Thai Company Route - Capital Structure

[mrmagyar]

Does anyone what the typical capital structure looks like for a Thai company setup for owning land?

 

Obviously we all know that it's against the law to use nominee shareholders or such a structure solely for the means of allowing a foreigner to own land. However, it remains common.

 

In such a structure, if one was to setup a Thai company with a couple of friendly Thai shareholders for this purpose is the usual procedure to put in a minimum amount of share capital and then the foreigner would loan the company money to buy land and build?

 

Obviously it makes a difference what that capital structure looks like in the event that relations soured with the Thai partners and suchlike.

Thanks

[YaDongImproved]

It's not about the capital. It's rare for the Land Department to check a company's capital. I've seen instances where suspicion arose if a 1 million baht company purchased a 10 million baht property. However, legally, a company can borrow funds, so this isn't a hindrance. Between 20 baht and 5 million baht capital registered, there aren’t many difference but according to the law, 25% must be paid up (clause 1105 of the commercial and civil code)

 

The Land Department is wary of foreign involvement in companies. They know foreigners setup company to own properties on their behalf. any reputable law firm should warn you and offer your lease, usufruct, sap ing sith, or other ways. But you decide.
 

Often, it's preferable to initially transfer property to a company wholly owned by Thais, and then change the shareholders and directors later. It's important to note that using nominees is illegal, but this is a common practice. You want less scrutiny so you start with Thai people.

 

For foreigners, the company's structure is crucial. Establishing preferred shares is key, allowing a minority of shares to control a majority of votes. It's simpler to set this up at the start than to modify it later, which might involve adjusting the capital to create new shares and can be time-consuming.

 

I can offer through ThaiLawOnline some services to establish a company with preferred shares, translate primary documents, assist with bank accounts, and register VAT. However, we do not provide nominees. We help clients set up companies as per their wishes. 

 

I recommend that foreigners hold normal shares and Thais have preferred shares, with the latter requiring 10 shares per vote. Normal shares operate on a one-share, one-vote basis. This arrangement gives foreigners more votes with normal shares and doesn't appear as an attempt to circumvent the system.

[mrmagyar]

On 12/22/2023 at 3:09 AM, YaDongImproved said:

It's not about the capital. It's rare for the Land Department to check a company's capital. I've seen instances where suspicion arose if a 1 million baht company purchased a 10 million baht property. However, legally, a company can borrow funds, so this isn't a hindrance. Between 20 baht and 5 million baht capital registered, there aren’t many difference but according to the law, 25% must be paid up (clause 1105 of the commercial and civil code)

 

The Land Department is wary of foreign involvement in companies. They know foreigners setup company to own properties on their behalf. any reputable law firm should warn you and offer your lease, usufruct, sap ing sith, or other ways. But you decide.
 

Often, it's preferable to initially transfer property to a company wholly owned by Thais, and then change the shareholders and directors later. It's important to note that using nominees is illegal, but this is a common practice. You want less scrutiny so you start with Thai people.

 

For foreigners, the company's structure is crucial. Establishing preferred shares is key, allowing a minority of shares to control a majority of votes. It's simpler to set this up at the start than to modify it later, which might involve adjusting the capital to create new shares and can be time-consuming.

 

I can offer through ThaiLawOnline some services to establish a company with preferred shares, translate primary documents, assist with bank accounts, and register VAT. However, we do not provide nominees. We help clients set up companies as per their wishes. 

 

I recommend that foreigners hold normal shares and Thais have preferred shares, with the latter requiring 10 shares per vote. Normal shares operate on a one-share, one-vote basis. This arrangement gives foreigners more votes with normal shares and doesn't appear as an attempt to circumvent the system.

Thank you @YaDongImproved