Guaranteed Property Lease From Company Share Ownership?

[mccw]

Say a thai and a non thai formed a company according to the law 51-49% ownership with full funds proportionally coming from each others separate bank accounts; its no problem right? To buy the land with company like this.

Then what if the company wanted to "sell" a plot or house on this land to a non Thai by the following method.

I understand a lease is not normally garranteed renewable.

But how about the non Thai buys x number of shares in the company which corresponds proportionally to the plot size and by the contract ownership of these shares does guarantee a lease / usage rights over the specified area of land belonging to the company?

Non Thai shares kept to with in the 49% limit. So the law is still followed, no nominees and no problems?

Alternatively how about just a company that issues leases with a garrantee / some kind of contractual moneyary penalty if not renewed? In this case no % restrictions is a plus.

I thought owning part of the actual land holding company would give buyers more of a sense of security than a strait normal lease even with the contracts. Then the shares can be sold to transfer "ownership" / lease / usage rights. Kind of like a share of free hold arrangement.

Another thread mentions the problems of non payment of service/ maintenance fees; this structure I propose could be preferable even to a full title in this area since it could be written that if fees aren't met then those people can loose their lease or be subject to forced buy back or similar? Also clear accounts and management for services and fees can be through part of the company structure.

I'm not claiming to be a legal expert or expecting others to be; just interested to hear people's thoughts really. If something like this were available for you as a means to "buy" a plot to build you dream house on, live all life and pass on to kids etc 100% on your name then would be interested? go for it? or too complicated and dodgy sounding?

I think about this company for buy the big land build infrastructure and "sell"/ lease plots.

Cheers

[Sophon]

Why would being a minority share holder in a company with no influence on what the company decides to do make me feel more secure than having a lease in my name? What would stop the company from selling the land at below market value to a third party?

Sophon

[BrianCR]

Nice thinking except, I hope that you understand in order for a Thai/Western Company to buy the land in the first place the Company has to invest a minimum of 500 million baht?

Plus on your memorandum of understanding you would by law have to state that the company was intending to buy and lease land - I think that you'll find that this will be refused by the registering authorities as, the reason for being allowed to own the land in the first place is to build your factory or offices!

Edited May 15, 2013 by BrianCR

[mccw]

Nice thinking except, I hope that you understand in order for a Thai/Western Company to buy the land in the first place the Company has to invest a minimum of 500 million baht?

Plus on your memorandum of understanding you would by law have to state that the company was intending to buy and lease land - I think that you'll find that this will be refused by the registering authorities as, the reason for being allowed to own the land in the first place is to build your factory or offices!

I thought this 500million and factory is a clause for sole foreign ownership to encourage large scale manufacturing investment?

A 51% Thai 49% foreigner company like a smaller scale resort can buy land like this no?

I think to keep the 51% Thai owned as being my wife. She would run and operate a rental/ resort residence style operation. The 49% foreign legal plots could then be "sold" for people to build what they want on (maybe under certain conditions so not ruin the look of the place and covenants on behaviour etc- a monthly service charge then contributes to security etc.)

[mccw]

Why would being a minority share holder in a company with no influence on what the company decides to do make me feel more secure than having a lease in my name? What would stop the company from selling the land at below market value to a third party?

Sophon

I thought a garrantee of lease renewal for owner x shares on the corresponding land could be written in to binding contracts; shares passing to new owner = new lease holder whether through sale or inheritance. So you feel more secure than a strait lease which is maximum 30years and on trust if it renewed or not.

The idea is that even if Company were to be sold then lease holding to share structure would continue to exist and services etc garrantteed, also that the resort land should be continued to be used in such a non obtrusive way.

You don't have majority in a condo or control over the other land in your moobaan either.

[Sophon]

Why would being a minority share holder in a company with no influence on what the company decides to do make me feel more secure than having a lease in my name? What would stop the company from selling the land at below market value to a third party?

Sophon

I thought a garrantee of lease renewal for owner x shares on the corresponding land could be written in to binding contracts; shares passing to new owner = new lease holder whether through sale or inheritance. So you feel more secure than a strait lease which is maximum 30years and on trust if it renewed or not.

The idea is that even if Company were to be sold then lease holding to share structure would continue to exist and services etc garrantteed, also that the resort land should be continued to be used in such a non obtrusive way.

You don't have majority in a condo or control over the other land in your moobaan either.

But if the company decided not to honour the contract I would have to go to court, which I would not want to do. And the company might not be sold, it could just be dissolved which I as a minority owner could not prevent. The company could even be dissolved by the authorities if the company fails to pay taxes or send in financial reports. So no, nothing you describe would give me more confidence than a straight 30 year lease from an individual.

Bottom line, if I decided to go for a lease I would consider it a 30 year lease, and not count on any contracts for extension. Even if there were a contract for extra periods the company could easily weasel out of it by charging more for the extension than what it's worth. And if the contract states what the cost of the future extension would be, I believe there is a good chance that the contract could be challenged on the grounds that it would be an attempt to circumvent the law by in effect giving you a 60 year lease.

No, I don't have control over the other condos if owning a condominium, but I do have control over my own condo.

Sophon

Edit: You didn't address what would prevent the company from selling off the assets to a third party and then dissolving the company. That would leave me with a 30 year lease and a contract with a no longer existing company, i.e. in the same situation I would be in with a straight lease.

Edited May 16, 2013 by Sophon

[BrianCR]

Why would being a minority share holder in a company with no influence on what the company decides to do make me feel more secure than having a lease in my name? What would stop the company from selling the land at below market value to a third party?

Sophon

I thought a garrantee of lease renewal for owner x shares on the corresponding land could be written in to binding contracts; shares passing to new owner = new lease holder whether through sale or inheritance. So you feel more secure than a strait lease which is maximum 30years and on trust if it renewed or not.

The idea is that even if Company were to be sold then lease holding to share structure would continue to exist and services etc garrantteed, also that the resort land should be continued to be used in such a non obtrusive way.

You don't have majority in a condo or control over the other land in your moobaan either.

Sorry Sophon, you're right, i had one to many beers and wasn't thinking straight

[Khun Jean]

A more straight forward way is to build a condominium. 49% of that can be owned freehold by foreigners removing all obstacles for them.

If the location and facilities are good it would be no problem selling it even when it is still only a plan on paper.

The problem is getting the license and permission.

[mccw]

Thank you for the input sophon; that is just the clear reasoning I was hoping for from an uninterested parties view. I guess I was thinking as being the owner of the company, and obviously trusting myself, so overlooked these concerns because too busy trying to find a creative solution to the foreigner land issue. You are absolutely right.

Kunn Jean, yes, thanks, I have considered the condo route; it is a possibility but a fair bit more risk, hassle and capital input than just laying infrastructure and splitting up plots. Think most likely I'll just sell chanort to Thais; no problem.

Cheers