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

[Thomas J]

2 hours ago, Yellowtail said:

You misunderstood. 

I can tell you how it works but obviously can't make you understand how corporations work. 

[donx]

@Thomas J,

 

In your original post, you claimed that the company is dissolved when either the foreign owner dies or the property is sold.

 

My claim is that the company is not dissolved by either of these events. Why do you continue to assert that the company is dissolved by these events? It is my understanding that there is a specific process that needs to be followed - and paid for - in order to dissolve the company.

 

I'll let other correct me if what I say is incorrect.

 

[Yellowtail]

34 minutes ago, donx said:

@Thomas J,

 

In your original post, you claimed that the company is dissolved when either the foreign owner dies or the property is sold.

 

My claim is that the company is not dissolved by either of these events. Why do you continue to assert that the company is dissolved by these events? It is my understanding that there is a specific process that needs to be followed - and paid for - in order to dissolve the company.

 

I'll let other correct me if what I say is incorrect.

 

 

You can tell him how it works but obviously you can't make him understand how corporations work. 

 

He already knows everything he ever will....

[scubascuba3]

I still haven't seen an answer to the Ops original question, which is why I'd avoid these dodgy thai companies with a barge pole

[whiteman]

One day the sky will fall on all theses dodgy House and Land ownership SCAMS,  Maybe sooner than you think with this government looking for any way to get money to prop up Thailand's failing economy due to this virous. Stranger things have happen in Thailand before. Remember we are only visitors here in there eyes no matter how much one spends a year here.

[Thomas J]

10 hours ago, donx said:

In your original post, you claimed that the company is dissolved when either the foreign owner dies or the property is sold.

 

My claim is that the company is not dissolved by either of these events. Why do you continue to assert that the company is dissolved by these events? It is my understanding that there is a specific process that needs to be followed - and paid for - in order to dissolve the company.

 

I'll let other correct me if what I say is incorrect.

You read  the post backwards.  I said if the company is dissolved and the home is sold not the other way around. I said nothing in the original post about the person dying, although that would be an event that would likely trigger the heirs to want to liquidate the home.  People don't live forever so eventually the home has to be sold and if the home is in the name of the corporation, all of the shareholders have a percentage ownership of that asset. 

 The post was intended to get the answer as to how when a foreign owner sets up a company and the home is eventually sold how the foreign owner receives the proceeds without having to share any of the proceeds with the other Thai shareholders. 

I suppose the foreign owner being the managing director could just sell the home, pocket the proceeds and not pay the minority shareholders anything and there likely would be no consequences since they probably don't even know about the home.  From a legal standpoint, these people are shareholders.  If the home is sold but the company not dissolved, the proceeds from the sale legally should remain in the bank account belonging to the company.  Not the persons personal bank account.  If the company is dissolved, all of the assets are then distributed to the shareholders.  Now I am certain that the lawyers who set up these companies foresaw that and have incorporated some way that only the foreign owner gets the proceeds and I am just wondering what that might be. 

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

Edited July 13, 2021 by Thomas J

[Yellowtail]

23 minutes ago, Thomas J said:

People don't live forever so eventually the home has to be sold and if the home is in the name of the corporation, all of the shareholders have a percentage ownership of that asset.

This simply is not true. You are convinced it is, but you are wrong.

 

23 minutes ago, Thomas J said:

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

 

The assets are sold off and distributed prior to the dissolution of the corporation. The company holds no assets at the time it is dissolved, so there is nothing to distribute. 

 

If you hold stock in a company when it goes through chapter seven bankruptcy, you do not get a share of the assets. The stock value goes to zero and you get nothing.

[Surelynot]

2 minutes ago, Yellowtail said:

The assets are sold off and distributed prior to the dissolution of the corporation

To whom?......creditors presumably.......and any residual will surely then go to the shareholders..... pro rata.

[Thomas J]

Just now, Yellowtail said:

This simply is not true. You are convinced it is, but you are wrong.

Which part of "if" the company is dissolved don't you understand.   When a company is dissolved the assets are sold and the proceeds distributed.   I did not say that upon a sale that a company is automatically dissolved.  Perhaps the company sold the home and purchased a new one and the company continues.  However if the company and I repeat IF the company is dissolved, the shareholders are suppose to receive their proportionate amount of the liquidated assets.  Now with that said, there must be some way in Thailand that lawyers are protecting the foreign owner from having to share those proceeds. 

 

[Thomas J]

3 minutes ago, Surelynot said:

To whom?......creditors presumably.......and any residual will surely then go to the shareholders..... pro rata.

Yes, somehow there are people here who are confusing voting rights with shareholder ownership.  Yes the managing partner really controls the corporation.  However he/she only owns 49% of the shares.  So from a legal standpoint he/she owns 49% of the assets of the company.   If a property is sold lets say the company has 5 homes well the proceeds go into the corporate bank account and everything stays the same.  The same would be true if all 5 properties were sold.  However lets be practical.  The majority of the company owned properties are just a single home occupied by the foreign owner.  Eventually that owner will die or perhaps sell  and get their money back.  So long as the company exists no distribution would have to be made.  However in the case of the death of the foreign owner, the heirs would receive his/her shares in the company.  I suspect they would not want to continue with the company and want it dissolved.  If they did, the minority shareholders would be entitled to their portion. 

Now perhaps there are ways around that.  That is what this post was asking yet others keep digressing.  Perhaps the foreign owner capitalizes the business by "loaning" money to the corporation.  When the company is dissolved the loan is paid back and the foreigner gets the money.  Perhaps, the company is never liquidated. The foreign owner does not "sell" the house, but sells the company and the new owner gets the house that is one of the assets of the company.  

I don't know that is why I asked the question.  But for those who somehow think that minority shareholders are just names on a piece of paper, they are wrong. 

[Yellowtail]

7 minutes ago, Surelynot said:

To whom?......creditors presumably.......and any residual will surely then go to the shareholders..... pro rata.

Shareholders generally get nothing.

 

But it's not really like a bankruptcy, the assets are all sold off and the fund's distributed legally however the board sees fit.

 

Again, at the time of the dissolution, the company has no real value, so there is nothing to distribute.  

[Surelynot]

2 minutes ago, Yellowtail said:

and the fund's distributed legally however the board sees fit.

But legally the only recipients would be creditors......let's say there are none.......what do you imagine happens to the assets then?

[Yellowtail]

6 minutes ago, Thomas J said:

Yes, somehow there are people here who are confusing voting rights with shareholder ownership.  Yes the managing partner really controls the corporation.  However he/she only owns 49% of the shares.  So from a legal standpoint he/she owns 49% of the assets of the company.   If a property is sold lets say the company has 5 homes well the proceeds go into the corporate bank account and everything stays the same.  The same would be true if all 5 properties were sold.  However lets be practical.  The majority of the company owned properties are just a single home occupied by the foreign owner.  Eventually that owner will die or perhaps sell  and get their money back.  So long as the company exists no distribution would have to be made.  However in the case of the death of the foreign owner, the heirs would receive his/her shares in the company.  I suspect they would not want to continue with the company and want it dissolved.  If they did, the minority shareholders would be entitled to their portion. 

Now perhaps there are ways around that.  That is what this post was asking yet others keep digressing.  Perhaps the foreign owner capitalizes the business by "loaning" money to the corporation.  When the company is dissolved the loan is paid back and the foreigner gets the money.  Perhaps, the company is never liquidated. The foreign owner does not "sell" the house, but sells the company and the new owner gets the house that is one of the assets of the company.  

I don't know that is why I asked the question.  But for those who somehow think that minority shareholders are just names on a piece of paper, they are wrong. 

If the company were in debt, would the shareholders be "entitled to their share" of the debt? No.

 

 

[Thomas J]

4 minutes ago, Yellowtail said:

If the company were in debt, would the shareholders be "entitled to their share" of the debt? No.

You are wrong.  You obviously are not acquainted with how corporations work.  Even assuming that the company was in debt, this is a corporation.  Shareholders in a corporation are not "personally" responsible for the debt.  Shareholders can only lose whatever "equity" they have in the corporation.  In the case of the Thai minority shareholders they put nothing in so they can not lose anything. 

Here is from Siam Legal with a section talking about liquidating a company. Notice it says that any leftover assets will be distributed average returned.  So if I own 25% of the company I get 25% of whatever is left over.  Again to repeat that is the law but there must be some way the Thai lawyers are getting around the reality of ever having to give the Thai minority shareholder anything. 









https://www.siam-legal.com/Business-in-Thailand/company-dissolution-thailand.php

[Yellowtail]

2 minutes ago, Surelynot said:

But legally the only recipients would be creditors......let's say there are none.......what do you imagine happens to the assets then?

Again, it's not really like a bankruptcy, the assets are all sold off and the fund's distributed legally however the board sees fit while the company is still viable. If the board sees fit to give the proceeds of the sale to the director it can. This is done prior to the dissolution of the company. 

 

The shareholders are (likely) all board members and the MD will have their proxy, so the vote will be unanimous. 

 

Again, at the time of the dissolution, the company has no real value, so there is nothing to distribute. 

 

I would never enter into this type of scheme, and I would advise anyone against entering doing it. It is a vehicle designed to circumvent the spirit of the law and as such it is subject to change at any time.

 

It is also worth noting that as long as the company is active, it has to be audited each year and has to hold several board meetings each year, with minutes taken, signed and approved. The fees associated with doing this can be significant. 

 

[Thomas J]

21 minutes ago, Yellowtail said:

Shareholders generally get nothing.

 

But it's not really like a bankruptcy, the assets are all sold off and the fund's distributed legally however the board sees fit.

 

Again, at the time of the dissolution, the company has no real value, so there is nothing to distribute.  

You really don't have any clue how companies work do you.  The fact that a company may be bankrupt and has no assets means that shareholders get nothing.  However using the example of a Thai company with a single family home that is sold that has value and the money from the sale of it would be an asset of the company.  When and IF I repeat IF the company was dissolved, the money gets distributed.  In a corporation whether here in the USA or Europe or anywhere else any distribution of assets goes pro-rata to the shareholders.  If I own 10% of the shares I get 10% of the distribution.  If I own 51% of the shares I get 51% of the distribution.   You can not just say " oh these are a sham" and I am the foreigner owning 49% of the shares so I will take all the money and you get nothing.  Perhaps that is done, but that is not legally correct.  

To repeat ad nauseum the Thai lawyers must have figured out a way around this.  Perhaps it is that houses are never sold, but "companies" are sold and the home is an asset of the company. 

[Yellowtail]

6 minutes ago, Thomas J said:

 

 

And yet again, at the time the company is dissolved, it has no value. All of the assets have been disposed of and the proceeds distributed long before the company is dissolved.

[Thomas J]

4 minutes ago, Yellowtail said:

Again, it's not really like a bankruptcy, the assets are all sold off and the fund's distributed legally

Yes you got that right.  Assets sold and funds distributed.  Assuming no other provisions were made those "legally distributed" would be pro rata based on the percentage of shares owned. 

 

[Yellowtail]

1 minute ago, Thomas J said:

Yes you got that right.  Assets sold and funds distributed.  Assuming no other provisions were made those "legally distributed" would be pro rata based on the percentage of shares owned. 

 

Again, the distribution is made with the approval of the board PRIOR to the dissolution, not at the time of the dissolution. 

 

[Thomas J]

Just now, Yellowtail said:

And yet again, at the time the company is dissolved, it has no value. All of the assets have been disposed of and the proceeds distributed long before the company is dissolved.

Again you are clueless.  If I dissolve a company does not make it bankrupt.  A company may just wish to no longer be in business.  There is a difference between dissolution and bankruptcy.   Taking foreigners out of the equation.  If I am Thai and have a company and it has a building, trucks, machinery, equipment and accounts receivable.  I am now retiring and I no longer want to maintain the company.  The company is dissolved, meaning I sell all the assets, and file to dissolve the company which removes it from any audit and other reporting requirements.  

The same would be true for the foreign owner.  The dissolution of a company does not mean the company is insolvent. Quite the opposite with the case of the a foreigner owning a home.  It would be impossible for the company to go bankrupt. 

 

[Yellowtail]

7 minutes ago, Thomas J said:

You really don't have any clue how companies work do you.

How many companies in Thailand have you set up and managed?

 

How many boards have you been on?

[Thomas J]

1 minute ago, Yellowtail said:

Again, the distribution is made with the approval of the board PRIOR to the dissolution, not at the time of the dissolution. 

Again you are clueless.  If and I repeat for the umpteenth time that IF and I repeat IF the company is dissolved that is an action of the board.  The board can not disenfranchise the minority shareholders. 

[Thomas J]

Just now, Yellowtail said:

How many companies in Thailand have you set up and managed?

 

How many boards have you been on?

I have owned 4 companies. Not in Thailand but the laws if you bothered to read are the same. 

How many companies have you owned.  It is obvious you are totally clueless not understanding the difference between dissolution and insolvency. 

 

[Yellowtail]

1 minute ago, Thomas J said:

I have owned 4 companies. Not in Thailand but the laws if you bothered to read are the same. 

How many companies have you owned.  It is obvious you are totally clueless not understanding the difference between dissolution and insolvency. 

 

How many shareholders did your companies have? 

 

I've never owned a company in Thailand either, but I did start-up a BOI registered company in Thailand for a US company and was the Managing Director for twenty years before retiring a couple years ago. 

 

 

 

 

 

 

[Thomas J]

6 minutes ago, Yellowtail said:

How many shareholders did your companies have?

You seem to be of the opinion that minority shareholders are merely there for decoration.  

When a corporation is formed shares of stock are issued.  Normally those shares are sold and the proceeds becomes the capital of the business.  In privately held companies shares are typically awarded.  That would be the case of the ruse used to allow a foreigner to own property here in Thailand.  Lets say it is 100 shares.  The foreign owner gets 49% and is the managing owner.  The other 51% are divided between the two or more Thai owners. 

Now somehow "capital" is injected into the company.  Perhaps the company takes out a loan between the company and the foreign owner.  The cash becomes an asset, and the loan a liability.  The company then uses that cash to buy the home and the home replaces the cash as an asset on the books. 

Now perhaps, everyone just forgets the legal aspect of this, the home is sold the foreign owner pockets the cash and goes back to his/her home country and the company is never dissolved and the foreign shareholders are left with nothing which is fine with them since they put nothing in and got some baht to put their names on a piece of paper that they didn't have a clue what they were signing. 

That however is not proper.  If properly done the home would be sold, the proceeds deposited into the corporate bank account, and the board would vote to dissolve the company, file the required forms with the Thai government and distribute the proceeds.  Absent any other methodology that distribution should be made pro-rata with the foreign owner getting 49% of the proceeds and the Thai owners 51%.  

I am sure that is not the case.  Perhaps company owned "homes" are never sold.  When the foreign owner wishes to sell, they sell their shares in the company and the home of course comes with it. 

But you are totally and completely wrong about how corporations are suppose to work and you can have a completely solvent company who decides to go out of business.  If that company is set up as a corporation the proceeds go to the shareholders pro-rata.  Even in a bankruptcy the shareholders get whatever is left over after all creditors have been satisfied. 

[Yellowtail]

10 minutes ago, Thomas J said:

You seem to be of the opinion that minority shareholders are merely there for decoration.

I'll take that as a none, that your companies had no shareholders, much like my lawncare and shoeshine businesses. 

 

10 minutes ago, Thomas J said:

When a corporation is formed shares of stock are issued.  Normally those shares are sold and the proceeds becomes the capital of the business.  In privately held companies shares are typically awarded.  That would be the case of the ruse used to allow a foreigner to own property here in Thailand.  Lets say it is 100 shares.  The foreign owner gets 49% and is the managing owner.  The other 51% are divided between the two or more Thai owners. 

Correct

 

10 minutes ago, Thomas J said:

Now somehow "capital" is injected into the company.  Perhaps the company takes out a loan between the company and the foreign owner.  The cash becomes an asset, and the loan a liability.  The company then uses that cash to buy the home and the home replaces the cash as an asset on the books. 

Correct

 

10 minutes ago, Thomas J said:

Now perhaps, everyone just forgets the legal aspect of this,

Incorrect. The "legal aspect" is more important than ever.

 

10 minutes ago, Thomas J said:

the home is sold the foreign owner pockets the cash and goes back to his/her home country

Incorrect. The asset is sold and the proceeds go into the company book. The company then distributes the funds to the MD.

 

10 minutes ago, Thomas J said:

and the company is never dissolved and the foreign shareholders are left with nothing which is fine with them since they put nothing in and got some baht to put their names on a piece of paper that they didn't have a clue what they were signing. 

Incorrect. The company, while still viable although holding no value and having no value is legally dissolved. 

 

10 minutes ago, Thomas J said:

That however is not proper.  If properly done the home would be sold, the proceeds deposited into the corporate bank account, and the board would vote to dissolve the company, file the required forms with the Thai government and distribute the proceeds.  Absent any other methodology that distribution should be made pro-rata with the foreign owner getting 49% of the proceeds and the Thai owners 51%. 

Incorrect. If properly done, the asset would be sold and the proceeds deposited into the corporate account. The board would then vote to distribute the proceeds to the MD. 

 

Only after the the assets are disposed of and the funds distributed would the board vote to dissolve the comapany.

 

10 minutes ago, Thomas J said:

I am sure that is not the case.  Perhaps company owned "homes" are never sold.  When the foreign owner wishes to sell, they sell their shares in the company and the home of course comes with it.

Correct. What you describe is not the case. 

 

10 minutes ago, Thomas J said:

But you are totally and completely wrong about how corporations are suppose to work

We are not talking about how corporations are supposed to work. We are talking about how corporation are used to circumvent the spirit of the law.

 

10 minutes ago, Thomas J said:

and you can have a completely solvent company who decides to go out of business. 

Correct

 

10 minutes ago, Thomas J said:

If that company is set up as a corporation the proceeds go to the shareholders pro-rata.  Even in a bankruptcy the shareholders get whatever is left over after all creditors have been satisfied. 

Except in a case such as this, where the assets have all been disposed of and the funds all distributed prior to the dissolution of the company. 

[Thomas J]

1 minute ago, Yellowtail said:

Except in a case such as this, where the assets have all been disposed of and the funds all distributed prior to the dissolution of the company. 

Again sure the foreigner could sell the home and just send the money to himself.  If any monies are distributed from a company as part of a liquidation/dissolution they legally are suppose to go to the shareholders pro-rata.   That is not to say that the foreigner could not just sell the home, and pocket the money.  That however does not make it legal.  

Using the example of three Thai's forming a company to buy a home and rent it.  One has a 49% ownership share and the other two the remaining 51%.  Are you suggesting the shareholder that controls the vote can just "legally' sell the home pocket the proceeds and give the minority shareholders nothing.  No different if Thai owners or foreign owner.  Corporations are corporations. 

[Thomas J]

8 minutes ago, Yellowtail said:

I'll take that as a none, that your companies had no shareholders, much like my lawncare and shoeshine businesses. 

 

No by law each corporation had to have shareholders.  I had one C corporation that was required to have two shareholders.  I had three.  I suspect your businesses were Sub Chapter S  which means you did not have to have other shareholders.  

That is not the case in Thailand.  Minimum 3 shareholders and foreigner can not own more than 49%. 

 

Edited July 13, 2021 by Thomas J

[scubascuba3]

1 hour ago, Thomas J said:

You really don't have any clue how companies work do you.  The fact that a company may be bankrupt and has no assets means that shareholders get nothing.  However using the example of a Thai company with a single family home that is sold that has value and the money from the sale of it would be an asset of the company.  When and IF I repeat IF the company was dissolved, the money gets distributed.  In a corporation whether here in the USA or Europe or anywhere else any distribution of assets goes pro-rata to the shareholders.  If I own 10% of the shares I get 10% of the distribution.  If I own 51% of the shares I get 51% of the distribution.   You can not just say " oh these are a sham" and I am the foreigner owning 49% of the shares so I will take all the money and you get nothing.  Perhaps that is done, but that is not legally correct.  

To repeat ad nauseum the Thai lawyers must have figured out a way around this.  Perhaps it is that houses are never sold, but "companies" are sold and the home is an asset of the company. 

Houses\condos do get sold, i bought one from thai company ownership to foreign quota. I heard there is a 2nd real structure\contract that supercedes these dodgy 49\51 structures

[Yellowtail]

23 minutes ago, Thomas J said:

Again sure the foreigner could sell the home and just send the money to himself. 

They can only do this legally with approval of the board.

 

23 minutes ago, Thomas J said:

If any monies are distributed from a company as part of a liquidation/dissolution they legally are suppose to go to the shareholders pro-rata.   That is not to say that the foreigner could not just sell the home, and pocket the money.  That however does not make it legal.  

Again ad-nauseum, the funds are not distributed as part of a liquidation/dissolution, but rather as the day to day workings of an ongoing business. 

 

23 minutes ago, Thomas J said:

Using the example of three Thai's forming a company to buy a home and rent it.  One has a 49% ownership share and the other two the remaining 51%.  Are you suggesting the shareholder that controls the vote can just "legally' sell the home pocket the proceeds and give the minority shareholders nothing.  No different if Thai owners or foreign owner.  Corporations are corporations. 

The three Thais in your example would be on the board and would likely not vote for this , BUT in the event did want vot to give away their money they could.

 

A board vote is different from a shareholder vote.