What happens to the minority shareholders in a company when a company is dissolved and the home sold?

[Thomas J]

Was discussing company owned homes in the village with another.  They explained that the typical arrangement is to have a foreigner own 49% of the stock in the company with a minimum of two other Thai citizens owning the remaining 51%.  I would assume they split that equally with each owning 25.5% of the company.  

I would "guess" they must keep the two minority owners from knowing each other otherwise they could legally out vote the foreign owner(s)

Now that led to a question of ok what happens when the property is sold or the foreign owner dies.  If the company is dissolved which I assume it would be if there was no new home purchased and/or the property was sold upon the death of the 49% foreign owner, aren't he minority owners entitled to their share of the proceeds?  

[Surelynot]

Shareholders are bottom of the pile......how much you receive depends on what money is left over once all other debts have been cleared........so I believe.

[Thomas J]

Just now, Surelynot said:

Shareholders are bottom of the pile......how much you receive depends on what money is left over once all other debts have been cleared........so I believe.

That would be true but if the only asset in a company is a home which would be the typical asset and the home is fully paid for and lets say the foreign owner dies and the company dissolved wouldn't the Thai minority owners have to be paid their proportionate share? 

[Surelynot]

3 minutes ago, Thomas J said:

That would be true but if the only asset in a company is a home which would be the typical asset and the home is fully paid for and lets say the foreign owner dies and the company dissolved wouldn't the Thai minority owners have to be paid their proportionate share? 

I would say so....shareholders, whoever they are, should receive their fair proportion after all other creditors are paid out of the estate.

[NCC1701A]

20 minutes ago, Thomas J said:

I would "guess" they must keep the two minority owners from knowing each other otherwise they could legally out vote the foreign owner(s)

they have no voting rights. farang is big boss. 

[Thomas J]

4 minutes ago, Surelynot said:

I would say so....shareholders, whoever they are, should receive their fair proportion after all other creditors are paid out of the estate.

I would think that would be the law.  That is why I posted the question.  If that is true, than any of the foreigners who are setting up companies would have to forfeit a percentage of the home back to the Thai minority owners. 

Perhaps the capital that is put into the company is in the form of a loan between the foreigner and the company.  If you did that, the loan would have to be repaid at the time the home was sold.  Maybe that is the way around it. 

I would just find it strange that foreigners would establish companies to purchase homes if somehow a portion of the worth of the company was given away particularly to total strangers. 

[Thomas J]

5 minutes ago, NCC1701A said:

they have no voting rights. farang is big boss. 

I am aware of the voting rights.  However voting and ownership rights are two different things.  

If i am truly a stockholder than I am an owner.  I don't know the answer but there must be some way that these minority shareholders never receive anything. 

[Surelynot]

3 minutes ago, Thomas J said:

I would think that would be the law.  That is why I posted the question.  If that is true, than any of the foreigners who are setting up companies would have to forfeit a percentage of the home back to the Thai minority owners. 

Perhaps the capital that is put into the company is in the form of a loan between the foreigner and the company.  If you did that, the loan would have to be repaid at the time the home was sold.  Maybe that is the way around it. 

I would just find it strange that foreigners would establish companies to purchase homes if somehow a portion of the worth of the company was given away particularly to total strangers. 

Got you.......!!!

 

Good point.

[Peterw42]

OP, the foreigner is the managing director, the only person who has the majority vote in what the company does. The other shareholders cannot make decisions that override the managing director, or out vote him.

The company assets cant be sold without the say so of the foreigner. If the assets are sold, the managing director is in charge of the distribution of the money. He pays it to himself.

 

You can be a shareholder in microsoft, you dont vote on them buying a new factory, or get a share of selling the old factory. Your percentage ownership in microsoft doesn't equate to a percentage ownership of all their asset., or a vote on buying and selling assets.

 

Mark Zuckerberg isnt the majority shareholder of facebook, he only owns 22%, but he holds all the voting control and if it is sold he gets most of the money

 

[Thomas J]

3 hours ago, Peterw42 said:

 

OP, the foreigner is the managing director, the only person who has the majority vote in what the company does. The other shareholders cannot make decisions that override the managing director, or out vote him.

 

Voting I understand but if I am a minority shareholders in Microsoft and it is sold, I get my proportionate amount from the number of shares I own. I don’t control the vote but with shares I have ownership based on the number of shares I own. 

[digbeth]

Shares don't have to be 'paid up' too, the other two shareholders could be 'owing' the company the initial capital cost of their shares

 

Thai laws allow limited company to operate with only 25% of their authorized capital

[donx]

OP, you asked what happens when the property is sold or when the foreign owner dies. These are 2 very different situations - neither of which amounts to the dissolution of the company.

 

If the property (asset) of the company is sold, the foreign owner simply transfers the proceeds to their personal bank account. Even without assets, the company still exists. There are specific steps that need to be followed to shut down the company. Until the company is shut down, it still exists and must submit yearly accounting reports.

 

If the foreign owner dies, the shares owned by the foreigner are transferred to whomever their heirs are or as directed by their will. Again, in this case, the company is not dissolved. Whoever ends up owning the shares becomes the director of the company and controls the property the same as the foreign owner who died did.

 

This is my understanding. I welcome anyone to correct me if I am wrong.

[soisanuk]

9 hours ago, donx said:

If the foreign owner dies, the shares owned by the foreigner are transferred to whomever their heirs are or as directed by their will. Again, in this case, the company is not dissolved. Whoever ends up owning the shares becomes the director of the company and controls the property the same as the foreign owner who died did.

This would be the norm.  The foreigner's asset is the stock in the company. The company is the owner of the property, which is a company asset.  If a stock holder dies, it is their asset, the stock, that goes to their heirs not the property.  There would be no need to dissolve the company.

 

 

[Thomas J]

11 hours ago, donx said:

If the property (asset) of the company is sold, the foreign owner simply transfers the proceeds to their personal bank account.

That just seems strange.  If I own a business with another person and it has a building and the building is sold, I am entitled as one of the owners to my share of the proceeds. 

Here the Thai shill shareholders do by law have a percentage of the business.  It would seem that they too are entitled to their share if the company assets are sold and the company dissolved.  Otherwise why even go through the ruse of creating a company that has any Thai shareholders at all. 

[natway09]

A better option is to have a Thai person close to you hold 2%.

I have heard of lawyers that have their staff hold 2% & have signed a Power of Attorney (undated) which is kept in the lawyers safe.

Just buy them a nice New Year present

[NCC1701A]

23 hours ago, Thomas J said:

I assume it would be if there was no new home purchased and/or the property was sold upon the death of the 49% foreign owner, aren't he minority owners entitled to their share of the proceeds?  

if this were the case every 49% foreign owner would be long dead by now. 

 

never be worth more dead than alive in Thailand. 

[nickcar]

A few comments open to correction.

1  if the property is sold and a profit is made then the company may be liable for taxes if the profit is over 300,000 Baht

2 when the property is sold and the proceeds belong to the company. Anybody such as managing director takes the money for his own use is required to borrow it from the company and pay interest.

 

[Delight]

 When a property is owned by a  Thai company the foreigner does not own the property and does not own the company.

He simply owns his share allocation and his voting rights.

 

If he wishes to dispose of the property he transfers that which he owns to the new foreign buyer.

 

He does this for the price of the property.

the other 51% of the shares are not involved.

 

If he were to sell the company total -then all the share holders will get a payday.

He is unlikely to do this.

 

Things could get a bit tricky if he lives  alone and then dies intestate.

Who takes the property ?

Answers please

[Thomas J]

25 minutes ago, Delight said:

 When a property is owned by a  Thai company the foreigner does not own the property and does not own the company.

He simply owns his share allocation and his voting rights.

 

If he wishes to dispose of the property he transfers that which he owns to the new foreign buyer.

 

He does this for the price of the property.

the other 51% of the shares are not involved.

 

If he were to sell the company total -then all the share holders will get a payday.

He is unlikely to do this.

 

Things could get a bit tricky if he lives  alone and then dies intestate.

Who takes the property ?

Answers please

Now this makes sense. 

If the property is sold, he does not sell the asset he sells his "shares" in the company.  That would mean the new owner would not have to set up a new company.  In terms of dying without a will, I would think that the same rules would apply for any of the other assets the person owns.  The rules of dying intestate would mean there is a division to closest relatives and the government rules on dying intestate would apply.  That would only mean that the heirs would have to get together and sell the 'shares" in the company to the new owner.  certainly a bit more complicated since all of them would get only a fraction of the 49% the foreign owner owned.  They would have to first get the shares transferred into their names and then "sell" all the shares to the new owner. 

[digbeth]

9 hours ago, Thomas J said:

That just seems strange.  If I own a business with another person and it has a building and the building is sold, I am entitled as one of the owners to my share of the proceeds. 

Here the Thai shill shareholders do by law have a percentage of the business.  It would seem that they too are entitled to their share if the company assets are sold and the company dissolved.  Otherwise why even go through the ruse of creating a company that has any Thai shareholders at all. 

If they are not shill shareholders, they'd have contributed to the corresponding share in the initial capital when the property was bought, if they wish to partake in the proceedings of the company, they must paid up their share.. 

[Thomas J]

2 minutes ago, digbeth said:

If they are not shill shareholders, they'd have contributed to the corresponding share in the initial capital when the property was bought, if they wish to partake in the proceedings of the company, they must paid up their share

I think it is safe to say it would be pretty unusual for there to be a company set up allowing it to purchase a single family residence where the Thai shareholders were not shills.  

 

[donx]

3 hours ago, Delight said:

 When a property is owned by a  Thai company the foreigner does not own the property and does not own the company.

He simply owns his share allocation and his voting rights.

 

If he wishes to dispose of the property he transfers that which he owns to the new foreign buyer.

 

He does this for the price of the property.

the other 51% of the shares are not involved.

 

If he were to sell the company total -then all the share holders will get a payday.

He is unlikely to do this.

 

Things could get a bit tricky if he lives  alone and then dies intestate.

Who takes the property ?

Answers please

I understand and agree with much of what you say. However, what if the property is sold to a Thai? Also I read that a foreign buyer may prefer to set up their own company since there are potential liabilities associated with taking over an existing company which would be avoided by establishing their own company. But for simplicity, let's take the case of selling the property to a Thai who doesn't want or need the company. Do you agree that in this case the foreigner selling the property will simply pocket the proceeds after any tax on profits are are paid?

[digbeth]

14 hours ago, donx said:

I understand and agree with much of what you say. However, what if the property is sold to a Thai? Also I read that a foreign buyer may prefer to set up their own company since there are potential liabilities associated with taking over an existing company which would be avoided by establishing their own company. But for simplicity, let's take the case of selling the property to a Thai who doesn't want or need the company. Do you agree that in this case the foreigner selling the property will simply pocket the proceeds after any tax on profits are are paid?

 

If I were to set up a company to buy Thai property, and the lawyer office grabbed two random somchai to put their name down as my 'shareholder', when I move on and sell the property, would I track them down to pay them 51% of my proceeds? 

[Yellowtail]

On 7/9/2021 at 10:53 AM, Thomas J said:

That just seems strange.  If I own a business with another person and it has a building and the building is sold, I am entitled as one of the owners to my share of the proceeds. 

If you own shares in Amazon, and they sell one of their properties, are you entitled to you share of the proceeds? 

 

No. You are only entitled the whatever the current share value is, and whatever dividends (if any) are paid. 

[Thomas J]

1 hour ago, Yellowtail said:

If you own shares in Amazon, and they sell one of their properties, are you entitled to you share of the proceeds? 

 

No. You are only entitled the whatever the current share value is, and whatever dividends (if any) are paid. 

That is an apples to oranges comparison.  If the Thai company here continued to operate then I would agree with you. 

However, this is what I posted. I specifically said, if the company was dissolved.  If I was an owner of shares in Amazon if it was dissolved or sold, I would be entitled to my proportionate share of the proceeds. 

What happens to the minority shareholders in a company when a company is dissolved and the home sold?

 

[Yellowtail]

38 minutes ago, Thomas J said:

That is an apples to oranges comparison.  If the Thai company here continued to operate then I would agree with you. 

However, this is what I posted. I specifically said, if the company was dissolved.  If I was an owner of shares in Amazon if it was dissolved or sold, I would be entitled to my proportionate share of the proceeds. 

What happens to the minority shareholders in a company when a company is dissolved and the home sold?
 

 

It is not. It is an accurate comparison, and what I was responding to was when you claimed:

 

"If I own a business with another person and it has a building and the building is sold, I am entitled as one of the owners to my share of the proceeds."

 

Clear now? You own shares in a company, the company has value, you are entitled to the portion of that value represented by your shares. The company directors can sell a property and throw a party with the proceeds if it wants to. 

 

[Thomas J]

16 minutes ago, Yellowtail said:

"If I own a business with another person and it has a building and the building is sold, I am entitled as one of the owners to my share of the proceeds."

That was poorly stated by me.  The intent was as described in the original post and the quote was with the mindset that the building sold was its only asset and the business was dissolved.  As a continuing business the proceeds from the sale in any asset merely get transferred on the books.  Instead of carrying the building as an asset the proceeds from the sale are deposited into the corporate bank account.  However, my original query was what happens upon dissolution of the company.  I suspect but don't know that the foreign majority shareholder "loans" money to the company to purchase the home and that forms the capital in the Thai company.  The other possibility is that the foreign owner never actually sells the home but rather their shares in the company and the new owner becomes the managing shareholder. 

[Yellowtail]

2 minutes ago, Thomas J said:

That was poorly stated by me.  The intent was as described in the original post and the quote was with the mindset that the building sold was its only asset and the business was dissolved.  As a continuing business the proceeds from the sale in any asset merely get transferred on the books.  Instead of carrying the building as an asset the proceeds from the sale are deposited into the corporate bank account.  However, my original query was what happens upon dissolution of the company.  I suspect but don't know that the foreign majority shareholder "loans" money to the company to purchase the home and that forms the capital in the Thai company.  The other possibility is that the foreign owner never actually sells the home but rather their shares in the company and the new owner becomes the managing shareholder. 

How would any corporation be dissolved? 

 

I doubt a foreign national not operating a legal loan business in Thailand would be able to hold a lean on a corporation for a loan. 

 

Keep in mind, the whole company owning a residence scheme designed to circumvent the spirit of the law. 

 

 

 

 

[Thomas J]

2 hours ago, Yellowtail said:

How would any corporation be dissolved? 

 

I doubt a foreign national not operating a legal loan business in Thailand would be able to hold a lean on a corporation for a loan. 

 

Keep in mind, the whole company owning a residence scheme designed to circumvent the spirit of the law. 

You misunderstood.  Lets say I am a foreigner and want to own a home.  I form a corporation and have 49% of the stock.  The Thai's have 51%.  Now, the corporation has to have "capital" from someplace.  So the owner LOANS THE COMPANY not the other way around.  The balance sheet would show the home purchased with the loan proceeds as an asset.  On the liability side of the balance sheet would be a loan owed to the foreigner.   The two would offset each other. 

Now back to dissolving a company.  You have a corporation here in Thailand and the foreign owner dies.  Whatever pretense was used to purchase the home as a "business activity" no longer exists.  If you did not sell the home and distribute the proceeds to the shareholders after paying off any debts of the company, the company would just continue to exist and the home would just sit there.  

Now, as said, I am guessing that the lawyers drafting the document have two ways around that.  The first being a loan from the owner to the business which would have to be paid back out of the proceeds of the sale of the home.  I think that is probably not the number 1 choice since the home "may" have appreciated in value beyond the loan amount.  The second choice would be for the heirs to inherit the stock in the Thai company and sell their "stock" to the new home owner and the company would continue.  

However, companies do in fact liquidate and dissolve all the time and then they cease to be a legal entity and any governmental reporting due from a corporation stops. 


 

[Yellowtail]

13 hours ago, Thomas J said:

You misunderstood.  Lets say I am a foreigner and want to own a home.  I form a corporation and have 49% of the stock.  The Thai's have 51%.  Now, the corporation has to have "capital" from someplace.  So the owner LOANS THE COMPANY not the other way around.  The balance sheet would show the home purchased with the loan proceeds as an asset.  On the liability side of the balance sheet would be a loan owed to the foreigner.   The two would offset each other. 

Now back to dissolving a company.  You have a corporation here in Thailand and the foreign owner dies.  Whatever pretense was used to purchase the home as a "business activity" no longer exists.  If you did not sell the home and distribute the proceeds to the shareholders after paying off any debts of the company, the company would just continue to exist and the home would just sit there.  

Now, as said, I am guessing that the lawyers drafting the document have two ways around that.  The first being a loan from the owner to the business which would have to be paid back out of the proceeds of the sale of the home.  I think that is probably not the number 1 choice since the home "may" have appreciated in value beyond the loan amount.  The second choice would be for the heirs to inherit the stock in the Thai company and sell their "stock" to the new home owner and the company would continue.  

However, companies do in fact liquidate and dissolve all the time and then they cease to be a legal entity and any governmental reporting due from a corporation stops. 


 

You misunderstood.