Thai government needs our money?

[TRIPxCORE]

My wife has just gotten off the phone with a friend who relayed her this story.

    Apparently, a Thai lady and her farang husband in BKK recently bought a restaurant.  The restaurant was purchased in the wife's name but obviously, the money came from the farang.  Soon after, some government officials apparently heard that a farang had financed the venture, and came around demanding money or else!  It wasnt clear what the officials said they were going to do if they weren't paid but the place is still open so maybe they came to an arrangement.  I was told that they were demanding 2-3 million Baht from the couple.  I have heard of stories like this when it is a farang owned business but not Thai.  Anybody know if this is that much of a common practice?  I understand that as outsiders, farang must come to terms with doing some things differently but this story is just plain ridiculous.

[sevinnow]

Strange how these "stories" come from a friend who know's someone ele's friend ect.

In all the years I have been associated with LOS I have heard many similar "stories" but never met or spoke to the friend of a friend!

When someone steps outside the law (engaging in something corrupt) which is usually the case in these situations or is seen to be working without the work permit, then they leave themselfs exposed to the law-enforcers and maybe LOS has it's own way of dealing with these situations.

My true opion is the many thousands of Law abiding Farang businessmen never encounter any acts of in-justice, they just get on with life.

Regards

Sev

:cool:

[Sunbelt Asia]

tripxcore,

I'm going to say the story is a story. Not from your wife, mind you, but it has been repeated enough times to have been changed. The foreigner buys a restaurant in his wives name and the government wants money.  NO rule against this so how could they ever extort money? Now if he was working there without a work permit, then I could see some potential problem.  Two - three million though?  Something is not adding up...lots in fact!

How could the husband directly or indirectly control the bar even if he only owed 49%?   He could

1...

(a) Have different classes of voting shares... The 51% for every 10 shares =1 vote and the 49% has 1 share =1 vote. As the 51% has the class of shares with only 1/10 of the voting rights. The Thai has the first right to liquidation proceeds. However he could put in the bylaws beforehand what valuation the 51% ratio will obtain...( note it does not have to be 51% will get 51%.)  

(…. He could be the sole signature on the account and director.

2. Americans for the most part are exempted from the nationality requirements of the Alien Business Law under the provisions of the Treaty of Amity.( at least till Dec 31st 2004) and then in all likely hood will be “grandfathered” in

3. The Board of Investment may grant exceptions.

4.Another legal way a foreigner can control a Thai company….  Have a company registered in Thailand (the "Operating Company")  which then can be considered Thai if 49% of its shares were directly held by Aliens and the other 51% were held by another company (the "Holding Company") which itself was 51% Thai and 49% Alien. It's possible for foreigners using a two-tier company structure to directly or indirectly own approximately 74% of the capital of the Operating Company and for the Operating Company to be considered Thai and thus permitted to conduct businesses prohibited to aliens. This is totally legal as the Ministry of Commerce did not change the law before it was enacted. They in fact studied the case very carefully and said “We won’t change the wording” If you have a large enterprise, you could perhaps even have 5 or 6 Thai Operating companies and Holding companies. The foreigner with this process could own indirectly or directly up to 98 % of the shares of one company. Some corporations even do crossing of shares between one Operating and one Holding company as shareholders so the foreigners can own directly or indirectly 98% of the shares. Again its all legal.

Overall the rules concerning foreigners are fair and do not appear to have discouraged investment.