Company Buying Land – A Problem?

[Sumitr Man]

Had dinner with a retired law professor friend of mine today and we got to talking [as usual] about the issue of foreigners buying land in Thailand (and the legal ramifications thereof).

Today’s chat consisted of considering the following scenario (as was raised):

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Foreigner comes to Thailand and meets a nice Thai lady. After some time the Thai lady and foreigner decide to marry. They marry and register the marriage at the Amphur. Before the marriage, not as stupid as he looks, the foreign man makes the Thai lady sign a prenup, wherein she agrees she has no claim over his assets, now or in the future.

So far, so good.

Some time later, as only Thai women can do, she convinces her husband to buy a house and land. Not trusting his wife with such a large purchase, and having read thaivisa.com, the foreign man tells his wife he is only happy to proceed with the purchase of the land if it is done using a Thai majority owned / foreign controlled company structure. She’s happy, as effectively she owns the company. He is happy, as he not only has he control over the company, but also has his prenup fall back on. Everyone is happy.

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A problem? Actually, yes.

As we all know, under Section 1470 of the Civil and Commercial Code of Thailand, property of the husband and wife, except insofar as it is set aside as Sin Sua Tua (individual ownership), is Sin Somos (communal property acquired during marriage).

So here is the problem, the wife has no claim over the husband’s share in the company, BUT the husband has a claim over the wife’s shares in the company as her future assets were not part of the prenup. So, because the husband has a potential communal share over the wife’s shares in the company, the authorities could (and I would like to stress “could”) claim that the shares in the company that the wife owns are actually, for this purpose, held by a foreigner. QED, the company has now become a foreign owned company and can no longer own land in Thailand.

Solution – when signing the prenup, make sure you agree that you have no claim over her assets (now or in the future) as well. Married without a prenup, or fit the above scenario (as you cannot sign a prenup post marriage), best talk to a lawyer and see if ‘her’ share in the company could be considered as shares held by a foreigner.

Of course, if you have not yet registered at the Amphur, even if you are “married”, the above should not apply – as a marriage is not ‘legal’ in Thailand unless you register at the Amphur. Also, if collectively you both own less than 50% of the company that owns the land, and an independent Thai owns the majority of the shares, then you have nothing to worry about.

Something to think about – no?

SM

Edited September 15, 2005 by Sumitr Man

[jrincon17]

//<snip> Try and think of something useful to say, jrincon17

Thanks, Sumitr Man - every bit of information helps.

Edited September 15, 2005 by RDN

[Sumitr Man]

swallow and come up for air then

[Khun Jean]

Very good post. Thanks!!

Another scenario, (The one i am in )

Foreigner married to a thai. No prenup.

They (will) have thai majority owned / foreign controlled company structure.

Company buys land. They divorce. What could happen?

Company is split up between the two, effectively dissolving the company?

What would be the best way to split the shares, if you want to setup a company with each part having a fair part, while remaining control and possesion of the land (with or without financial compensation) after divorce?

Edited September 16, 2005 by Khun Jean