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39% Plus Shares In Limited Company


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The below article has appeared this month in the hua hin observer.

Is this scaremongering or what?

Do different Land department offices apply different rules?

Can they refuse if you have plans in the future to do business on the land?

Anyone recently bought in Hua Hin with 49% shares?

http://www.observergroup.net/thismonth.htm

Practice of the Land Department

Foreigners sometimes buy land by using companies which are nominally majority Thai owned. Under the present law, a Thai company which is at least 51% Thai owned may buy land. In practice, the Land Department is reluctant to register transfers of land to any company that is more than 39% owned by foreigners. In a case where a company has any foreign shareholders or foreign directors, the Land Department may refuse to permit a transfer, until it is satisfied that the Thai equity in the company is real and that the Thai shareholders are not nominees of foreigners. In this respect, the Land Department may investigate Thai shareholders to see if they have the resources to purchase their shares. Such an inquiry may involve a request to see income tax returns. Cases in which foreigners own more than 39% of the shares are referred to the Director General of the Land Department for consideration.

Edited by jflundy
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I'm no lawyer, so I'm just postulating...

The Thai law I believe dictates the 51% rule. Therefore, anything outside of this is just hot air from the authorities or journalist. They may well put obsticles in the way, but legally the company can purchase - if the seller wants to sell - then the company can probably enforce its right under Thai law to buy it.

If the Thai Gov. doesn't like it, it needs to change the law.

I think shares can be gifted, so checking that they could not afford to buy them is not much of an arguement.

Remember TiT - every Gov. office applies their interpretation of the law. It doesn't mean that they can enforce this if tested by the courts. We know of the 'Thais married to Farangs can't buy land' rule that was impossed a while back - once tested in law it was found to be unconsitutional. It was therefore supported by the inherritance laws and need to sign a abdication or your right as a foreigner to take any ownership of the land - i.e. its not yours.

In short - just 'cos they so its so don't make it so.

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The below article has appeared this month in the hua hin observer.

Is this scaremongering or what?

Do different Land department offices apply different rules?

Can they refuse if you have plans in the future to do business on the land?

Anyone recently bought in Hua Hin with 49% shares?

http://www.observergroup.net/thismonth.htm

Practice of the Land Department

Foreigners sometimes buy land by using companies which are nominally majority Thai owned. Under the present law, a Thai company which is at least 51% Thai owned may buy land. In practice, the Land Department is reluctant to register transfers of land to any company that is more than 39% owned by foreigners. In a case where a company has any foreign shareholders or foreign directors, the Land Department may refuse to permit a transfer, until it is satisfied that the Thai equity in the company is real and that the Thai shareholders are not nominees of foreigners. In this respect, the Land Department may investigate Thai shareholders to see if they have the resources to purchase their shares. Such an inquiry may involve a request to see income tax returns. Cases in which foreigners own more than 39% of the shares are referred to the Director General of the Land Department for consideration.

I believe Bobcat has commented previously that he has seen documentation from the Land Department that the 39% rule is no longer to be followed, and he creates 49% companies with no problem.

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Leasing land off your missus is so mch easier.

Yes, you're right.

I was once thinking of The Company route myself, but when I spoke to people who had gone the same route, it seemed many were worried about the fact that they were not really a trading company, just using a company as a front, and in the future could well be exposed to any changes in Policy.

By the way, I never went for the lease either. :o

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I can't really understand people still having non-trading front companies!

Set the company up correctly, specify in the statues of association that the purpose of the company is acquiring real estate, to then get revenue of renting it out.

It will cost a lot more yearly then your nontrading company, but a good accountant knowing all allowed expenses you can deduct (maintenance, depreciation, etc) will keep the tax to be paid reasonable.

The thing to be afraid of is the nominee Thai shareholders!

Once the officials can accertain that these nominees never brought the cash inside the company as per the share distribution, the company can be deemed illegal, with possible jailterms for all shareholders, cancelling of the company etc...

But of course, correct trading companies, paying a nice amount of tax are very unlikely to come under the scrutiny of the officials.

It's the companies just sitting there, doing absolutely nothing but costing the government money and time in administration costs without generating any tax revenue whatsoever which sooner or later are going to be very closely looked at...

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jflundy,

I think the fault in your reasoning would be that you can legally hold only 49% of the shares.

You cannot gift something away if you cannot own it. So who is going to gift the 51% of the shares (which can only be held by a Thai national) to your family?

The 51% would innitially have to be owned by a Thai national (actual 6 Thai nationals, since you need a total of 7 or more shareholders) who would have to prove again that they actually invested in the company!

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There is no need for a company's share structure to be identified within either a Land Sell Buy Agreement or Construction Agreement, are you sure?

The property boom in Hua Hin started approximately 3 years ago, would be interested to know what did your developer develop for the 9 years prior to that?

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There is no need for a company's share structure to be identified within either a Land Sell Buy Agreement or Construction Agreement, are you sure?

The property boom in Hua Hin started approximately 3 years ago, would be interested to know what did your developer develop for the 9 years prior to that?

Involved in numerous other businesses development-related.

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The thing to be afraid of is the nominee Thai shareholders!

Once the officials can accertain that these nominees never brought the cash inside the company as per the share distribution, the company can be deemed illegal, with possible jailterms for all shareholders, cancelling of the company etc...

But of course, correct trading companies, paying a nice amount of tax are very unlikely to come under the scrutiny of the officials.

It's the companies just sitting there, doing absolutely nothing but costing the government money and time in administration costs without generating any tax revenue whatsoever which sooner or later are going to be very closely looked at...

Question: I've heard a lot of the scare stories, but never heard first hand from someone who has actually been stuffed by Thai shareholders or had his company declared illegal... is there anyone out there that has had this happen to them?

Cheers

sr

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