Jump to content

Recommended Posts

Posted

Hello, I just registered a new Thai Limited Company, with 3 shareholders: 51% Thai, 49% 3 farangs (including myself). As we didn't know any Thai person, we asked our lawyer to help on this and he put his wife as shareholder and managing director. On the company registration form, it clearly said she is the only one authorized to sign anything for the company. My understanding is that we cannot be directors or act on behalf of the company before obtaining the work permits (can you confirm it please?), which we intend to do as the next step.

My question is: what if, after we obtain the work permits, she refuses to put me as director? The company does not have any asset, as we are planning to buy a restaurant with an owner finance, so the restaurant will not be transferred to my company before it's paid off (18 months). Could she do something to harm us in the mean time? Would you consider risky to proceed without being the director? Could she claim a share of the income, even if I manage the restaurant and keep the revenue in a bank account under my name?

Of course, this is just my thinking, but I would like to be sure about what I can do to protect myself.

Thank you very much,

Roger

Posted

Just a suggestion, not sure of the rules/restrictions etc but maybe someone here can clarify this for me. Why put all 51% in one Thai persons name? Would it not be better to find 25 Thai people and put 2% in each of their names (3% for one person)? If the company was set up like that then they would all need to conspire against you to take control and you would only need to have one at any given time on your side (worse comes to worse you bribe one). I find it foolish to put that much trust in one person. If someone knows why this cannot be done I would greatly appreciate the info, if it can then I dont see why anyone would proceed otherwise.

Posted

If you are taking an active role in running the business...yes you need a WP, but you can be a director without a WP provided you dont take an active role in running the business, inclusive of signing any paper work.

As regards your other question, it appears you would be at the mercy of the Thai lady, yes she could claim a portion of the income, as she is an officer of the company, further you cannot put proceeds/revenue in your own personal account even as a director, it needs to go into a company account which you as a director alone or with other directors have signing power against, doing what you are suggesting and putting company money in a personal named account other than a company account can be interpreted as theft/fraud, the company is a legal "person" and therefore you would be "stealing" from that person

Posted

Just a suggestion, not sure of the rules/restrictions etc but maybe someone here can clarify this for me. Why put all 51% in one Thai persons name? Would it not be better to find 25 Thai people and put 2% in each of their names (3% for one person)? If the company was set up like that then they would all need to conspire against you to take control and you would only need to have one at any given time on your side (worse comes to worse you bribe one). I find it foolish to put that much trust in one person. If someone knows why this cannot be done I would greatly appreciate the info, if it can then I dont see why anyone would proceed otherwise.

It can be done in multiple names, and in many cases very wise to do, generally not good put controlling share of a company in one persons name

Posted

Rogerpily: you should have asked form advice PRIOR to setting-up and finalizing this company structure. However; until there are $$ to dispute, there's really no harm done.

Where are you in Thailand, maybe I can help you sort-out this nightmare-in-the-making.

Posted

@rogerphilly "On the company registration form, it clearly said she is the only one authorized to sign anything for the company" Based on this quote you have the answer regards risk. If it were me I would not engage any further with the lawyer & set up a new company entity/structure as the current set up is a classic scenario for a scam. I guess you will already know you will need to very careful regarding the lease T&C's for the property at which you wish to locate the restaurant.

Posted

Your lawyers wife?

Should the lawyers wife do anything silly, who do you think the lawyer is going to support?

You are completely at the mercy of the wife, the lawyer and the Thai legal system.

Firstly, get a new lawyer who offers you good legal and company structure advice. You can be the Director. You can have shares of different voting rights for the Thais (10:1) and have pre-signed share transfer agreements from the Thai's just in case you want to change shareholders in the future for any reason. The Thais are basically nominees and technically illegal also, so you may want to consider "loan agreements" to cover their % of the "investment".

This is how the nightmare starts...change the Directorship and get those blank share transfers signed before you put 1 baht into this venture.

  • Like 1
Posted

I think you and your parners are setting yourself up for a big shock do not do it,

i think you are crazy.

Consider this would you do the same in your own country

hand over business control to someone you no nothing about?

I certainly would not but thats me and my money

as they say here in thai (up to you)

Posted

If you can't give away the capital without crying, then forget it.

Thailand is for fun... don't buy, don't invest.

Sorry to be a naysayer, but I'm an observer and nothing more of this amazingly entertaining show that is called Thailand. I strongly advise all others to be the same. smile.png

Putting a business into the hands of a Thai?!? Forget it.

  • Like 2
Posted

Rogerpily: you should have asked form advice PRIOR to setting-up and finalizing this company structure. However; until there are $$ to dispute, there's really no harm done.

Where are you in Thailand, maybe I can help you sort-out this nightmare-in-the-making.

Hi, thank you for the offer. I'm in Phuket. There will not be any asset in the company, just hopefully income. At the moment, I did not pay full balance to the lawyer and I do not intend to pay it until he changes what he needs to change. If you can help me, I will appreciate it, if not, thank you anyway for the suggestion.

Posted

Thank you all for taking the time to replay. I have to say, nobody really has answered my question, which was my fault as I think I wasn't able to make it clear enough. I did not ask your opinion about the Thai system. Internet is full of people talking about how terrible the system is and how may horrifying stories they have heard. As far as I know, Thailand is full of farangs owning a business. In a different Country, I would have done differently. For the simple reason: in most Countries nobody requires to have a local shareholder holding 51% of the quotes! So, my question is very simple: is standard procedure to make the Thai shareholder the director of a new company until one of the farangs get the work permit?

Thanks to everybody who will be so kind to answer a yes or no.

Posted

Thank you all for taking the time to replay. I have to say, nobody really has answered my question, which was my fault as I think I wasn't able to make it clear enough. I did not ask your opinion about the Thai system. Internet is full of people talking about how terrible the system is and how may horrifying stories they have heard. As far as I know, Thailand is full of farangs owning a business. In a different Country, I would have done differently. For the simple reason: in most Countries nobody requires to have a local shareholder holding 51% of the quotes! So, my question is very simple: is standard procedure to make the Thai shareholder the director of a new company until one of the farangs get the work permit?

Thanks to everybody who will be so kind to answer a yes or no.

Your question was answered in post #4.....and the answer is either yes or no depends on your intentions

  • Like 1
Posted

Thank you all for taking the time to replay. I have to say, nobody really has answered my question, which was my fault as I think I wasn't able to make it clear enough. I did not ask your opinion about the Thai system. Internet is full of people talking about how terrible the system is and how may horrifying stories they have heard. As far as I know, Thailand is full of farangs owning a business. In a different Country, I would have done differently. For the simple reason: in most Countries nobody requires to have a local shareholder holding 51% of the quotes! So, my question is very simple: is standard procedure to make the Thai shareholder the director of a new company until one of the farangs get the work permit?

Thanks to everybody who will be so kind to answer a yes or no.

This is a question for your Thai lawyer.

Oh wait...he is the husband of your largest shareholder and Director. His answer may be skewed.

Posted

Rogerpilly,

There is no need to put a Thai as MD and as the only person with right to sign for the company. That is a setup to scam by your "lawyer". Especially as the MD should be his wife. Do not do this. It is not beneficial for you.

Posted

However you structure your company you are only allowed to own 49% of it. That means that it is possible for the 51% to collectively outvote you. You know this. You understand this.

What is it about this maths that you don't understand?

Posted

As has been mentioned before, any nominees should sign a blank share transfer agreement, so you can replace them at any time.

I got suspicious when I read that your lawyer's wife is the only signatory to the company. Nominees are usually not allowed to sign anything. The usual set-up required one or more shareholders to sign, and these are the ones that put the money in. In any case, you could be the sole signatory, or you and another one (either one) of your foreign shareholders. I would be very suspicious of a lawyer who even suggests that his wife should be the sole signatory.

Just an example: Suppose you decide to buy the vegetables from a certain source. the wife of the lawyer says she won't pay to them; you have to buy from her cousin. There is no way you can make her sign the check to your source!

Suppose that wife decides to buy a bar under the name of your company. The bar loses money, and you are liable to pay up! (Happened to a person I know.)

My suggestion is to drop this lawyer and ask him to close the company (which is more complicated than opening one). Of course, he can only do that if his wife agrees and signs.

My take on this scenario is that you've been had. Get out if you can, but be aware that you have signed all your rights over to a person you don't know.

Posted

However you structure your company you are only allowed to own 49% of it. That means that it is possible for the 51% to collectively outvote you. You know this. You understand this.

What is it about this maths that you don't understand?

Yoshiwara, actually this can be averted with giving the Foreign shareholders "Preferred shares" - which could give them preferential voting rights (up to 10:1) over "Ordinary" (the Thai nominees). So the nominees could be watered down to 5.1% of the vote.

This allows Foreigners to have control over any company they invest in.

Many people don't understand Thai company law and have Thai (or Farang) lawyers that know only the very basics, or are deliberately giving Thai control.

Thai company law works and is effective if setup and maintained correctly.

Of course, allowing your lawyers wife to be Director and majority shareholder with no pre-signed resignation and share transfer forms kind of negates that.

Posted

A simple trick we always use to avoid issues with our thai shareholders/directors: we have them sign in advance resignation letters (without date) as well as share transfer agreements with no name and no date. Get your lawyer to get his wife to do that right now and you should not have sleepless nights should he or she be somewhat crooked.

Posted

A simple trick we always use to avoid issues with our thai shareholders/directors: we have them sign in advance resignation letters (without date) as well as share transfer agreements with no name and no date. Get your lawyer to get his wife to do that right now and you should not have sleepless nights should he or she be somewhat crooked.

And what would you do if the lawyer organised a 51% decision, lodged it with the courts together with signed renunciations of the resignation letters and you only found about it afterwards. Then what?

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • Recently Browsing   0 members

    • No registered users viewing this page.



×
×
  • Create New...