Nominee Shareholder Dies - What Then?

[dsfbrit]

Can someone tell what happens to the shares of a Nominee shareholder in the case a Nominee shareholder dies?

Can they just 'will' the shareholding to another Thai, or does there need to be a shareholders meeting and a new person appointed formally??

In any case - the un-dated pre-written letters that all us 'landowners' have from the current Nominees, transferring their shares, will become useless at this point.

It has concerned me for some time, but I wasn't going to bother looking into this issue until the new FBA was implemented.

Edited August 14, 2007 by dsfbrit

[dsfbrit]

[no new shareholder can take over. the share certificates and the blank share transfer document are in YOUR hands and YOU appoint the new shareholder.

Thanks for that Dr Naam. That's actually encouraging news.

Edited August 14, 2007 by dsfbrit

[fletchsmile]

- A nominee shareholder dies - the new shareholder takes over - then what - I have undated letters from the original nominee shareholder only!!

no new shareholder can take over. the share certificates and the blank share transfer document are in YOUR hands and YOU appoint the new shareholder.

Thanks for that Dr Naam. That's actually encouraging news.

Don't forget that the signed undated transfers you have are illegal. They are there to by-pass laws. While under usual circumstances they offer some "protection", don't forget it's "illegal protection". consider the following:

1) If you suddenly decide to lodge them after someone's death, but back date them, that would look extremely suspicious. Particularly if someone tried to check the transfer with the "old" (now deceased) shareholder; or if someone else who was aggrieved flagged it to the authorities that the old shareholder had died, eg someone to inherit under a will flagged the timing. Someone who would inherit under a will has done nothing wrong and has nothing to lose in challenging you.

2) If you have good relations, then the person who has signed undated, would sign anyway at the appropriate time. It is only in difficult times, or times of disagreement that you would tend to have an "advantage" or "protection" with undated docs. Again the nominee could flag to the authorities that these were held as undated and unsigned. Maybe it's difficult to prove, and both parties are equally fraudulent. (Penalties are BTW the same for both, including up to 3 years jail). While there is some incentive for the nominee not to expose you to the authorities, imagine a desperate nominee with nothing to lose, or someone well connected. All they need to do is raise the issue and you are both in trouble. Someone with nothing to lose could say they were "co-erced", "didn't understand" and may get away with it. Someone with connections might get away with it. Will you?

My advice. Don't use nominees it's illegal. Change your structure to something legal.

Edited August 14, 2007 by fletchthai68

[dsfbrit]

Don't forget that the signed undated transfers you have are illegal. They are there to by-pass laws. While under usual circumstances they offer some "protection", don't forget it's "illegal protection". consider the following:

1) If you suddenly decide to lodge them after someone's death, but back date them, that would look extremely suspicious. Particularly if someone tried to check the transfer with the "old" (now deceased) shareholder; or if someone else who was aggrieved flagged it to the authorities that the old shareholder had died, eg someone to inherit under a will flagged the timing. Someone who would inherit under a will has done nothing wrong and has nothing to lose in challenging you.

2) If you have good relations, then the person who has signed undated, would sign anyway at the appropriate time. It is only in difficult times, or times of disagreement that you would tend to have an "advantage" or "protection" with undated docs. Again the nominee could flag to the authorities that these were held as undated and unsigned. Maybe it's difficult to prove, and both parties are equally fraudulent. (Penalties are BTW the same for both, including up to 3 years jail). While there is some incentive for the nominee not to expose you to the authorities, imagine a desperate nominee with nothing to lose, or someone well connected. All they need to do is raise the issue and you are both in trouble. Someone with nothing to lose could say they were "co-erced", "didn't understand" and may get away with it. Someone with connections might get away with it. Will you?

My advice. Don't use nominees it's illegal. Change your structure to something legal.

I agree with all you say. The point is I made a mistake 4 years ago (like many others over the years), setting up this company to buy the land and house. I have consdered the 'legal' options you mention of 30 year lease or Usufruct to continue living here for the foreseeable future.

Both of these have their drawbacks. Including:

1. I cannot sell and move elsewhere if I want to - as in fact I am only a glorified tenant.

2. Divorce is possible over the next 30 years.

3. Death of my wife is possible over the next 30 years.

I would not want to continue living here in either of cases 2 or 3.

Sure in case 3 if my wife dies, then she could 'will' the land to me - more likely it would go to her family - groan!

In the case of 2, well I may just as wll pack up and leave anyway.

So looking at all the scenarios, the company route is still the best route for me.

I have total control over the land and house.

As for 'illegal'. I have come to realise more and more that 'illegal' in Thailand is not the same as we farangs are used to.

Let's face it, all this fuss over the FBA is just a smokescreen.

Anytime over the last year, the government could have picked on just one Thai Law office that has these Nominee companies and raided it. It could simply have chosen one office at random - or to get 'real bang for the buck' they could have raided a chum of Thaksin.

See the headlines 'Crackdown on Thaksin Accomplices' - it hasn't happened.

To my knowledge there has not been one investigation of anyone like me. I am sure if there had been then the flamers and 'I told you so brigade' would have been out in force.

So for now I think it is best - and I would advise anybody else in my situation - to wait and see and continue learning about all the issues involved.

But hey - its a personal decision and I fortunately followed the golden rule in Thailand of 'not bringing more into Thailand than I can afford to walk away from', so I have great sympathy for those who are in a worse position than me in all this.

[fletchsmile]

Think it's an interesting topic. We all make mistakes now and again. As you say attitudes to illegailty and repercussions are different in Thailand. You also hit the nail on the head when you say it's personal choice.

For what it's worth, I personally choose to try and live by the same standards wherever I am in the world. Try being the key. Sure I could get away with bending rules or go unnoticed, but it's not who I am, and I'm lucky to have what I do in life, so why risk it? The most important things in life for me I don't have to bend the rules anyway.

Taking a step further. In your situation, my personal choice would be: put the land in my wife's name one way or another, make a will, and get rid of the nominees ASAP.

2) For divorce, under Thai law your wife would be entitled to half of the assets you have in Thailand since you got married. That probably includes your company anyway

3) For death, make a will for your wife and you do one at the same time to ensure she is protected if anything happens to you.

On putting land in your wife's name - one way or another:

A/ company sells/transfers land to your wife and you get the property. Wind up the company. Make a lease or have a usufruct. Only risk is divorce, as mentioned she'd get 50/50 anyway, now you have property and she land = similar

B/ do share transfers from nominee to your wife's name. Then there are no nominees. Just husband and wife owning a company. Think you need 5 other shareholders with minor holdings. But majority is now Thai owned. If she has say 60 and you 40, that's again similar to 50/50. You can probably do this while thinking which is the next step to do

C/ Combination of A/ and B/ Put property in your name. Leave land in company with your wife replacing nominee. You now have 100% property, 40% land.

Not sure if B/ and C/ work fully but they have got to be better and more legal than nominees. A husband and wife owning a company above board has to be better than undated illegal papers

Then make a will.

All options are ones I'd consider. Then run by a good lawyer. I could be wrong but none of these puts you at risk of 3 years jail when in place

Edited August 15, 2007 by fletchthai68

[dsfbrit]

Thanks for the reply. Sadly over the last year I have investigated these options.

For what it's worth, I personally choose to try and live by the same standards wherever I am in the world. Try being the key. Sure I could get away with bending rules or go unnoticed, but it's not who I am, and I'm lucky to have what I do in life, so why risk it? The most important things in life for me I don't have to bend the rules anyway.

Me too - I took advice from a lot of people before setting up the company some years ago. I have posted on this before so won't go into it all again. Funnily enough, the same groups that actualy had speakers explaining about this ‘common accepted practise’ in 2002 (ie: Pattaya Expats Club) are now some of the loudest voices against this practise!

There also used to be a massive sign up on the road into Pattaya a few years back that read “Foreigners CAN own land’

Taking a step further. In your situation, my personal choice would be: put the land in my wife's name one way or another, make a will, and get rid of the nominees ASAP.

–

Agreed - My wife has a Will, I have a Will for my assets in the UK and a separate Will for my assets in Thailand. Who would the nominees be ? - they would not have the money to buy the shares so would be as illegal as the current set-up. I would not really want any of my wife's relatives - a couple are OK - certainly not her father

2) For divorce, under Thai law your wife would be entitled to half of the assets you have in Thailand since you got married. That probably includes your company anyway

I have a pre-nup that states my wife will get 50 percent of all my assets in Thailand only. Most of my assets are off-shore. The company would actually only be shared out as a combined percentage of my stake in it and hers, or a formula based on the amount of shares we own combined – it would not include the Nominee shareholding. It’s a messy formula, but I would give her 50 percent of everything anyway – fairs fair and all that.

3) For death, make a will for your wife and you do one at the same time to ensure she is protected if anything happens to you.

Agreed - Done that. The trouble is if the marriage hits a rocky patch in the next 30 years – quite likely for most people I would say – she could easily change the Will and leave everything to her family!! Its easy to change a Will isn’t it!

On putting land in your wife's name - one way or another:

A/ company sells/transfers land to your wife and you get the property. Wind up the company. Make a lease or have a usufruct. Only risk is divorce, as mentioned she'd get 50/50 anyway, now you have property and she land = similar

To do this will cost about 300,000 Baht in my case (taxes 6 percent, new Wills, closing down company etc…). It just feels like throwing good money after bad.

Agreed I could do this - the 30 year lease has been tested in the Supreme Court, the Usufruct has not.

B/ do share transfers from nominee to your wife's name.

Then there are no nominees. Just husband and wife owning a company. Think you need 5 other shareholders with minor holdings. But majority is now Thai owned. If she has say 60 and you 40, that's again similar to 50/50. You can probably do this while thinking which is the next step to do

Sadly, its now my wife’s company. My wife, or worse than that, her rather scary father can coerce her to do anything with the assets! Its not my wife I am concerned about she is a sweety – its that father of hers. She is a good Thai girl and wants to be a good daughter as well as a good wife! Last time I put money in a bank account in her name in preparation to set up a Karaoke restaurant – in no time at all the father had 10 cows sitting in his field!!! I got the rest of the money back and learnt a valuable lesson!!!!

C/ Combination of A/ and B/ Put property in your name. Leave land in company with your wife replacing nominee. You now have 100% property, 40% land.

Not sure if B/ and C/ work fully but they have got to be better and more legal than nominees. A husband and wife owning a company above board has to be better than undated illegal papers

Then make a will.

But now its my wife’s company….leaving land in the company name and moving the house out of the company is illegal. I contacted Sunbelt about this earlier in the year and posted their reply in this thread:-

http://www.thaivisa.com/forum/index.php?showtopic=113021

All options are ones I'd consider. Then run by a good lawyer. I could be wrong but none of these puts you at risk of 3 years jail when in place

I don’t really think someone like me with my little house and scrub of land is going to get ‘banged up’ for 3 years. More likely I will be given 1 year to get my affairs in order – dispose of the land.

As for the good lawyer. I tend to post my questions here rather than speak to my lawyer nowadays, Sunbelt have been very helpful over the past 12 months so I would probably use them for any changes.

Like I say thanks for the feedback – its food for thought - are you one of the sad souls with this company problem or an interested observer???

Edited August 15, 2007 by dsfbrit