2 firms face action under foreign ownership act

[DrTuner]

There must be gazillions of companies with nominees, including all the ones used to buy land for a house. I reckon the ones to get caught are the ones who've managed to piss off somebody.

[BuffaloRescue]

How I wish Thailand was a free market and non-protectionist

On the other hand it would be a wealthy country which wouldnt be so good for me personally I guess. Or maybe it would.

Its just a matter of national pride coming in the way of common sense, and the Thai elite wanting to (badly) control all the industry to keep them in control, them rich and and the country poor.

Edited March 17, 2014 by BuffaloRescue

[belg]

what is so wrong with a farang, wanting to own 100% of is 100% invested monnies?

feodal rules

[ggt]

They knew the rules...they took a chance and broke the rules...they will likely pay off someone and continue business...or loose their businesses...those are the rules in Thailand...

[Thai at Heart]

If the farangs are investing 100% of the money and taking all the financial risks why can't they run the company. Having to take all the risks and handing over the majority of the profits to Thais is simply wrong. Why would you invest and set up a business employing thais when you will never own it.

Because thai law states that ni foriegners may hold more than 49% ownership in a business. The only exception is for Americans who are permitted to invest and own 100%.

Sent from my GT-S5310 using Thaivisa Connect Thailand mobile app

Under the TAFTA free trade agreement Australians are also able to own 100% of companies in non restricted industries.

Didnt knowabout the aussies. The restricted businesses are simple. No agriculture or private security. At least this is what the American chamber of commerce has told me here in Bkk

Sent from my GT-S5310 using Thaivisa Connect Thailand mobile app

There are more than that. Some big some small

[Thai at Heart]

They found 2.

That's it?

[Dogmatix]

If the farangs are investing 100% of the money and taking all the financial risks why can't they run the company. Having to take all the risks and handing over the majority of the profits to Thais is simply wrong. Why would you invest and set up a business employing thais when you will never own it.

-----------------------

Like it or not the law is the law.

That's as true in Thailand as it is in the U.K. or the U.S.A.

An honest investor would have known about that long before they put their money into an investment in Thailand.

It would have been a basic part of their investigation into investing any funds into Thailand long before they committed funds into a Thai business investment.

Of course, there are people who are using the nominee system to get around the law in Thailand.

That is true of any country in the world .... but most honest investors do a "due diligence" search before they commit any funds into an investment ..... and they know all the rules and associated risks.

If I had money to invest .... and I don't ...... you can be absolutely sure I would double or triple check everything before I risked one Dollar.

You are correct. However, in Thailand they like to have impractical, draconian laws that are spottily enforced but allow them to have crackdowns from time to time that create opportunities for graft and grandstanding like this. Singapore has some limited restrictions on foreign ownership but, in contrast, they ensure that illegal foreign ownership is never registered. Thai lawyers encourage foreign investors to circumvent the FBA, assuring them it is quite legal. The government wants the investment capital and the employment they provide but reserves the right to shut them down.

The original FBA dates back to the early 70s and the language in the current version is virtually unchanged. It claims that ownership restrictions are necessary to allow Thais to have time to compete but doesn't specify how much time is required. Now 40 years on all former closed economies on Thailand's borders have opened up and introduced modern investment codes, while Thailand insists on maintaining this pathetic piece of antiquated protectionism.

[hansgruber]

This is code for get your wallets ready, we are coming.

[Arkady]

The eight firms involved in tourism were found to have done business transparently by having foreign shareholders maintain contacts with customers, while Thais dealt with hotels and restaurants.

However, the two companies found breaching the Act were suspected of allowing foreigners hold the majority share and run the entire firm, which is against the FBA.

I wonder which part of the FBA they think makes it illegal for foreigners to run the entire firm. There is, in fact, no restriction on the management role of foreign executives, except in certain reserved occupations like auditing and law. It is up to the board to appoint whoever they want to run a company of whatever nationality. What they probably mean is that the Thai shareholders are nominees and allow the foreign shareholders to have complete control.

It is also still possible to have different classes of shares with different voting rights, e.g. Thais own 51% of the share capital and their shares have a fixed preference divided but less voting rights than the shares that don't received a fixed dividend. Thus foreigners can legally have majority control of a Thai company. In the 1999 FBA there was a push to make preference shares with lower voting rights illegal but this was shot down as a result of opposition by foreign chambers of commerce who said members would close down a lot of their businesses in Thailand, if they were no longer allowed control through preference shares. It would also have required an amendment to the Civil and Commercial Code which have have made preference shares illegal for Thais as well, blowing up many troubled debt restructurings that were in progress at the time (1999). The Dem govt got scared an backed off. However, it is much more difficult to register this type of structure today, although it is clearly allowed by law.

[moe666]

some Thai companies bought businesses in my country and got 100% of shares , what the government has to say about that ?....... Should be the same here ....

We have Thai friends (husband/wife) who own a Thai restaurant in Melbourne Aust and they own 100% they didn't have to give 51% of their business to an Aussie. The even own the building and the "LAND" it sits on.

Well good for them, this subject has come up before and the laws are the same now as they where the last time. If I remember correctly there was someone then making the same silly argument you are. why why why is it different in Thailand. Cry me a river cry baby

[Arkady]

If the farangs are investing 100% of the money and taking all the financial risks why can't they run the company. Having to take all the risks and handing over the majority of the profits to Thais is simply wrong. Why would you invest and set up a business employing thais when you will never own it.

Why? Because people are greedy and think they can get away with it. I'm glad that Thailand is Nationalistic and slows down foreign ownership.

Are you saying that a farang who is married to a thai and have children are being greedy for wanting more than 49% from their 100% investment. I think it is Thailand acting like a parasite and sucking all they can out of the farang. It is not the foreigner who is being greedy, he is just trying to run a business to take care of his thai family.

Whether you can have a Thai spouse own a majority stake in a business that is 100% funded by you is an interesting legal point. Under the Civil and Commercial Code any new assets acquired by either partner in a marriage are regarded as common conjugal property. Therefore, if you receive a remittance from overseas it is already joint property of your wife and vice versa, if you send the remittance to her. Therefore tests to ascertain whether this remittance later used to subscribe to shares in a new company in the name of your wife was legitimately earned by your wife or came from her Thai family would make no sense under the CCC. Even the Land Dept's band aid declaration form for Thai-foreign couples buying land seems at loggerheads with the CCC and would probably not stand a challenge in the Supreme Court.

I am fairly confident that, if a Thai-foreign couple running a family business with a structure as above were charged under the FBA it would be thrown out by the courts: either the court of first instance, the appeal court or the supreme court, if they defended themselves all the way. A family business is a standard business structure in Thailand and denying the right of Thais married to foreigners to operate such as structure would arguably be unconstitutional as well as against the CCC. Unfortunately the average Thai plod is ignorant of the finer points of the law and only well versed in extortion.

[thailiketoo]

Pardon my ignorance, but under what conditions can an American own 100% of a small business in Thailand. This would be news to at least a couple of hundred Americans that I know of.

Treaty of Amity. It has been there since 1965 or around there.

[thailiketoo]

Is the US is the only country allowed to have its citizens open companies in Thailand without Thai shares under a special pact?

With all its resources Thailand should be a power house in the region, but as it stands will continue to lose out if they don't change their ways and catch up with the likes of Singapore.

555 by the time Thailand even figures out what to do, SG will have gone 50 more years in the future. Nice dream but Thailand is a dump that will never catch up with any developed country. Nice beaches though....

Take a look at the Thailand-Australia Free Trade Agreement On the previous page. Then you will feel like a dummy. PS try the beaches in Pattaya, you'd like em.

[thailiketoo]

Many countries welcome foreign investment, usually actively encouraging it. Not in Thailand, sadly. It would be a massive boost to investment if foreigners could own say up to one rai of land for residential our small business purposes, and own own 100% shares if employing say, a couple of Thais. While Thailand may have a genuine concern about big foreign companies buying up vast tracts of land this doesn't apply to individual or small business owner.

The big companies can buy the land. Do a bit of research.

[downunderontop]

If the farangs are investing 100% of the money and taking all the financial risks why can't they run the company. Having to take all the risks and handing over the majority of the profits to Thais is simply wrong. Why would you invest and set up a business employing thais when you will never own it.

Because thai law states that ni foriegners may hold more than 49% ownership in a business. The only exception is for Americans who are permitted to invest and own 100%.

Sent from my GT-S5310 using Thaivisa Connect Thailand mobile app

Under the TAFTA free trade agreement Australians are also able to own 100% of companies in non restricted industries.

Are u sure i have never read that in the agreement????

[thailiketoo]

If the farangs are investing 100% of the money and taking all the financial risks why can't they run the company. Having to take all the risks and handing over the majority of the profits to Thais is simply wrong. Why would you invest and set up a business employing thais when you will never own it.

Because thai law states that ni foriegners may hold more than 49% ownership in a business. The only exception is for Americans who are permitted to invest and own 100%.

Sent from my GT-S5310 using Thaivisa Connect Thailand mobile app

Under the TAFTA free trade agreement Australians are also able to own 100% of companies in non restricted industries.

Are u sure i have never read that in the agreement????

Well it's only one page back. Go look. Somebody posted the whole thing.

[chooka]

If the farangs are investing 100% of the money and taking all the financial risks why can't they run the company. Having to take all the risks and handing over the majority of the profits to Thais is simply wrong. Why would you invest and set up a business employing thais when you will never own it.

Why? Because people are greedy and think they can get away with it. I'm glad that Thailand is Nationalistic and slows down foreign ownership.

Are you saying that a farang who is married to a thai and have children are being greedy for wanting more than 49% from their 100% investment. I think it is Thailand acting like a parasite and sucking all they can out of the farang. It is not the foreigner who is being greedy, he is just trying to run a business to take care of his thai family.

Whether you can have a Thai spouse own a majority stake in a business that is 100% funded by you is an interesting legal point. Under the Civil and Commercial Code any new assets acquired by either partner in a marriage are regarded as common conjugal property. Therefore, if you receive a remittance from overseas it is already joint property of your wife and vice versa, if you send the remittance to her. Therefore tests to ascertain whether this remittance later used to subscribe to shares in a new company in the name of your wife was legitimately earned by your wife or came from her Thai family would make no sense under the CCC. Even the Land Dept's band aid declaration form for Thai-foreign couples buying land seems at loggerheads with the CCC and would probably not stand a challenge in the Supreme Court.

I am fairly confident that, if a Thai-foreign couple running a family business with a structure as above were charged under the FBA it would be thrown out by the courts: either the court of first instance, the appeal court or the supreme court, if they defended themselves all the way. A family business is a standard business structure in Thailand and denying the right of Thais married to foreigners to operate such as structure would arguably be unconstitutional as well as against the CCC. Unfortunately the average Thai plod is ignorant of the finer points of the law and only well versed in extortion.

I believe they had one of their "Clampdowns" on farangs supporting Thai partners in starting a business. It is an illegal practice, a farang can not give money to his g/f or wife to start a business the money must be hers

[rct99q]

Anybody figured out where Thailand would end up when "farang"-capital flows away?...Disasterous...

Why?? The "farang" keep coming...by the boat load. So the capital keeps flowing. For every business that shuts 20 more open up or want to open.

Now why is that. Why do people insist on opening a business here with Thailands track record.

Is it the cold winter nights that are so attractive. Or the single mother of 8 with missing teeth from Yorkshire that holds great appeal. Why not open your business in say Greenland?

And of course the entire Thai economy would shut down over night if Bob's Bar was to close with all his foreign investment. Truly the only thing that keeps the lights on in this country is the Farang!

[thailiketoo]

Why? Because people are greedy and think they can get away with it. I'm glad that Thailand is Nationalistic and slows down foreign ownership.

Are you saying that a farang who is married to a thai and have children are being greedy for wanting more than 49% from their 100% investment. I think it is Thailand acting like a parasite and sucking all they can out of the farang. It is not the foreigner who is being greedy, he is just trying to run a business to take care of his thai family.

Whether you can have a Thai spouse own a majority stake in a business that is 100% funded by you is an interesting legal point. Under the Civil and Commercial Code any new assets acquired by either partner in a marriage are regarded as common conjugal property. Therefore, if you receive a remittance from overseas it is already joint property of your wife and vice versa, if you send the remittance to her. Therefore tests to ascertain whether this remittance later used to subscribe to shares in a new company in the name of your wife was legitimately earned by your wife or came from her Thai family would make no sense under the CCC. Even the Land Dept's band aid declaration form for Thai-foreign couples buying land seems at loggerheads with the CCC and would probably not stand a challenge in the Supreme Court.

I am fairly confident that, if a Thai-foreign couple running a family business with a structure as above were charged under the FBA it would be thrown out by the courts: either the court of first instance, the appeal court or the supreme court, if they defended themselves all the way. A family business is a standard business structure in Thailand and denying the right of Thais married to foreigners to operate such as structure would arguably be unconstitutional as well as against the CCC. Unfortunately the average Thai plod is ignorant of the finer points of the law and only well versed in extortion.

I believe they had one of their "Clampdowns" on farangs supporting Thai partners in starting a business. It is an illegal practice, a farang can not give money to his g/f or wife to start a business the money must be hers

Under the TAFTA free trade agreement Australians are also able to own 100% of companies in certain industries.

[zink]

some Thai companies bought businesses in my country and got 100% of shares , what the government has to say about that ?....... Should be the same here ....

We have Thai friends (husband/wife) who own a Thai restaurant in Melbourne Aust and they own 100% they didn't have to give 51% of their business to an Aussie. The even own the building and the "LAND" it sits on.

That's the same in the U.S., of course, not just for people from Thailand, but from any country.

As long as you're in the country legally in terms of Immigration, you can operate and own any business you like. No rules that this or that sector is reserved only for native Americans, etc etc.

LOTS of Thai small business owners in the U.S.

Remember Dubai Ports deal? That was canceled because of foreign ownership issues, even thought the law didn't explicitly disallow the deal.

Airline business is another sector that is reserved only for Americans. Foreigners can only have minority ownership. Same applies for EU.

All countries have a long list of sectors where the foreign ownership is limited. Only difference is that this list is longer in Thailand.

[zink]

Pardon my ignorance, but under what conditions can an American own 100% of a small business in Thailand. This would be news to at least a couple of hundred Americans that I know of.

Any business that is not on the "Restricted Business Activities" list can be 100% owned by foreigners: http://www.boi.go.th/index.php?page=legal_issues_for_investors_01_foreign_business_act

[sustento]

Many countries welcome foreign investment, usually actively encouraging it. Not in Thailand, sadly. It would be a massive boost to investment if foreigners could own say up to one rai of land for residential our small business purposes, and own own 100% shares if employing say, a couple of Thais. While Thailand may have a genuine concern about big foreign companies buying up vast tracts of land this doesn't apply to individual or small business owner.

When the Thai government talks about foreign investment they're thinking of companies like Toyota who have 7 billion baht of registered capital in Thailand. I know it's hard to get your head round but buying a rai in the boonies and employing your mother-in-law isn't 'foreign investment'.

[Mikki Nyman]

6,942 registered companies - is that it? fewer than 7,000 companies in the whole country?! lmfao

No wonder the oligarchs keep control.

Still can't believe there are so few but can't find an exact figure. Maybe 7,000 just in Chiang Mai.

I thought of setting up a company when I first moved here... then thought again.

Yes, wait for the AEC to kick in and let's see how Thais are going to stop companies from ASEAN countries operating in Thailand. Then pick the best other ASEAN country and set up a company there.

Singapore is the best option.

Very easy to setup company with full ownership, and very transparent laws and regulations. No actual corruption at all, and all done as english as official language.

I have already Ltd formed there and Im waiting patiently what will happen next year, 2 law firms I have talked says that eventually Thailand must comply with ASEAN articles.

What is not making situation any easier, is the fact that 99% of Thais have no idea about ASEAN and how it will change their country.

[thailiketoo]

6,942 registered companies - is that it? fewer than 7,000 companies in the whole country?! lmfao

No wonder the oligarchs keep control.

Still can't believe there are so few but can't find an exact figure. Maybe 7,000 just in Chiang Mai.

I thought of setting up a company when I first moved here... then thought again.

Yes, wait for the AEC to kick in and let's see how Thais are going to stop companies from ASEAN countries operating in Thailand. Then pick the best other ASEAN country and set up a company there.

Singapore is the best option.

Very easy to setup company with full ownership, and very transparent laws and regulations. No actual corruption at all, and all done as english as official language.

I have already Ltd formed there and Im waiting patiently what will happen next year, 2 law firms I have talked says that eventually Thailand must comply with ASEAN articles.

What is not making situation any easier, is the fact that 99% of Thais have no idea about ASEAN and how it will change their country.

Of course the wages are the same in Singapore and Thailand.

[Frostie]

It's all very well listening to bar room lawyers and the varying degrees of opinion... Why not go direct to http://www.boi.go.th/index.php?page=index which is a Thai Government website for The Board of Investment and look under the heading "Doing Business" and the various subheadings.. All answers will be revealed.

[NCFC]

Many countries welcome foreign investment, usually actively encouraging it. Not in Thailand, sadly. It would be a massive boost to investment if foreigners could own say up to one rai of land for residential our small business purposes, and own own 100% shares if employing say, a couple of Thais. While Thailand may have a genuine concern about big foreign companies buying up vast tracts of land this doesn't apply to individual or small business owner.

When the Thai government talks about foreign investment they're thinking of companies like Toyota who have 7 billion baht of registered capital in Thailand. I know it's hard to get your head round but buying a rai in the boonies and employing your mother-in-law isn't 'foreign investment'.

7,000 farang investing one million baht is equal to that Toyota registered capital. Now we have a lot more than 7k farang and investing say 3-4mill in a house, a workshop or a restaurant and you can see the amount is far larger than Toyota so think again

Sent from my iPhone using Thaivisa Connect Thailand

[sustento]

Many countries welcome foreign investment, usually actively encouraging it. Not in Thailand, sadly. It would be a massive boost to investment if foreigners could own say up to one rai of land for residential our small business purposes, and own own 100% shares if employing say, a couple of Thais. While Thailand may have a genuine concern about big foreign companies buying up vast tracts of land this doesn't apply to individual or small business owner.

When the Thai government talks about foreign investment they're thinking of companies like Toyota who have 7 billion baht of registered capital in Thailand. I know it's hard to get your head round but buying a rai in the boonies and employing your mother-in-law isn't 'foreign investment'.

7,000 farang investing one million baht is equal to that Toyota registered capital. Now we have a lot more than 7k farang and investing say 3-4mill in a house, a workshop or a restaurant and you can see the amount is far larger than Toyota so think again

Sent from my iPhone using Thaivisa Connect Thailand

You think Thailand doesn't have enough restaurants or workshops?

[Thai at Heart]

Many countries welcome foreign investment, usually actively encouraging it. Not in Thailand, sadly. It would be a massive boost to investment if foreigners could own say up to one rai of land for residential our small business purposes, and own own 100% shares if employing say, a couple of Thais. While Thailand may have a genuine concern about big foreign companies buying up vast tracts of land this doesn't apply to individual or small business owner.

When the Thai government talks about foreign investment they're thinking of companies like Toyota who have 7 billion baht of registered capital in Thailand. I know it's hard to get your head round but buying a rai in the boonies and employing your mother-in-law isn't 'foreign investment'.

7,000 farang investing one million baht is equal to that Toyota registered capital. Now we have a lot more than 7k farang and investing say 3-4mill in a house, a workshop or a restaurant and you can see the amount is far larger than Toyota so think again

Sent from my iPhone using Thaivisa Connect Thailand

When you put it like that, indeed, SMEs are the fountain of growth for an economy.

[chooka]

Thailand is full of <deleted> when it says it has trade agrrements with countries like Australia. They say they have no import duties, bullshite. If I want to put vegemite on my toast it is cheaper for me to fly to Australia get it spread and fly back. Almost 15 AUD for a small jar of vegemite in Thailand and you can buy the same thing in Aust for 3 AUD

[KamalaRider]

How is this act going to square with membership of the AEC ?

It shouldn't change it. Thai companies still need to be Thai majority owned, BUT foreign (ASEAN) companies will be able to operate in Thailand (possibly just particular sectors though).

Wrong, at 2015 when ASEAN will be in full power, it will start with 70% ownership.