JimmyGreaves Posted March 17, 2006 Share Posted March 17, 2006 (edited) 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 March 17, 2006 by jflundy Link to comment Share on other sites More sharing options...
wolf5370 Posted March 17, 2006 Share Posted March 17, 2006 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. Link to comment Share on other sites More sharing options...
astral Posted March 17, 2006 Share Posted March 17, 2006 When my company bought my house I had a 39% holding. Later this was changed to 49%, after the event, so to speak. Link to comment Share on other sites More sharing options...
Sir Burr Posted March 17, 2006 Share Posted March 17, 2006 Leasing land off your missus is so mch easier. Link to comment Share on other sites More sharing options...
Dragonman Posted March 18, 2006 Share Posted March 18, 2006 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. Link to comment Share on other sites More sharing options...
Maigo6 Posted March 18, 2006 Share Posted March 18, 2006 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. Link to comment Share on other sites More sharing options...
Bobcat Posted March 19, 2006 Share Posted March 19, 2006 Yes, that's right - but it is possible that some officers are still wary. I'll dig up the regulation from the Land Department and try to post it if I can. Link to comment Share on other sites More sharing options...
monty Posted March 20, 2006 Share Posted March 20, 2006 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... Link to comment Share on other sites More sharing options...
JimmyGreaves Posted March 20, 2006 Author Share Posted March 20, 2006 Monty Are you saying that you cannot give your family shares in the company or cannot gift shares? Link to comment Share on other sites More sharing options...
JimmyGreaves Posted March 20, 2006 Author Share Posted March 20, 2006 Bobcat Really would like to see the official documents on the abolishment of the 39% rule. You any closer to tracking it down. Cheers Link to comment Share on other sites More sharing options...
monty Posted March 20, 2006 Share Posted March 20, 2006 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! Link to comment Share on other sites More sharing options...
JimmyGreaves Posted March 21, 2006 Author Share Posted March 21, 2006 (edited) Monty Yes but surely you can gift the money or loan the money to buy the 51%. Edited March 21, 2006 by jflundy Link to comment Share on other sites More sharing options...
johnnyk Posted March 21, 2006 Share Posted March 21, 2006 Interesting thing, when I got the contracts to sign for the house I'm buying in HuaHin the developer's company is a 39% one and he is a knowledgeable guy who has been doing business sucessfully in HH for 12 years. Link to comment Share on other sites More sharing options...
malcolminthemiddle Posted March 21, 2006 Share Posted March 21, 2006 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? Link to comment Share on other sites More sharing options...
johnnyk Posted March 22, 2006 Share Posted March 22, 2006 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. Link to comment Share on other sites More sharing options...
SportRider Posted March 22, 2006 Share Posted March 22, 2006 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 Link to comment Share on other sites More sharing options...
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