the money from a property sale out of the company – you might however keep only the land office appraised value in the company books, but it depends of documentation needed at the land office, as registration and taxation should be either appraised value, or actual sales price, whichever is highest – nor can you sell the stocks without paying the shareholders. If nominee shareholders have been used, then there should be undated both power of attorney for voting rights, and blank share transfer documents, somewhere.

 

You, or rather your friend, should consult an experienced property solicitor for best advise.

????

[CGW]

On 2/4/2020 at 7:51 AM, Langsuan Man said:

Depending upon the lawyer / accountant this will also require a substantial amount of money also.  First is the 18,000 THB fee to the Office of Business Development to close the company, then a final accounting and payment of the business tax, and then whatever the legal fees the lawyer/accountant want, which can be as little as 20,000 THB or as much as 50,000 THB to close a company 

Its a lot more than you think to close a company, I sold a house a few years back, they didn't want the company so had to close the company and put it in their name, it was well over 200,000 Baht.

[khunPer]

On 2/4/2020 at 1:51 AM, Langsuan Man said:

This amount will be based upon several factors.  They will start with what the value of the property as was declared when it was registered at the Land Office, then the normal increase in value, as determined by the Land Office's magic sauce, plus what "improvements" (like a house) were made to the property.  Once they come up with the value they will not change the Chanote until that is paid

Not sure this is correct.

 

Price for taxation shall be either land office appraised value, or actual sales price, whichever is highest.

 

Normally a 3,3% business tax is paid when a company sells a house plus a withholding tax calculated with a deduction depending of times owned. On top comes the 2% transfer fee.

 

There is a property tax-calculator here.

[jimn]

3 hours ago, CGW said:

Its a lot more than you think to close a company, I sold a house a few years back, they didn't want the company so had to close the company and put it in their name, it was well over 200,000 Baht.

Its not closing the company that is expensive, its the land transfer tax. I closed my company 3 years ago. It was 10,000 to close the company but 180,000 to the land office to transfer the land into a Thai name.

[BigFun]

20 hours ago, khunPer said:

Not sure this is correct.

 

Price for taxation shall be either land office appraised value, or actual sales price, whichever is highest.

 

Normally a 3,3% business tax is paid when a company sells a house plus a withholding tax calculated with a deduction depending of times owned. On top comes the 2% transfer fee.

 

There is a property tax-calculator here.

There is no time owned related deduction if company owned.

[Delight]

  if the sick man sold the house -where would he live?

 

In the regular arrangement involving  land in a company the Farang -in this case the sick man - has a share  allocation less than  50% of total. He also has voting rights 100% of total.The voting rights are everything.

These are the only thing that the sick man owns. 

These are usually sold to a new buyer. 

The problem here relates to the people who live in the house. Maybe this is not a problem.

 

It is not clear -from your post - if the sick man's son has a financial interest in this process.

 

As far as POW is concerned. The son has full legal authority to act for the father.

 

 

[khunPer]

4 hours ago, BigFun said:

There is no time owned related deduction if company owned.

Thanks, but are you sure about that?

 

I'm not talking about the 3.3 percent business tax, but the additional withholding tax, which in the tax-calculator appears on top for sale of business owned property.

 

It's however many years ago I sold a business owned property – land, owned a short period only – and by that time it was agreed that buyer paid all taxes and fees, so I never checked anything, buyer's bank representative just paid it all; so I have no personal experience.