How Dangerous Is It To Own Property With A Company?

[philliphn]

buy a condo and sleep easy

I have seen s ome houses that I would have liked to own. However, it is not wise to purchase a house. Unless you just want a lease. At the end of the lease the property goes back to the original owner.

The only safe option is to buy a condo. DO NOT GO THE COMPAY ROUTE!

[dsfbrit]

I bought a house through the company route 4 years ago. I dont lose any sleep at all over the set-up so it is fine for me. If you are not a 'worrier', then it will be fine for you too. If you are a 'worrier' then don't touch this set-up with a barge-pole.

If you must own property in Thailand then buy a condo in your own name. There is not really any other practical and cheap legal set-up for a 100 percent honest 'joe'.

To understand all the issues relating to this subject, I have spent a lot of time over the past 2 years looking into the other options and I may move the property into my wife's name via a Usufruct or lease.

Why would I do this if I dont lose any sleep over the current structure you may ask??? Well I dont particularly like the 15000 baht I have to pay a year for the accounts AND at the moment I would not have to pay the transfer taxes - well only a tiny proportion anyway. So if I did want to make everything 100 percent legal then this is a good time to do it.

My advice to you though is NOT to buy a house/land in Thailand unless you really really really feel you must - it could cause you lots of hassle down the road.

[Smithson]

I have spent a lot of time over the past 2 years looking into the other options and I may move the property into my wife's name via a Usufruct or lease.

Why would I do this if I dont lose any sleep over the current structure you may ask??? Well I dont particularly like the 15000 baht I have to pay a year for the accounts AND at the moment I would not have to pay the transfer taxes - well only a tiny proportion anyway. So if I did want to make everything 100 percent legal then this is a good time to do it.

I recently bought land and put it in my wife's name and the Usufruct in my name. As we're married she's entitled to 50% in the case of divorce and it's not that clear whether she can cancel the usufruct or not (also because we're married). So there's not much guarantee for married couples whatever you do, my main concern was in the event of her death. Needless to say, I'm making sure none of the family move in.

My advice to you though is NOT to buy a house/land in Thailand unless you really really really feel you must - it could cause you lots of hassle down the road.

This is excellent advice. In my case we have a business together so my wife has a say in where the money's spent. 1.8m isn't that much in terms of what we currently pay in rent, if we move our business there it will be a big saving long term.

[dsfbrit]

I recently bought land and put it in my wife's name and the Usufruct in my name. As we're married she's entitled to 50% in the case of divorce and it's not that clear whether she can cancel the usufruct or not (also because we're married). So there's not much guarantee for married couples whatever you do, my main concern was in the event of her death. Needless to say, I'm making sure none of the family move in.

I see we think very much alike and I agree 100 percent. For me, these are the 2 main issues. Its for exactly these reasons that I have not yet been to Sunbelt's Offices to set-up the Usufruct. I think I have several months (up to a year?) before the full tax has to be paid again, so I will ponder this over the next few months.

As this has been discussed at length in other threads I suppose I had better not elaborate further, but advise the OP to beware of both lease and Usufructs and realise they have their pro and cons should he decide the company route is indeed 'too dangerous'.

[MaiChai]

Whatever way you look at it, its a fiddle? I mean setting up a fake business so that you can own a house. Not to mention the 7 Thai directors you need to 'trust'. It all sounds straightforward, but what happens further down the road when you relationship with those Thais sours or you loose contact with them? Not to mention all the company admin, plus the risk of being targeted for fraud.

What I have seen many times before is someone being targeted; you have something that is worth alot of money, and those who would never be able to afford what you have choose a 'legal' route to get what you think is yours. Then you go through a long winded legal process to try and prove its really yours, and the system can be quite easily manipulated.

My advice would go the lease or usefruct route; if you can put it in your Thai childrens names, or somehow set it up so that they inherit it, then thats great. If you can't do this, then maybe you just return to the owner when you die, and when you're dead you dont care? House ownership can be put in your name; land ownership in a usufruct or lease.

Another alternative is to rent, especially if you are new to Thailand or are in a new relationship with a Thai and you don't know how its going to pan out. Renting (house or condo) is a great way to find out all the 'problems' in the area you want to live, as well as to work out if you really want to invest '

What with the credit crunch and uncertainties for the future it would be better to either keep money in the bank or invest in your own home country where you do have citizens rights?

Remember you are always a foreigner and have little rights here.

It amazes me that foreigners what to spend so much money here on property and then don't have the free time to enjoy it? If this is the case, why not just rent when you are here?

[Smithson]

Everybody seems to consider a 30yr lease as similar to buying and pay the similar amounts, but if you're under 50 there's a fair chance you'll still be alive when the lease runs out. I wouldn't want to be in my 70's looking for somewhere to live.

What about leasing for a 10 or 20 year period? I've heard you can get very good deals for this. If it's for an investment, buy a house in your home country and rent it, then use to rent here. A much safer option.

One of the main reasons I went for the usufruct is that a lawyer was present on the day of the transfer, so we knew everything was above board. If things turned sour in a relationship would the other person take the property? Very good chance they would, as this is normal throughout the world.

[thaigene2]

Everybody seems to consider a 30yr lease as similar to buying and pay the similar amounts, but if you're under 50 there's a fair chance you'll still be alive when the lease runs out. I wouldn't want to be in my 70's looking for somewhere to live.

What about leasing for a 10 or 20 year period? I've heard you can get very good deals for this. If it's for an investment, buy a house in your home country and rent it, then use to rent here. A much safer option.

One of the main reasons I went for the usufruct is that a lawyer was present on the day of the transfer, so we knew everything was above board. If things turned sour in a relationship would the other person take the property? Very good chance they would, as this is normal throughout the world.

The whole lease thing makes little sense to me in the first place. But if you were thinking about a ten or 20 year lease. Why not just rent the place - on a year-to-year agreement...That way your money stays in the bank or you can invest it and earns interest, etc.

A 30 year lease is just renting the place anyway - except your handing over all that money in advance. Why do that? I don't get it.

[dsfbrit]

Whatever way you look at it, its a fiddle? ...

My advice would go the lease or usefruct route; if you can put it in your Thai childrens names, or somehow set it up so that they inherit it, then thats great. If you can't do this, then maybe you just return to the owner when you die, and when you're dead you dont care? House ownership can be put in your name; land ownership in a usufruct or lease.

Another alternative is to rent, especially if you are new to Thailand or are in a new relationship with a Thai and you don't know how its going to pan out. Renting (house or condo) is a great way to find out all the 'problems' in the area you want to live, as well as to work out if you really want to invest '

What with the credit crunch and uncertainties for the future it would be better to either keep money in the bank or invest in your own home country where you do have citizens rights?

Yes its a fiddle - so what. If you are comfortable with this kind of fiddle then go with it. The alternatives you recommend are also a fiddle according to some quite learned sources on this forum. Go and see the threads about Usufructs and Leases when the Lease or Usufruct is put in the Thai wife's name. This can also be considered trying to own land and could be contested.

As for investing in my home country (England), I would have problems with my Expat status and would/could be liable for tax in the UK. So that would be another can of worms.

When I decided to leave the UK and live half way around the World in and Asian country, I knew it would not be easy and things would be different. The fact that these land laws are a pain and the company structure is not ideal is just one of the 'challenges' facing the intrepid Expat.

I have to say, when I considered moving here 6 years ago I expected the problems to be a lot greater than they have been and having to cope with the company structure is a minor irritation for me and many Expats in this position.

I would however agree, as I said above in a previous post, that I would recommend not buying a house and land in this country unless you really really really feel you want to. Buying a condo on your own name is easier if you dont like any problems at all.

As for renting - personally I love sitting in 'my' garden knowing I can do what I want with it without some 'bl**dy' landlord telling me they wont allow me to do it.

Still each to their own.

[MaiChai]

I dont want to get into a battle with anyone here. The lease/usufruct usage is quite clear; you will never own the land. The usufruct means you gain the control without the ownership. The lease is similar, but needs a good contract. Both fill the requirement that the land is not owned by a foreigner. So you can own the house in your own name, and then ensure you have full control over the land without interference from someone else. Under Thai law, who owns the land can control what happens to buildings on the land; with either of these structures you can prevent this.

I suggest the original poster speaks to a few lawyers on the best way to protect control over the land you intend to build a house on? Its quite clear the authorities wanted to clamp down on the ltd co route, so this could come up again? Not to mention all the legal reporting (tax/company accounts/etc) you have to do every year?

I have had my own fair share of problems with land ownership and a house here, and it makes me wary of doing it again (call it learning from experience). Motorbikes and cars in my name are not a problem, building a house on land owned by someone else? Well...?

If you can't own it dont buy it? Or as other have said, don't spend more than you are prepared to loose...

[Alf Witt]

I have not posted on TV for a long time but since this is a subject which I have researched I will throw in my twopenceworth.

1. Rule no. 1. Measure what is being said against who is saying it.

a. "doom and gloom" merchants full of bar-stool wisdom who probably don't have enough money to buy their next beer, never mind a property in Thailand. (Wait for the attacks on this post and start to identify them or check out posts 12 months ago from those who are silent now).

b. Those with a vested interest trying to sell you an alternative (including lawyers and quasi lawyers - TIT).

c. Politicians or those quoting politicians. What is politically correct to say and what is economically and legally viable may be in conflict. (i) "All the land in Thailand belongs to the Thais". Politically correct to say. (ii)"We want foreign income for real estate transactions" Economically expedient. Policy: talk (i) but do (ii). If you have followed the farce about revisions to the Foreign Business Act over the past 2 years or so you will understand this. Result: status quo.

2. Rule no. 2. Understand the law.

a. There is no such thing as a "bogus" company. A company is a legal entity and comes into being when the appropriate authority issues a Certificate of Incorporation. A Thai company is a legal entity and it is Thai. It is legally a "person" and its "personality" is quite distinct from that of its directors and shareholders. To undermine this principle for the sake of some land grab intentions would make Thailand a pariah state in the international business community. It is never going to happen as long as the average IQ of government ministers exceeds 50. (Please do not confuse any enquiry by the Commercial Office into the source of funds by shareholders as being relevant to this issue. Yes, they can refuse to register a company if {rightly or wrongly} they consider it appropriate to do so. This has no bearing on the status or legality of existing companies. Also please don't confuse "business" with "company" - they are two very distinct concepts.

Secondly, there is no law in Thailand or in any other country that I am aware of that says shares cannot be given as a gift. Also, a company is not funded by shares alone. There is no obstacle to loan finance even from a farang (see ealier posts - one of the more meaningful ones). As far as I am aware the authorised share capital of a Thai company is B1m. This is what the commercial office can investigate in terms of source of funds. 7 shareholders are required and Thai shareholding must be 51%, = B510,000. B510,000 divided by 6 Thai shareholders = B85,000. Big deal? (maybe to the bar-stool wise guys).

3. Rule no 3. Watch what you say.

I can not stress this too much. Farangs DO NOT own land in Thailand. It is legally impossible except in very specifically authorised circumstances. Get this one into your head an everything else falls into place!!! If a company owns the land the company owns the land. End of story.

4. Yes, the company should trade and pay appropriate taxes - but even that is a separate issue. By leasing the land to a farang and providing maintenance services the company is trading.

5. Get the company to lease the land to you and register the lease.

6. A farang can legally register any structure (house) on the land in his name. (i.e. ownership).

7. Do the maths.

Value of land: say, B5m

Value of building, say B5m

What do you own?

NOT THE LAND!!!!

house B5,000,000

49% of company's assets (ie. (hopefully, appreciating) value of the land - N.B. that is

money's worth represented by shares - not the land per se) B2,450,000

30 year lease - this effectively secures your interest in the Thai "ownership" element of

the company's asset (land) for the next 30 years (the 51%) = 2,550,000. Equivalent to

a cost of B85,000 per year. B2,550,000 (for 30 years right)

(if 90 years this is B27,777p.a.)

Right to repayment of any loan you extended to the Thai company to buy the land.

(plus interest if you have structured it right)

What do the Thai sharholder's own?

Not the house.

Not the rights under the lease for th next 30/90 years.

51% of a company with a debt of B5,000,000 + annual interest = -B255,000, and a reversionary interest in land that is legally leased out for the next 30/90 years.

The upside? They may own 51% of the value of the land (less the value of the loan finance + interest) in 30/90 years time. (possibly not too bad a deal if they did not pay for their shares, but should you worry about it? Up to Yoooou! GIVE them the shares - there is no need for "nominees".

8. Would all the Thai lawyers who have advised and set up companies for farangs to enjoy the benefits of land in Thailand (N.B. not "OWN") be immune from any backlash if the government were, perversely, to claim that land was acually "owned" by farangs. They would all be liable for negligence and would be more culpable under the law than any farang. Ask yourself, is this likely to happen? Have they all got it wrong or do they know the actual risks?

As someone in an earlier post said if you want to worry about it go ahead! If you want to think rationally. This is still possible in Thailand - although, strictly under the law, you should have a work permit for indulging in that activity (true, check it out) then don't worry.

To answer the OP's question: "How dangerous is it to own property with a company?" Answer: You cannot. See above.

Edited to correct typos and for clarity.

Edited May 6, 2008 by Alf Witt

[dsfbrit]

Alf Witt, that about sums it up. I have only looked into any of this again since the land transfer taxes were reduced. Quite simply IF (and thats a big IF) I want to shut down the company and do the Usufruct / Lease thing then this is a good time to do it.

Maichai, you certainly are not getting into any sort of battle with me I can assure you . I was merely 'thinking out loud'. I am rethinking whether or not I want to shut the company and set up a Usufruct. Am I comfortable with the 'fiddle' ?- I guess I am - so why would I do the Usufruct ??? I guess there are lots of people like me at the moment who are re-thinking this NOW simply because of the reduction in land transfer taxes.

I have to say, at this precise moment, I wish I had just bought a condo in my own name!!! Nice and simple

[Smithson]

If you want to think rationally. This is still possible in Thailand - although, strictly under the law, you should have a work permit for indulging in that activity (true, check it out) then don't worry.

TIT

[quiksilva]

I have not posted on TV for a long time but since this is a subject which I have researched I will throw in my twopenceworth.

1. Rule no. 1. Measure what is being said against who is saying it.

a. "doom and gloom" merchants full of bar-stool wisdom who probably don't have enough money to buy their next beer, never mind a property in Thailand. (Wait for the attacks on this post and start to identify them or check out posts 12 months ago from those who are silent now).

b. Those with a vested interest trying to sell you an alternative (including lawyers and quasi lawyers - TIT).

c. Politicians or those quoting politicians. What is politically correct to say and what is economically and legally viable may be in conflict. (i) "All the land in Thailand belongs to the Thais". Politically correct to say. (ii)"We want foreign income for real estate transactions" Economically expedient. Policy: talk (i) but do (ii). If you have followed the farce about revisions to the Foreign Business Act over the past 2 years or so you will understand this. Result: status quo.

2. Rule no. 2. Understand the law.

a. There is no such thing as a "bogus" company. A company is a legal entity and comes into being when the appropriate authority issues a Certificate of Incorporation. A Thai company is a legal entity and it is Thai. It is legally a "person" and its "personality" is quite distinct from that of its directors and shareholders. To undermine this principle for the sake of some land grab intentions would make Thailand a pariah state in the international business community. It is never going to happen as long as the average IQ of government ministers exceeds 50. (Please do not confuse any enquiry by the Commercial Office into the source of funds by shareholders as being relevant to this issue. Yes, they can refuse to register a company if {rightly or wrongly} they consider it appropriate to do so. This has no bearing on the status or legality of existing companies. Also please don't confuse "business" with "company" - they are two very distinct concepts.

Secondly, there is no law in Thailand or in any other country that I am aware of that says shares cannot be given as a gift. Also, a company is not funded by shares alone. There is no obstacle to loan finance even from a farang (see ealier posts - one of the more meaningful ones). As far as I am aware the authorised share capital of a Thai company is B1m. This is what the commercial office can investigate in terms of source of funds. 7 shareholders are required and Thai shareholding must be 51%, = B510,000. B510,000 divided by 6 Thai shareholders = B85,000. Big deal? (maybe to the bar-stool wise guys).

3. Rule no 3. Watch what you say.

I can not stress this too much. Farangs DO NOT own land in Thailand. It is legally impossible except in very specifically authorised circumstances. Get this one into your head an everything else falls into place!!! If a company owns the land the company owns the land. End of story.

4. Yes, the company should trade and pay appropriate taxes - but even that is a separate issue. By leasing the land to a farang and providing maintenance services the company is trading.

5. Get the company to lease the land to you and register the lease.

6. A farang can legally register any structure (house) on the land in his name. (i.e. ownership).

7. Do the maths.

Value of land: say, B5m

Value of building, say B5m

What do you own?

NOT THE LAND!!!!

house B5,000,000

49% of company's assets (ie. (hopefully, appreciating) value of the land - N.B. that is

money's worth represented by shares - not the land per se) B2,450,000

30 year lease - this effectively secures your interest in the Thai "ownership" element of

the company's asset (land) for the next 30 years (the 51%) = 2,550,000. Equivalent to

a cost of B85,000 per year. B2,550,000 (for 30 years right)

(if 90 years this is B27,777p.a.)

Right to repayment of any loan you extended to the Thai company to buy the land.

(plus interest if you have structured it right)

What do the Thai sharholder's own?

Not the house.

Not the rights under the lease for th next 30/90 years.

51% of a company with a debt of B5,000,000 + annual interest = -B255,000, and a reversionary interest in land that is legally leased out for the next 30/90 years.

The upside? They may own 51% of the value of the land (less the value of the loan finance + interest) in 30/90 years time. (possibly not too bad a deal if they did not pay for their shares, but should you worry about it? Up to Yoooou! GIVE them the shares - there is no need for "nominees".

8. Would all the Thai lawyers who have advised and set up companies for farangs to enjoy the benefits of land in Thailand (N.B. not "OWN") be immune from any backlash if the government were, perversely, to claim that land was acually "owned" by farangs. They would all be liable for negligence and would be more culpable under the law than any farang. Ask yourself, is this likely to happen? Have they all got it wrong or do they know the actual risks?

As someone in an earlier post said if you want to worry about it go ahead! If you want to think rationally. This is still possible in Thailand - although, strictly under the law, you should have a work permit for indulging in that activity (true, check it out) then don't worry.

To answer the OP's question: "How dangerous is it to own property with a company?" Answer: You cannot. See above.

Edited to correct typos and for clarity.

Great post Alf, good to see you back.

[suiging]

Great post Alf.

My two bobs addition would be that Thais are;

A. Asian......................and

b. Human.

In short a combination of nationalistic, money grabbing #$%^& but still essentially pragmatists.

Will a Farang ever own Thai land, not in my life time for the majority of us without huge sums of money in the bank. However, the " Grey Hair " schemes of other SE Asian countries are causing our lot to go green with envy and will eventually result in some form of longer term secured lease ( at a price.....this is Thailand ) so the few who run the place can get their hands on a share of the goodies.

I went the company route ( twice !! ) and as I believe in the above will sweat it out until the much talked about extended ( 99 year ? ) lease comes into reality. I firmly believe due to A. & B above. it will.

[Schooner]

It's good to hear from people who have given this more thought than I have. For the moment I'm staying put with the nominee company. What's that expression about the devil that you know vs. the devil that you don't know. I have zero confidence with anyone in Thailand that would have to help me do something different.

If this all blows up, and I seriously doubt that it will than it will be all over TV and then the thousands of home owners in my situation can get togather and take some sort of action.

On the bright side, my house is rented out for healthy return and it has appreciated 20% (mostly due to the dollar) it is for sale but I am not really that anxious for it to sell because the rent is a great return on my investment and I don't know where I would put the proceeds.

IMO the government comes out with one of these things to scare us and slow growth. It worked. Pattaya property appreciation dropped from the teens to about 6% overnight. Now it is started back up again.

[Smithson]

Will a Farang ever own Thai land, not in my life time for the majority of us without huge sums of money in the bank.

I can't see them ever allowing us to own land. The difficulty for a parent of a Thai child to reside here permanently shows their insecurity about giving foreigners. IMO this is a more important issue than land ownership.

[johnnyk]

Its politics.

What benefit is there for a Thai politico to promote foreign land ownership?

He'd be bounced in the next election and lose his limo, his aircon office and his retinue of paid asskissers in a flash.

He might have to get a job.

[chivo]

I might look at it perhaps a bit simply and ask everyone here have they ever actually known anyone to have land/property confiscated due to it being held under a shell company?

[wolfmanjack]

I might look at it perhaps a bit simply and ask everyone here have they ever actually known anyone to have land/property confiscated due to it being held under a shell company?

No but i do know someone that has had their company dissolved for not paying taxes due to company inactivity for several years. If memory serves me right they told me they did not pay for over 5 years but the said the company could be dissolved after 3 years of non payment.

[BL4u]

I might look at it perhaps a bit simply and ask everyone here have they ever actually known anyone to have land/property confiscated due to it being held under a shell company?

No but i do know someone that has had their company dissolved for not paying taxes due to company inactivity for several years. If memory serves me right they told me they did not pay for over 5 years but the said the company could be dissolved after 3 years of non payment.

I know a company that is dissolved 7 years ago and the land is still registered in that company's name. It seems that the land office (in this case Samui) just don't know what to do with the land owned by 7 shareholders who can't be traced.

The advice would be:

1 if you own land through a nominee company don't worry, take a lease from your company,

2 when it would be time to worry then dissolve your company, your shareholders are fake anyway and can't be traced if you've done it right.

3 the lease will protect you, and after 30 years with no one actually owning the land but fake shareholders, your lease is automatically renewed according to the Civil and Commercial Code. Sure with a real land owner this offers little guarantee but in this case with a fake co-ownership by untraceable shareholders you remain lawfully on the land..

Afraid of using nominees? With a Thai government carefully circumventing this subject? Take the best, untraceable fake shareholders you can find in any hill tribe in the north

[johnnyk]

I might look at it perhaps a bit simply and ask everyone here have they ever actually known anyone to have land/property confiscated due to it being held under a shell company?

No but i do know someone that has had their company dissolved for not paying taxes due to company inactivity for several years. If memory serves me right they told me they did not pay for over 5 years but the said the company could be dissolved after 3 years of non payment.

Som nom na... if you're gonna go the company route:

1) Show some activity

2) File tax returns

3) Pay some tax if need br

DO NOT let the company sleep. Whatever you may think they ARE NOT stupid.

[Marvo]

A few of you learn-ed guys and gals are recommending to lease the land/property from your company.

If the company leases you the land and property, aren't you expected to pay the company a "realistic" "rent" for the land and property and pay the government a building and land tax of 12.5% of the rent? Will the company also have to pay tax on the income it makes from the renting/leasing out of the land?

Has anybody got any experience of how in the real world the lowest acceptable "realistic" rental figure is arrived at?

(I also read that the "rent" figure could be the "annual value assessed by the Land Department")

[WilliamJarvis]

2. Rule no. 2. Understand the law.

Also, a company is not funded by shares alone. There is no obstacle to loan finance even from a farang (see ealier posts - one of the more meaningful ones). As far as I am aware the authorised share capital of a Thai company is B1m. This is what the commercial office can investigate in terms of source of funds. 7 shareholders are required and Thai shareholding must be 51%, = B510,000. B510,000 divided by 6 Thai shareholders = B85,000. Big deal? (maybe to the bar-stool wise guys).

Great Post.

Two things. First of all, I believe the shareholders is now 3. Second, if you have a shareholder loan that is greater than the share capital of the firm, as I understand it, this will be a red flag to a bull for the Revenue Department.

EDIT: by the above, I mean you should talk with your accountant about your company debt-to-equity ratio for revenue purposes.

Edited May 8, 2008 by WilliamJarvis

[Lazy Sod]

Here's my situation for what it's worth. . .

A year ago, when the "nominee" issue was in the news, I changed our company's shareholding to 49% me and 51% the (Thai) wife.

Three reasons, firstly I came to the conclusion that I trusted the wife to own the majority shares more than nominees that I didn't know, secondly I reckon that now our company does not have "nominees" because the company is really 51% Thai owned by a real stakeholder (the wife), and thirdly at that time the transfer taxes were very high which put me off transferring owndership from the Company to the wife.

I realise that the wife now has effective control of the company due to her 51% majority shareholding, but I doubt she is going to stage a boardroom coup anytime soon, especially as the house is mortgaged through SCB bank and they have the deeds until the mortgage is paid. I am still the sole director and signatory just out of convenience, but if this becomes a "foreign control" issue I've no problem adding the wife to the directors list and making her a joint signatory.

Having said all that, now that transfer taxes are reduced for 1 year only, I'm tempted to pay off the mortgage, get rid of the company, and sell the house (from the company) to the wife with a usufruct before the tax break ends. Can't make my mind up to be honest.

[Marvo]

How many shareholders do you have in th Co. Lazy?

I understand your dilema re the xfer out of the Co. and the Usufruct. I'm erm-ing and arh-ing myself.

[donx]

Here's my situation for what it's worth. . .

A year ago, when the "nominee" issue was in the news, I changed our company's shareholding to 49% me and 51% the (Thai) wife.

Three reasons, firstly I came to the conclusion that I trusted the wife to own the majority shares more than nominees that I didn't know, secondly I reckon that now our company does not have "nominees" because the company is really 51% Thai owned by a real stakeholder (the wife), and thirdly at that time the transfer taxes were very high which put me off transferring owndership from the Company to the wife.

I realise that the wife now has effective control of the company due to her 51% majority shareholding, but I doubt she is going to stage a boardroom coup anytime soon, especially as the house is mortgaged through SCB bank and they have the deeds until the mortgage is paid. I am still the sole director and signatory just out of convenience, but if this becomes a "foreign control" issue I've no problem adding the wife to the directors list and making her a joint signatory.

Having said all that, now that transfer taxes are reduced for 1 year only, I'm tempted to pay off the mortgage, get rid of the company, and sell the house (from the company) to the wife with a usufruct before the tax break ends. Can't make my mind up to be honest.

I thought that all Thai limited companys had to have a total of at least 7 different shareholders. It is this requirement that forced people to have nominee shareholders in the first place isn't it? I have a feeling that your company is now illegally structured. I don't know if this is the case since I am basing this comment on what I have read from this forum.

[johnnyk]

Seven was the old MINIMUM requirement but now you can form a company with as few as three.

Doesn't mean those currently with seven have to change anything.

[dsfbrit]

Lazy and Marvo,

I too am ummming and Arriing over whether to shut down the company and do a Usufruct in my wifes's name whilst the transfer taxes are so low.

Too be honest Lazy, I reckon you would be better off with a Usufruct. However, as I dont know all your personal circumstances, I will keep my big nose out of it

[Lazy Sod]

Sorry for the confusion, I was too lazy to mention that the Company still has 5 other shareholders because they own such an insignificant percentage. For those who are interested, I just checked the docs, and the shareholding is actually;

51% wife

47% me

2% the 5 others

Don't forget that the authorites were threatening to go after Thai nominees being used to circumvent the laws on property ownership. My point was that the wife now genuinely owns 51% of the Company, she is not a nominee, she is a real stakeholder, and so it is a majority owned Thai Company.

Regardless, I was all set to change to usufruct until I read on TV that spouses can cancel the usufruct if you get divorced, that got me thinking perhaps it's best to at least own 47% of a company which in turn owns the house. Now I can't make up my mind, but there's still nearly a year left to decide before the tax rate increases.

Donx, I think you may be a bit confused, the 7 shareholders is not the problem, the problem is that the Company should be 51% Thai owned (it means 51% owned by real stakeholders, not 51% owned by nominees) in order for it to be defined as a Thai Company, and only Thai Companies can own land. As far as I am aware, in theory you could have 6 foreign shareholders and 1 Thai shareholder providing that the Thai shareholder really owns 51% and the foreigners no more than 49%.

[donx]

Sorry for the confusion, I was too lazy to mention that the Company still has 5 other shareholders because they own such an insignificant percentage. For those who are interested, I just checked the docs, and the shareholding is actually;

51% wife

47% me

2% the 5 others

Don't forget that the authorites were threatening to go after Thai nominees being used to circumvent the laws on property ownership. My point was that the wife now genuinely owns 51% of the Company, she is not a nominee, she is a real stakeholder, and so it is a majority owned Thai Company.

Regardless, I was all set to change to usufruct until I read on TV that spouses can cancel the usufruct if you get divorced, that got me thinking perhaps it's best to at least own 47% of a company which in turn owns the house. Now I can't make up my mind, but there's still nearly a year left to decide before the tax rate increases.

Donx, I think you may be a bit confused, the 7 shareholders is not the problem, the problem is that the Company should be 51% Thai owned (it means 51% owned by real stakeholders, not 51% owned by nominees) in order for it to be defined as a Thai Company, and only Thai Companies can own land. As far as I am aware, in theory you could have 6 foreign shareholders and 1 Thai shareholder providing that the Thai shareholder really owns 51% and the foreigners no more than 49%.

Thank you for clearing that up. I agree that it shouldn't matter whether you have 1 or 6 Thai shareholders. The requirement is (or at least was) that there had to be at least 7 shareholders and that 51% of the shares had to be held by non-foreigners, which could be just one person.

If I were in your position, I would probably not change the ownership structure you have in place unless you felt it was becoming cumbersome to provide the company documentation and yearly taxes. I agree that the usufruct may have limited use in the case of a divorce, but does provide protection from the family in-law.

As for me, call me crazy or blissfully ignorant, all of the land my wife owns in Thailand is in her name alone without any usufruct or lease even for the land I gave her money to buy. We have three children who will inherit all the land she owns if anything happens to her. If we get divorced, then she can have the land in Thailand. I will keep the house in the US since it is in my name alone.