Closing Company That Owns House

[LeCharivari]

I am doing exactly the same thing as the OP. My friend's Thai wife is buying my house and I have been told it is going to cost roughly 24k baht to wind down the company and transfer owenership.

Wind down the company and transfer ownership are different subjects:

- Wind down means close the company / deregister the company as a juristic entity. And yes there are fees involved. I've been checking this recently because I will soon have no further use for 'my' company. Lawyers (I wouldn't actually use a lawyer for this purpose, because their fees are outrageous for what is a quite mechanical process, but does involve several steps, and does involve various govt. agency costs plus costs of advertisements in several newspapers a number of times), and good accountants have told me that it is unwise to just stop sending annual company reports, annual tax returns etc., and if you do this you are at risk of some backlash, especially from the Thai Revenue Dept. (tax). Fees I've been quoted:

- Thai lawyers - 90,000Baht / 60,000Baht plus the actual costs involved at several Thai Gov't agencies, costs of newspaper adverts. etc.

- Farang lawyer (in Pattaya) 185,000Baht plus the actual costs involved at several Thai Gov't agencies, costs of newspaper adverts. etc., plus 15% surcharge.

- Thai accountant 20,000 plus the actual costs involved at several Thai Gov't agencies, costs of newspaper adverts. etc.

- Transfer ownership means that the company continues but the shareholders have all changed:

- Very simple on-line process to change the shareholders names, no real need to have lawyers involved but probably wise to have a good accountant who is familiar with this subject involved. Also there are a number of better real estate agencies, in Pattaya, and I guess elsewhere, who are knowledgeable and experienced in this matter.The actual on-line transfer of shareholders names is very simple and quick and the gov't., fees involved (on-line) are quite small.

- Accountant will of course charge a fee.

- Outgoing shareholders also sometimes charge a fee for the new shareholders to 'buy the company name'. Plus of course if the company has assets (and/or liabilities) then these items would also be part of the costs to 'buy the company'.

Would you please share whether 24,000Baht includes everything (fee from the person doing the close down work and the fees at govt. agencies, newspapers etc.).

The fees you have been quoted are exorbitant.

Three years ago, when I closed my company following the sale/transfer of the house we owned jointly as directors through the company to my Partner's sole name, it cost me 13,000 baht for the final annual company accounts, 16,500 baht to close the company and 13,000 baht in closing and annual company taxes mainly due to profit from the sale of the house - a total of 42,500 baht.

As subsequently confirmed (coincidentally) by a Revenue Department official (see my previous post) this was all above board and the correct procedures were followed. The lawyer I used was Khun Jirat (Visan) Voradilok of the Attorney's House on North Pattaya Road; he also did the property/house transfer for a fee of 7,000 baht - well worth paying, as although I have done simple land transfers myself his doing so more than paid for itself by minimising the transfer tax.

FYI there are no "farang lawyers" in Pattaya qualified to practice in Thailand, and of those who advertise their services at least one has been struck off in the UK for incompetence.

Thanks for sharing and quite interesting, also thanks for the name of Khun Jirat.

Since I posted my earlier comments on this subject I've been approached by two farang who are interested to take over the company name. In both cases they would pay all costs of the share transfer etc., but if I go this route I will ensure there are no 'loose ends' which come back at me at some future date.

Your comment on 'farang lawyers' is also very interesting. I'm aware of a farang in Pattaya who claims to be a qualified lawyer, he offers short term financing but as a security the borrower has to actually transfer the Thai company to him as the farang shareholder and to the Thais he nominates, with his 'promise' that he will then transfer the company back to the borrower when the loan is repaid. No further comment needed.

Thanks again.

Selling the company on once you have sold the house can be a good deal for buyer and seller, as you avoid the costs of setting up or closing down the company, but really you're only talking about 25,000 baht or so for each as the balance sheets still have to be done, taxes paid, etc.

I don't want to queer your pitch selling the "shell" company, but personally I'd never risk buying such a company for such a small saving. Although you may sell the company to them with all Revenue taxes paid, etc, there is still the possibility that the purchaser could be liable years later for local taxes (see my post above) on a house that the company owned before they became directors and they don't know anything about, and with compound interest this could be hundreds of thousand or millions of baht. I asked the Revenue officer who confirmed with a smile that I had just avoided having to pay this how many cases there were just in my tambon and he told me it was "thousands", Thai as well as farang. Not a problem for you, at least with the Revenue Office, but it could be for the buyer.

The problem with this local tax is its difficult to find out if you're liable or not as they don't have to tell you and its a bit of a Catch 22. If you don't ask you don't know, and if you do ask they may take it as an opportunity to charge you which they might not otherwise have done!

As for the lawyers, be careful. One struck off in the UK, for example, is on the British Embassy list of local lawyers even though this has been reported in the press and they have been told of this.

[Maestro]

A lot of talk regarding winding up the company....but considering what the OP wants to do, why not just sell it on, house included.

That was always an advantage of company ownership, the ease of selling it.

In his capacity of Managing Director of a company the O P can neither "close" the company nor sell it. He can close the door to the company's office, abandon his job an leave the country permanently, if that's what he wants to do that. He ask how this will affect the situation of the house and the answer is that the house will remain the property of the company.

Now, if he believes that he can single-handedly liquidate the company he cannot do this, as has been explained in the discussion that followed his post. I believe that is all he wanted to know, and he has made it clear that he does not wish to discuss the motives for his question. We should therefore leave him in peace.

As to the questions asked by other members regarding companies in which they hold shares, let us by all means continue to discuss them and give advice where we can.

[p_brownstone]

I am doing exactly the same thing as the OP. My friend's Thai wife is buying my house and I have been told it is going to cost roughly 24k baht to wind down the company and transfer owenership.

It cost me 10,000 baht to close a company through a lawyer under similar circumstances.

I still get the company's office annual or bi-annual requests for a return (which I simply ignore.

If you still receive the annual return requests it means you company is still active for the revenue office, and you might one day expect a knock on the door.

When your company get's closed you receive an official document with some stamps from a government agency, to confirm it's closed down.You will also have a liquidation Balance sheet stamped by the revenue office.

I hope you have that document, otherwise I guess tha lawyer made good use of your 10.000 Baht in one or another gogo-bar.

Certainly if you are still receiving these Documents etc. the Company is definitely not closed.

Also bear in mind you cannot just ignore these returns with impunity. The Company doubtless has Thai Directors who are responsible to ensure that these returns are made - failure to do so may result in them being banned from holding Directorships in other Thai Companies in the future.

Patrick

[illdietryin]

I am no expert ,but I suspect that you cannot just close a company which has assets (or liabilities).

You will need to dispose of the asset.

My thoughts are that the company could sell the land to a Thai National -who gets the house for free(worst case) or you sell the company(with land and house) for market price.

If you go for option 1 then you can close the company when the asset is disposed of.

I understand that closing a company is more expensive than creating a company.

I can confirm that closing a registered company in Thailand is a nightmare, particularly where assets are involved and the (mandatory) Thai shareholder compliment are not happy to cooperate. The far better solution (if they are) is to sell the company (or at least your shareholding in it (for which you will need the other directors' written authority, both to accept the sale and the purchase, after a special meeting of the board has sanctioned the move. All that will be involved then is a transfer of shares and the company's assets are of no consequence.

[LeCharivari]

I am no expert ,but I suspect that you cannot just close a company which has assets (or liabilities).

You will need to dispose of the asset.

My thoughts are that the company could sell the land to a Thai National -who gets the house for free(worst case) or you sell the company(with land and house) for market price.

If you go for option 1 then you can close the company when the asset is disposed of.

I understand that closing a company is more expensive than creating a company.

I can confirm that closing a registered company in Thailand is a nightmare, particularly where assets are involved and the (mandatory) Thai shareholder compliment are not happy to cooperate. The far better solution (if they are) is to sell the company (or at least your shareholding in it (for which you will need the other directors' written authority, both to accept the sale and the purchase, after a special meeting of the board has sanctioned the move. All that will be involved then is a transfer of shares and the company's assets are of no consequence.

IF your shareholders have voting rights, yes that could well be a "nightmare". I can't imagine why anyone would set up a company solely to own property where this could happen, unless they were very badly advised. If not, its straightforward: you dispose of the assets (any property) and get a suitable lawyer to close the company for you far a reasonable fee. Pretty painless for all concerned.

[LeCharivari]

(edited).... The Company doubtless has Thai Directors who are responsible to ensure that these returns are made - failure to do so may result in them being banned from holding Directorships in other Thai Companies in the future.

Patrick

Why "doubtless"?

Although I had the required number of Thai shareholders I (farang) was initially the sole director and the only one whose signature had to appear anywhere. I later made my Partner (Thai) a director, but that was my choice and again either of us could sign individually for any transactions/reports, including reports of company meetings and company decisions.

If you use a reliable, recognised and recommended lawyer who specialises in this and who charges a reasonable fee there is no problemm, as long as the company has been set up properly in the first place. If you are thinking of paying pay well over the odds at the costs scorecard was quoted (but wisely rejected!) then you should get some advice, just as you should if you've got a bargain that's simply too good to be true like comserve.

I would never go so far as to say that some lawyers are good, but some are at least reliable and reasonable; others are simply appalling.