30 Year Rental And Company Ownership At The Same Time

[THAIJAMES]

There is a lot of information about renting land for 30 years and a lot of information about how to purchase property using a Thai company.

I have not seen any information that someone has done both on the same property.

That is to partner with Thai nationals to purchase a property using a Thai company. Then have the company rent out the land to the Farang partner for 30 years.

Having signature rights for the Thai company, the Farang minor shareholder would then if needed be able to extend the rental period of the rental contract as needed.

Does anyone see any problem with this idea?

[Langsuan Man]

Nothing wrong but somewhat redundant.

Why go the company route in the first place? Have a Thai individual buy the property and issue a 30 year lease, or better yet, an usfruct at the same time

That way you will save the approximately 15,000 THB fee for the annual company audit.

By the way, those who set up these companies are smart enough to insure that they have control by limiting the strength of the thai shareholders by diluting their voting rights by keeping 49% for themselves and the remaining 51% spread out over other shareholders

[Delight]

What is the benefit of this approach as distinct from the simpler approach of buying land in a Thai Company-a Company which you control?

[THAIJAMES]

What is the benefit of this approach as distinct from the simpler approach of buying land in a Thai Company-a Company which you control?

I guess the idea is that if there is ever a problem with the company, at least you still have a lease on the land. Sort of double protection.

[THAIJAMES]

Nothing wrong but somewhat redundant.

Why go the company route in the first place? Have a Thai individual buy the property and issue a 30 year lease, or better yet, an usfruct at the same time

That way you will save the approximately 15,000 THB fee for the annual company audit.

By the way, those who set up these companies are smart enough to insure that they have control by limiting the strength of the thai shareholders by diluting their voting rights by keeping 49% for themselves and the remaining 51% spread out over other shareholders

Thanks for your comments,

In my case I already have a company that is sitting idle and I only pay 9K for the audit every year.

[Delight]

What is the benefit of this approach as distinct from the simpler approach of buying land in a Thai Company-a Company which you control?

I guess the idea is that if there is ever a problem with the company, at least you still have a lease on the land. Sort of double protection.

What is the benefit of this approach as distinct from the simpler approach of buying land in a Thai Company-a Company which you control?

I guess the idea is that if there is ever a problem with the company, at least you still have a lease on the land. Sort of double protection.

If you are worried about the Company route from a legal position-then that Company issuing a lease may be just as vulnerable from a legal position.So double protection can result in no protection.

30 Year leases are generally safe (I understand) and are supported by the Thai Gov.

What is the plan with the land?

[THAIJAMES]

Sorry for not providing all the information up front.

I already have a 30 year lease on a property, which I hope to develop either into a condominium or apartments. I also have an idle company, which is not yet being used.

The owner would sell his land to the company and also become one of the share holders.

Since I already have a lease on the property, any legal problems that the company might have would not affect the existing preexisting lease.

I would think that changing ownership of the land from sole to company would add extra protection in that it would ensure that the lease is renewed at the end of the 30 year period, or if the property needs to be sold.

[jbrain]

Nothing wrong but somewhat redundant.

Why go the company route in the first place? Have a Thai individual buy the property and issue a 30 year lease, or better yet, an usfruct at the same time

That way you will save the approximately 15,000 THB fee for the annual company audit.

By the way, those who set up these companies are smart enough to insure that they have control by limiting the strength of the thai shareholders by diluting their voting rights by keeping 49% for themselves and the remaining 51% spread out over other shareholders

I recall a thread only a few days ago that mentioned that a company needs to have a Thai director.

I know these companies are all registered with only a foreign director, but according to tha tthread it's illegal.

Also the thing about double voting rights is not legal inn Thailand.

Edited March 26, 2013 by jbrain

[Delight]

Sorry for not providing all the information up front.

I already have a 30 year lease on a property, which I hope to develop either into a condominium or apartments. I also have an idle company, which is not yet being used.

The owner would sell his land to the company and also become one of the share holders.

Since I already have a lease on the property, any legal problems that the company might have would not affect the existing preexisting lease.

I would think that changing ownership of the land from sole to company would add extra protection in that it would ensure that the lease is renewed at the end of the 30 year period, or if the property needs to be sold.

The Land owner can sell the land to your existing Company or sell it on the open market.

Why would he sell it to your company. What's in it for him?

[Langsuan Man]

Nothing wrong but somewhat redundant.

Why go the company route in the first place? Have a Thai individual buy the property and issue a 30 year lease, or better yet, an usfruct at the same time

That way you will save the approximately 15,000 THB fee for the annual company audit.

By the way, those who set up these companies are smart enough to insure that they have control by limiting the strength of the thai shareholders by diluting their voting rights by keeping 49% for themselves and the remaining 51% spread out over other shareholders

I recall a thread only a few days ago that mentioned that a company needs to have a Thai director.

I know these companies are all registered with only a foreign director, but according to tha tthread it's illegal.

Also the thing about double voting rights is not legal inn Thailand.

There is so much mis-information about these company structures here at TV since no one appears to understand how the loop holes in the Thai laws are worked by the lawyers here

Yes, the company must have a Thai director to purchase property here in Thailand. BUT , after the property is purchased then the company (and it assets) can be transferred and a new non-Thai director can be named. A simple process that is usually covered in the cost of setting up the company in the first place

Also don't see where my post said anything about double voting rights, all I said is that you control the board by having 49% and splitting the remaining 51% by several other board members, to prevent them from getting together and seizing control (by naming one of themselves to be the managing director)

[jbrain]

Sorry for not providing all the information up front.

I already have a 30 year lease on a property, which I hope to develop either into a condominium or apartments. I also have an idle company, which is not yet being used.

The owner would sell his land to the company and also become one of the share holders.

Since I already have a lease on the property, any legal problems that the company might have would not affect the existing preexisting lease.

I would think that changing ownership of the land from sole to company would add extra protection in that it would ensure that the lease is renewed at the end of the 30 year period, or if the property needs to be sold.

How can you build a condominium on land on which you have only a 30 year lease ?

After 30 year all the owners would lose their property as all constructions on the land belong to the landowner at the end of the lease.

[jbrain]

Nothing wrong but somewhat redundant.

Why go the company route in the first place? Have a Thai individual buy the property and issue a 30 year lease, or better yet, an usfruct at the same time

That way you will save the approximately 15,000 THB fee for the annual company audit.

By the way, those who set up these companies are smart enough to insure that they have control by limiting the strength of the thai shareholders by diluting their voting rights by keeping 49% for themselves and the remaining 51% spread out over other shareholders

I recall a thread only a few days ago that mentioned that a company needs to have a Thai director.

I know these companies are all registered with only a foreign director, but according to tha tthread it's illegal.

Also the thing about double voting rights is not legal inn Thailand.

There is so much mis-information about these company structures here at TV since no one appears to understand how the loop holes in the Thai laws are worked by the lawyers here

Yes, the company must have a Thai director to purchase property here in Thailand. BUT , after the property is purchased then the company (and it assets) can be transferred and a new non-Thai director can be named. A simple process that is usually covered in the cost of setting up the company in the first place

Also don't see where my post said anything about double voting rights, all I said is that you control the board by having 49% and splitting the remaining 51% by several other board members, to prevent them from getting together and seizing control (by naming one of themselves to be the managing director)

Of course youi can do all this, but it's illegal.

Strictly you need a workpermit to be a director, and the law doesn't change at that point that it says the director has to be Thai, so you have in fact an illegal company.

All documents you sign will be invalid because you have no workpermit, and believe me they will look at it when money is involved.

I had a friend who's car insurance was void when he had an accident because he signed the insurance contract as director but didn't have a workpermit.

[THAIJAMES]

Nothing wrong but somewhat redundant.

Why go the company route in the first place? Have a Thai individual buy the property and issue a 30 year lease, or better yet, an usfruct at the same time

That way you will save the approximately 15,000 THB fee for the annual company audit.

By the way, those who set up these companies are smart enough to insure that they have control by limiting the strength of the thai shareholders by diluting their voting rights by keeping 49% for themselves and the remaining 51% spread out over other shareholders

I recall a thread only a few days ago that mentioned that a company needs to have a Thai director.

I know these companies are all registered with only a foreign director, but according to tha tthread it's illegal.

Also the thing about double voting rights is not legal inn Thailand.

jbrain, thank you for your contribution. I could not find any info that a company needs to have a thai director. (i am currently the signing director of a number of companies) and yes I do have a work permit!

I understand that any new company that has foreign shareholders needs to show where the money from all the partners came from. However my company is already established quite a few years ago.

Also from what I understand there is still in effect the options for foreign share holders to have preferential shares which have more voting powers, in effect allowing foreign control of the company.

While there has been a lot of talk, I don't think the laws were ever changed, only more strictly enforced. Mainly that companies must have paid up capital and all thai partners must show their source of capital.

This more strict enforcement is not applicable to existing companies. Even if it was, the existing land owner is putting their land in exchange for being a share owner. So there is no problem of existing capital.

Any information or links contrary to the above would be greatly appreciated.

[THAIJAMES]

Sorry for not providing all the information up front.

I already have a 30 year lease on a property, which I hope to develop either into a condominium or apartments. I also have an idle company, which is not yet being used.

The owner would sell his land to the company and also become one of the share holders.

Since I already have a lease on the property, any legal problems that the company might have would not affect the existing preexisting lease.

I would think that changing ownership of the land from sole to company would add extra protection in that it would ensure that the lease is renewed at the end of the 30 year period, or if the property needs to be sold.

The Land owner can sell the land to your existing Company or sell it on the open market.

Why would he sell it to your company. What's in it for him?

Delight,

I don't want to reveal too much personal information on a public forum, however it would be simply that he would earn his share of any future business earnings. While at the same time allowing to protect my investment as best as I could.

Of course at some point the whole project needs to be converted to a condominium, which has its own rules, if I do go that route. I am at this point trying to get information to make more informed decisions.

Thanks for your input.

[THAIJAMES]

Nothing wrong but somewhat redundant.

Why go the company route in the first place? Have a Thai individual buy the property and issue a 30 year lease, or better yet, an usfruct at the same time

That way you will save the approximately 15,000 THB fee for the annual company audit.

By the way, those who set up these companies are smart enough to insure that they have control by limiting the strength of the thai shareholders by diluting their voting rights by keeping 49% for themselves and the remaining 51% spread out over other shareholders

I recall a thread only a few days ago that mentioned that a company needs to have a Thai director.

I know these companies are all registered with only a foreign director, but according to tha tthread it's illegal.

Also the thing about double voting rights is not legal inn Thailand.

There is so much mis-information about these company structures here at TV since no one appears to understand how the loop holes in the Thai laws are worked by the lawyers here

Yes, the company must have a Thai director to purchase property here in Thailand. BUT , after the property is purchased then the company (and it assets) can be transferred and a new non-Thai director can be named. A simple process that is usually covered in the cost of setting up the company in the first place

Also don't see where my post said anything about double voting rights, all I said is that you control the board by having 49% and splitting the remaining 51% by several other board members, to prevent them from getting together and seizing control (by naming one of themselves to be the managing director)

I tend to agree with your views, I am trying to find opposing information as there are always benefits and pitfalls to any investment decisions and it is so hard to get the real facts here in Thailand even from professionals.

[jbrain]

Nothing wrong but somewhat redundant.

Why go the company route in the first place? Have a Thai individual buy the property and issue a 30 year lease, or better yet, an usfruct at the same time

That way you will save the approximately 15,000 THB fee for the annual company audit.

By the way, those who set up these companies are smart enough to insure that they have control by limiting the strength of the thai shareholders by diluting their voting rights by keeping 49% for themselves and the remaining 51% spread out over other shareholders

I recall a thread only a few days ago that mentioned that a company needs to have a Thai director.

I know these companies are all registered with only a foreign director, but according to tha tthread it's illegal.

Also the thing about double voting rights is not legal inn Thailand.

jbrain, thank you for your contribution. I could not find any info that a company needs to have a thai director. (i am currently the signing director of a number of companies) and yes I do have a work permit!

I understand that any new company that has foreign shareholders needs to show where the money from all the partners came from. However my company is already established quite a few years ago.

Also from what I understand there is still in effect the options for foreign share holders to have preferential shares which have more voting powers, in effect allowing foreign control of the company.

While there has been a lot of talk, I don't think the laws were ever changed, only more strictly enforced. Mainly that companies must have paid up capital and all thai partners must show their source of capital.

This more strict enforcement is not applicable to existing companies. Even if it was, the existing land owner is putting their land in exchange for being a share owner. So there is no problem of existing capital.

Any information or links contrary to the above would be greatly appreciated.

This will make a good read for you, let us know what your conclusions are.

http://www.samuiforsale.com/knowledge/overview-property-law-thailand.html#12

http://www.samuiforsale.com/knowledge/land-holding-company-structure.html

Edited March 27, 2013 by jbrain

[Langsuan Man]

If you need a work permit to be a director then please tell me why the Department of Business Development, Ministry of Commerce, does not require the work permit to be submitted when directorships change ?

In a country where you must have a Certificate of Residence to get a drivers license or to register a car, one would think that the Ministry of Commerce would require the work permit to change directorships..... but they don't....and this illegal argument is bandied around TV all the time yet, other than the motorcycle gangs in Phuket a couple of years ago, I have never seen any actual evidence of all this supposed illegality..... other than from the mighty all knowing Thai Visa keyboards

[THAIJAMES]

jbrain,

Thanks for the links. I have spent a number of hours reading material on the excellent site. My conclusion is that it is should be viable option depending on your circumstances. I could not find any information to the contrary.

I agree with Langsuan Man that there is a lot of misinformation on Thai Visa. The samui for sale web site does answer a majority of the questions if you read carefully.

Basically my conclusion until someone can prove otherwise is that anyone that has a legitimate company and wants to add extra protection can have both a land lease and part ownership in the land through a company.