What Happens If Foreign Shareholder Dies

[thaifamilyguy]

Not looking for detail advice, just if there's "smoke" here that I should work through. Assuming foreignor owners 49% of Thai company dies. Does anybody have direct experience (Ok not too direct, I want don't want comments from Ghosts) of whether there is any unusual effect, i.e. company has to be liquidated, shares transfered w/in certain period of time? Forget the basics of Thai Probate, etc. That not the issue, its how the Corp structure is effected by death.

I have only third hand that if foreign shareholder dies, the company has to be "closed down" which I assume means liquidated, etc.

Again this just a shout out on this issue to better evaluate any investment here.

[ballbreaker]

Because there are other shareholders whoever claims the estate of deceased can take over the investment provided it has court approval.

[sbk]

moving to the business forum

[bino]

Can't speak directly about a deceased shareholder, but I have seen a situation years ago where a shareholder was incarcerated. the company sent a series of registered letters to the shareholder's address on the company registration documents, which naturally went unanswered and returned to sender. The registered letters show clear "abandonment" and the shareholder was voted out at the next AGM.

Of course the whole probate / notification of the deceased persons heirs would be a totally different ball game, but I'd say that there is a way to do it without winding up the company. It might just be as easy as the above.

[cloudhopper]

Shareholders can simply be "voted out"?

[falang07]

In case they have a majority which is always the case in Thailand (a.k.a. the racist country) where we can own only up to 49%.

[Naam]

Shareholders can simply be "voted out"?

no they can't because even a minority shareholder can have all share certificates with signed blank transfer slips in a safe place.

[fletchsmile]

I think someone is probably mixing up various concepts.

On death the shares would form part of the deceased estate and would be passed on in accordance with either a will if it exists or in accordance with the relevant inheritance laws. So the shares simply pass to someone else.

One of the key points in having a company structure with shares is that the company is able to continue to exist and carry on if a shareholder dies, unlike a sole trader/ individual where the business dies with them.

Now if a foreign director dies, or a key manager who runs the business is foreign and dies, that may make the business practically difficult to function, but that's a different issue than a foreigner shareholder dying. What happens though is people often mix them up as shareholders are often directors/management at the same time.

More of an issue would be a Thai dying and passing their entitlements onto a foreigner, where one law or another comes in to play that doesn't permit foreign ownership in some way, eg 49% ownership limit, land ownership etc.

Edited September 22, 2012 by fletchsmile

[yoshiwara]

I think one question might be if the foreigner returns to his home country, dies, leaves no documentation connecting to the company and in effect disappears.

The question is then whether the remaining shareholders who have supposedly subordinate status, can exercise ownership of say a company which was purely set up to buy a house.

[falang07]

I would say they can not and their only option would be to find the heirs and discuss further steps. But this is just my humble opinion

[thaifamilyguy]

Thanks for the responses, I would agree with the usual approach to shareholding going into probate, so assuming a will, either a Thai will or foreign will properly probated in say HK, with simple direction, there's no inheritance tax that I know of, etc. BUT that doesn't mean that is the rule/law in Thailand.

I did hunt down why I was getting red flags and came across this outfit which is marketing a pure Thai company arrangement, for a fee. In there FAQs they representing that the Thai company has to be closed not sure I've got enough yet to close this inquiry down. i.e. anybody have first hand knowledge? My concern about getting "advice" in a place like Thailand is that you only find out later that actual practice not match.

• http://www.macsm.com/propertypurchase.php
  
• What happens if the client dies?
  
• Unlike when a person dies holding a Thai company where the whole company structure has to be closed, In this case the investment can continue or the property can be sold without any complications with the sale proceeds going to the immediate relative.
  
• The investment agreement can be put in a Will and left to a relative or friend
  
• I am NOT saying I agree with this but does have me still asking questions.