Moving The House To The Wife's Name

[GuestHouse]

I believe this is a problem and have said as much, but I have yet to hear a response.

In response to the recent enforcement of Foreign Ownership laws, let us surpose I want to close a 49/51% Thai Limited Company that owns property and move to a Lease or simply give the property to my Thai wife.

At the point of disposing of the company assets (the house and land), what is to stop the 51% Thai shareholders from demanding 51% of the company assets (51% of the House and land)?

Edited June 1, 2006 by GuestHouse

[rishi]

I would distinquish between (at least) two different situations:

1) The wife owns 51% of the shares (minus 5 shares a 100 baht)

2) All other situations.

In case 1) I'll just transfer my 49% to my wife (minus 1 share to some niece). Case 2) I'll leave up to others to comment on.

[thaihome]

I believe this is a problem and have said as much, but I have yet to hear a response.

In response to the recent enforcement of Foreign Ownership laws, let us surpose I want to close a 49/51% Thai Limited Company that owns property and move to a Lease or simply give the property to my Thai wife.

At the point of disposing of the company assets (the house and land), what is to stop the 51% Thai shareholders from demanding 51% of the company assets (51% of the House and land)?

Assuming your company is set with you owning preferred shares which have voting rights that give you control, you hold a shareholders meeting with 3 motions on the agenda:

Sell the property to your wife

Only the preferred shares get dividends.

Wind up the company

I'm sure some else is probably more qualified to answer.

TH

[pepi1]

Other points to consider----What if a shareholder dies? ----When the Co is sold the proceeds should be divided up with shareholders---ouch! make sure that shareholders have been informed about any dividends.----stay legal---sleep at night ---all in my opinion

[rishi]

As far as I've understood - from my lawyer and from replies to a thread I initiated some time ago regarding preference shares - well, you can't have both in bag and sacks. If the preference shares give you control (by means of e.g. 1 share = 10 votes) you loose out on the sharing of dividends and capital gains. Quite understandably, your control of company affairs, doesn't give you the right to pocket all the gains the company makes on the expense of holders of ordinary shares.

Thus, selling out of company assets, without dishing out to nominee shareholders, could be an impossible thing do, legally.

I see the heading of this thread a bit biased - once again the Thai wifes are going to get the vip. Actually, in those cases there actually is a Thai-wife involved, the specific problem mentioned in OP, is easily solved by transferring/selling the shares to the wife and keep the company. You'll be stucked with the overhead of 15-20 k to the yearly audit, but you'll save the land transfer fees (which could counterweight the audit expenses for your lifetime if you have a mansion on a large plot of prime land).

I can follow OP with respect to the not so uncommon situation, where the Thai shareholders are nothing but lawyer provided nominees. I too cannot see anything that can prevent those guys from coming crawling out of the woodwork, when they feel it opportune. I've never quite understood the confidence expressed by (in my opinion trustworthy) lawyers - including some regular posters on this board - that it would be more safe to have their employees as shareholders than your beloved wife and her family.

You might, rightfully, trust the integrety of the lawyer you know - but how can you (and he) be perfectly sure of the integrity of his staff?

Well, the majority of staffmembers around the lawyer-offices probably are quite decent - but why should a lawyer-office be the only kind of place, where some staff-member doesn't keep records/copies he can use for own benefit after leaving the job? --- And those shareholder-nominees will be the same guys that handled your case and consequently will know each and every detail of your situation and each and every paper in your file.

[GuestHouse]

Some of the regular posters on all things setting up companies are notable by there absence in this post.

[SunbeltAsia]

Some of the regular posters on all things setting up companies are notable by there absence in this post.

Didn't see your post. Sorry. I see you are looking for free advice. :-)

At the point of disposing of the company assets (the house and land), what is to stop the 51% Thai shareholders from demanding 51% of the company assets (51% of the House and land)?

It is how the company was structured in the By-laws and if you had good legal advice. You are surmising that if someone owned 99% of a company, they are entitled to 99% of the funds. That is what your logic tells you, but a persons logic is not always in the laws. Check the Civil and Commercial Code and see where it states that a 1% shareholder must get 1% of the liquidation proceeds? You can get a copy of the code at Asia Books.

www.lawyer.th.com

[pepi1]

I believe this is a problem and have said as much, but I have yet to hear a response.

In response to the recent enforcement of Foreign Ownership laws, let us surpose I want to close a 49/51% Thai Limited Company that owns property and move to a Lease or simply give the property to my Thai wife.

At the point of disposing of the company assets (the house and land), what is to stop the 51% Thai shareholders from demanding 51% of the company assets (51% of the House and land)?

[pepi1]

I believe this is a problem and have said as much, but I have yet to hear a response.

In response to the recent enforcement of Foreign Ownership laws, let us surpose I want to close a 49/51% Thai Limited Company that owns property and move to a Lease or simply give the property to my Thai wife.

At the point of disposing of the company assets (the house and land), what is to stop the 51% Thai shareholders from demanding 51% of the company assets (51% of the House and land)?

[pepi1]

I believe this is a problem and have said as much, but I have yet to hear a response.

In response to the recent enforcement of Foreign Ownership laws, let us surpose I want to close a 49/51% Thai Limited Company that owns property and move to a Lease or simply give the property to my Thai wife.

At the point of disposing of the company assets (the house and land), what is to stop the 51% Thai shareholders from demanding 51% of the company assets (51% of the House and land)?

[pepi1]

I believe this is a problem and have said as much, but I have yet to hear a response.

In response to the recent enforcement of Foreign Ownership laws, let us surpose I want to close a 49/51% Thai Limited Company that owns property and move to a Lease or simply give the property to my Thai wife.

At the point of disposing of the company assets (the house and land), what is to stop the 51% Thai shareholders from demanding 51% of the company assets (51% of the House and land)?

This is the big problem I am afraid. Shareholders invest in a Co. in order to reap rewards later(ie stockmarket) If a Co goes bust they get nothing. However, if assets transfered for whatever reason there must be a agm with all shareholders giving their agreement. They are entitled to the value AT LEAST to their shareholding ratio. All lawyers should have explained the pitfall s of forming Cos. I am sorrybut I think all those so called s/holders(cleaning ladies etc) are about to come into money)

[SunbeltAsia]

They are entitled to the value AT LEAST to their shareholding ratio.

Please point out where in the Thai law, it states this.

www.lawyer.th.com

[Mobi]

I believe this is a problem and have said as much, but I have yet to hear a response.

In response to the recent enforcement of Foreign Ownership laws, let us surpose I want to close a 49/51% Thai Limited Company that owns property and move to a Lease or simply give the property to my Thai wife.

At the point of disposing of the company assets (the house and land), what is to stop the 51% Thai shareholders from demanding 51% of the company assets (51% of the House and land)?

This is the big problem I am afraid. Shareholders invest in a Co. in order to reap rewards later(ie stockmarket) If a Co goes bust they get nothing. However, if assets transfered for whatever reason there must be a agm with all shareholders giving their agreement. They are entitled to the value AT LEAST to their shareholding ratio. All lawyers should have explained the pitfall s of forming Cos. I am sorrybut I think all those so called s/holders(cleaning ladies etc) are about to come into money)

Surely, the signed undated share transfer forms you are holding of all the Thai shareholders protect you, if you have any concerns that they may try something. You could simply transfer those shares to someone else who you do trust - your wife? your in laws? whoever.

I always thought that these 49% companies were structured in such a way that the farang, holding a different class of share, always had effective control and therefor could do whatever he wanted: close the company, transfer the assets to his wife, etc, and the "other" shareholders would not be entitled to anything, provided the relevant stautory meetings were held and the appropriate resolutions so passed.

[SunbeltAsia]

Surely, the signed undated share transfer forms you are holding of all the Thai shareholders protect you, if you have any concerns that they may try something. You could simply transfer those shares to someone else who you do trust - your wife? your in laws? whoever.

The share transfer in themselves do not give much protection. What does is in the By-laws that the shares are restricted and can not be transferred or sold without the Share Registers permission which is the MD.

I always thought that these 49% companies were structured in such a way that the farang, holding a different class of share, always had effective control and therefor could do whatever he wanted: close the company, transfer the assets to his wife, etc, and the "other" shareholders would not be entitled to anything, provided the relevant stautory meetings were held and the appropriate resolutions so passed

You are understanding the protection the class of shares with more voting rights has, and why a 51% shareholder may not be entitled to 51% of the assets. Its all in the votes. The preferred shareholder are entitled to the first portion of the liquidating assets which must be voted on by the shareholders and agreed upon when the company was formed.

www.lawyer.th.com

[Nadia 2]

Surely, the signed undated share transfer forms you are holding of all the Thai shareholders protect you, if you have any concerns that they may try something. You could simply transfer those shares to someone else who you do trust - your wife? your in laws? whoever.

The share transfer in themselves do not give much protection. What does is in the By-laws that the shares are restricted and can not be transferred or sold without the Share Registers permission which is the MD.

I always thought that these 49% companies were structured in such a way that the farang, holding a different class of share, always had effective control and therefor could do whatever he wanted: close the company, transfer the assets to his wife, etc, and the "other" shareholders would not be entitled to anything, provided the relevant stautory meetings were held and the appropriate resolutions so passed

You are understanding the protection the class of shares with more voting rights has, and why a 51% shareholder may not be entitled to 51% of the assets. Its all in the votes. The preferred shareholder are entitled to the first portion of the liquidating assets which must be voted on by the shareholders and agreed upon when the company was formed.

www.lawyer.th.com

Section 77 CCC; 'The provisions on agency of this Code shall apply to the relationship between the juristic persons and its representatives, and between the juristic person or its representative and third persons, mutatis mutandis'

Preference shares or not, your (nominee) shareholder could of course say you have no say in this matter as you have a personal interest.......

[SunbeltAsia]

Preference shares or not, your (nominee) shareholder could of course say you have no say in this matter as you have a personal interest.......

However the special corporate by-laws which still follow the Civil Commercial Code, and approved by the Thai government have already set the precedent on how the company should be governed by the voting rights and how the proceeds should be split between the different class of shareholders.

It would be pretty tough road for any shareholder to argue after the liquidation of the company with the special articles of incorporation, that the split of the proceeds should be different because of a personal interest of one of the shareholders.

www.lawyer.th.com

[SEAtramp]

It never fails to astound me that people look for legal advice on a web forum. See a lawyer mate.

[thaigene2]

Preference shares or not, your (nominee) shareholder could of course say you have no say in this matter as you have a personal interest.......

Thai government have already set the precedent ...

www.lawyer.th.com

Sunbelt - I'm probably wrong..but I thought 'precendent', as in English Common Law-style, isn't recognised here? A court can decide one thing one day and another court or judge can ignore it and decide something else the next..right? Oh and you can't criticize the judgements.. ;-)

[thaigene2]

Here the real question..Let's assume some are correct and the Thai government eventually decides at long last to allow foreigners with Thai spouses a chance to list their name jointly on the freehold...I wonder how many Thai wives will refuse to sign over 50% of the property to their hubbies?

The real test is yet to come darling.....he, he..

[Dragonman]

It never fails to astound me that people look for legal advice on a web forum. See a lawyer mate.

People should always seek legal advice from a licenced Thai lawyer! However it does no one any harm to be prepared for your discussion with all the information available on this forum. Many people have posted laughable comments from some lawyers they have talked to without knowing all the facts. Besides, I believe Sunbelt are Legal Advisors.

thaigene2. Whatever the legal system Judges use precedents! Although strictly speaking they need not. The Thai Civil Law system was preceded by reference to the Common Law of England & Wales. Old habits die hard.

[Mobi]

It never fails to astound me that people look for legal advice on a web forum. See a lawyer mate.

You mean like all the countless lawyers who advised thousands of farangs to buy their houses through the 49% company route?

Quite frankly, I for one would put more faith in some of the expert opinions I've read in the various topics on this subject in TV Forum than in almost any lawyer you care to name in Thailand.

Its little short of scanadalous how many farangs have been misled by qualified Thai lawyers.

I don't include myself here, because I personally was aware of the risks, but there are undoutedly many farangs who used Thai lawyers in good faith and are now very worrried about their investment in Thai property.

For some, to lose their homes may destroy their lives.

[Digger]

It never fails to astound me that people look for legal advice on a web forum. See a lawyer mate.

You mean like all the countless lawyers who advised thousands of farangs to buy their houses through the 49% company route?

Quite frankly, I for one would put more faith in some of the expert opinions I've read in the various topics on this subject in TV Forum than in almost any lawyer you care to name in Thailand.

Its little short of scanadalous how many farangs have been misled by qualified Thai lawyers.

I don't include myself here, because I personally was aware of the risks, but there are undoutedly many farangs who used Thai lawyers in good faith and are now very worrried about their investment in Thai property.

For some, to lose their homes may destroy their lives.

I think you will find that 80%+ of the 'lawyers' in Pattaya are not qualified lawyers. I know of maybe half a dozen qualified lawyers in Pattaya - none of them operate out of real estate offices. Its amazing how so many people just assume that if he says he is a lawyer, then he must be.

[Mobi]

I think you will find that 80%+ of the 'lawyers' in Pattaya are not qualified lawyers. I know of maybe half a dozen qualified lawyers in Pattaya - none of them operate out of real estate offices. Its amazing how so many people just assume that if he says he is a lawyer, then he must be.

Well the lawyer who handled my business is most certainly from a licensed, fully qualified law firm, and has no connection with any property companies. He has handled house sales for dozens , if not hundreds of farangs, and somewhat jokingly, enjoys a good reputation as an "honest" lawyer. I am sure there are other qualified lawyers too, but I cannot dispute your contention that many farangs use unqualified lawyers. I am sure this is so.

About 3 years ago, on a previous house purchase in BKK, I was advised by a qualified lawyer from a major international law firm, and I would say that I was definitely misled. However, as previously stated , I came to my own conclusions on the legality, and was never really comfortable.

[SunbeltAsia]

People should always seek legal advice from a licenced Thai lawyer! However it does no one any harm to be prepared for your discussion with all the information available on this forum.

100% correct. The problem is you may be told something 180 degress different. The best is to check it out with the Thai government. If you are interested in the company route with land, ask them. What % does the shareholders have to show as a investment, What is considered trading? Can the company use the house purchased as a office? Is this legal? Get the name of the officer. Write down the name and time you talked in your notes. It never hurts to have a reason why you went with the company route. Once again if you in a business and want to buy property, check it out If you have a company that owns a house and it is not kosher, you can make it legal. Call the Land Dept and they will tell you what they are looking for to be legal. Do your own due diligence to satisfy yourself. No matter what you read on Thaivisa.com or law firm you speak to. If you are worried, talk with the Thai Government, on a anonymous basis and find out what you should do.

The legality of setting up a company to own the land is advisable only for the active company who will really run the business. If it was set up with other intentions to just own land, the Land dept will tell you how you can changed to make it legal But you must make that commitment to do so.

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