Setting Up A Company Elsewhere

[bkkmadness]

A friend and I were hoping to set up our company this year in Thailand (internet business) and we was advised to take the usual path of 7 sharholders, we have 49% ownership but full voting control etc. The normal route for most people I would imagine.

Now after seeing the latest news regarding company set ups for land ownership we have started to have second thoughts about this. I always knew that companies that were set up just to own land and never trade were going to be in for some trouble one day, actually I advised my brother against buying land this way just last year but never really equated it to my own situation as we are going to be a fully operational company and have no intentions of buying land.

But thinking on it a little more we realised there could be a number of problems setting up a company in Thailand this way.

First is the people we spoke to who advised us to set up our company suggested to us that they could provide Thai nominees to say they are shareholders. Now we realise this is illegal. Isn't it?

Second problem with it is that if our company ever got dissolved/sold at any point, whatever worth it has should be legally divided up 49% for us, 51% for the Thai nominees and whats to stop them making a claim on their money?

So we end up working our socks off trying to make the company worth some money, and at the end of the day, 51% of that is owned by people we don't even know.

Surely theres a chance we could lose a significant amount of cash in the future should we decide to sell the comany or it gets dissolved or whatever.

Are we correct in my thinking on the two above points. If I set up the company as I was advised to do so would that be illegal and could we at some point lose 51% of its worth?

Second question (s) is what are the other options. Could we set up the company in another country and just open a branch of it in Thailand?

Obviously we'd need work permits and visas for Thailand as we will be here working for our company.

If so, what countries are suitable? I was thinking of looking at places like Singapore and Hong Kong. Good idea or not?

Any advice given would be much appreciated.

[Crushdepth]

Be very interested to see the replies to this one. But if you have any doubts and its an internet company do you actually have any need to set up your company in Thailand?

Jurisdictional shopping is one of the luxuries of the internet!

[bkkmadness]

Be very interested to see the replies to this one. But if you have any doubts and its an internet company do you actually have any need to set up your company in Thailand?

Sorry, I should've mentioned (but I rushed off to jump in the sauna) that we will be taking money from Thai clients here for advertising, and also wish to hire staff here so we definately need a to have some kind of company/branch of a company/business bank account in Thailand. Also, workpermit/visa etc. requirements need to be thought of.

[simon43]

bkkmadness, I registered my 'internet' company in The Seychelles. Completely anonymous, no annual accounts, only 1 director, no secretary, no Seychelles etc. I do my internet business with UK customers, but for UK VAT I am classifed as doing business with, but not in the UK. So I am zero-rated for VAT and don't have to register for UK VAT. Plus, because I am not working in the UK or resident in the UK or bringing money into the UK (I use an offshore bank account), my company and I pay no UK tax.

Seems pretty well covered...

Simon

PS - But important to note that I do no business in Thailand. I only have customers in the UK!!

[cclub75]

A good scheme. But watchout regarding the "nationality" of your company.

Seychelles is known to be an off shore paradise. Its reputation might be better than some caribean islands. But still.

My point is : an european company having direct business with such off shore place, might be scrutinized by fiscal authorities.

The very important point is to have a bank account not in an "exotic" island. But rather in a solid place of trading, like Hong Kong for instance.

Having invoices/money movements between UK and HK will look perfectly legitimate.

bkkmadness, I registered my 'internet' company in The Seychelles. Completely anonymous, no annual accounts, only 1 director, no secretary, no Seychelles etc. I do my internet business with UK customers, but for UK VAT I am classifed as doing business with, but not in the UK. So I am zero-rated for VAT and don't have to register for UK VAT. Plus, because I am not working in the UK or resident in the UK or bringing money into the UK (I use an offshore bank account), my company and I pay no UK tax.

Seems pretty well covered...

Simon

PS - But important to note that I do no business in Thailand. I only have customers in the UK!!

[poorfarang]

So you will just be setting up a website or something?

[bkkmadness]

bkkmadness, I registered my 'internet' company in The Seychelles. Completely anonymous, no annual accounts, only 1 director, no secretary, no Seychelles etc. I do my internet business with UK customers, but for UK VAT I am classifed as doing business with, but not in the UK. So I am zero-rated for VAT and don't have to register for UK VAT. Plus, because I am not working in the UK or resident in the UK or bringing money into the UK (I use an offshore bank account), my company and I pay no UK tax.

Seems pretty well covered...

Simon

PS - But important to note that I do no business in Thailand. I only have customers in the UK!!

You seem to have a good set up for your type of business Simon43 (from what little I know of it).

This is something we want to have a look at, opening the company elsewhere and just having a branch in Thailand, or just working as employees of the company in Thailand. We are just looking for a way to have 100% ownership over our company, 100% control is just not enough IMHO.

Really although we will have customers from Thailand, I don't suppose it matters a great deal whether they pay their money into a Thai bank account or a Hong Kong bank account. Maybe theres even some kind of tax benefits by setting up a business bank account elsewhere(?) and thats something we'd also look into.

What we definately do require is the work permits and correct visas for ourselves though. We want everything 100% legit.

It just seems from the various companies that we have asked about setting up a company in Thailand they have all offered the same advice, and thats to set up the usual 2 mil baht / 49% ownership style of company.

Now we are closer to doing it and have started to think a little bit more about it, it does seem we are being led down the wrong path and are being advised to set up a company illegally.

Of course they all say 'no one checks, don't worry about it' but its not therir company or money so quite easy for them to say! One company even suggested an alternative of skipping our company set up and taking money 'under the table'!

What worries me is that although the company like most internet companies is worth nothing at some point it'll start making money (fingers crossed!) and it will gather some worth but we would have signed away 51% of that worth at the very start.

An example of one bad scenario I can think of is that someone comes along in a few years, makes us an offer we can't refuse to buy our business, and we sell the company. What's to stop our 51% shareholders giving us their bank details and asking us when their share will be paid in? By rights they could do that and we would not have a legal leg to stand to stand on.

[Digger]

Create a Thai holding company with 100,000 baht capital and a director loan account of 1,000,000 baht. Total revenue in holding company = 1,100,000 baht. Then have that holding company buy 49% of your operating company (i.e invest some of that capital, assuming its a 2,000,000 baht company, it invests some 1,000,000 baht). Then have 4 farang shareholders owning 49% of the company. You then have 5 shareholders already owning some 98% of the company. Additional 2% goes to 2 other Thai shareholders. This is a very simple explanation of how most companies are structured in Thailand (ie foreign owned) - do yourself a favour and go and see a real lawyer - its a piece of cake for them to set it up and follows the Thai law. In the holding company, you have same 4 foreign shareholders (brothers, sisters etc) and then need three Thai shareholders - using 2 sets of shareholding ordinary and preference, means you can have the Thai's buy the preference shares and when dividends come around, you have a vote and the majority of the shareholders vote to only award dividends to ordinary shareholders - given that you have the majority of the shareholding under your control, its a paper excercise.

As I say, there is more to it than this and lots of things you need to be aware off and mindfull in terms of nominees however the key is keeping the capital small, and then allowing couple of Thai's to invest very small amount of money as their element of the paid up capital.

[SunbeltAsia]

The following methods all have advantages and negatives...

1.You could apply for a BOI promotion where you will have 100% of the shares in foreign hands. You can apply for this before you set up your company to see if you will be approved. The big advantage is the Tax Holiday for 8 years and unlimited # of work permits. You only need to have a registered capital of 1 million. The odds of approval are very high in IT but you have to know you will have lots of red tape. We help clients to process the application and give guidance.

2. You could have a 49% foreign own company with preferred ordinary shares. The foreigner has more voting rights. You don't use nominees ( NEVER use nominees) but real Thai shareholders that are looking to invest/ JV. Under the Thai Civil Commercial Code, promoters can pay for the shares with cash or non cash such as service or equipment. This can be in the By-laws of the company how the shares will be paid for. If it is cash and you felt they would still bring something to the table then you could loan them the money to pay for the shares as well. You must have a loan share agreement and proof the loan was made with other documentation.

Other sophisticated strategies could be employed which will protect your interest, as long as it is in the by-laws and has been approved.

3. The holding company and operating company that Digger explained, works as well. The only negative is that it is under debate now, if it violates the Alien Business act and the other negative, its double bookkeeping. However in 1999, this was discussed in Parliament and after a number of days of debate, was allowed to stand.

4. You could form a company with a American. Then you could have 100% of the shares under the Amity Treaty as long as the American(s) has 51% of the shares and the majority of the directors are American or Thai.

5. You could apply for the Foreign Business License as this on List 3 of restricted businesses for foreigners. If you are approved, you can own the shares 100%. You must invest and have registered capital of 3 million Baht ( to obtain the work permit as well, they will look at your companies bank account in this case) if you are approved, you may be subject to conditions such as minimum debt/equity ratio, as well possible number of alien directors resident in Thailand, period of nvestment, technology and assets. The good news is if you are transferring leading edge technology into Thailand, then you will have a good chance for approval.

6. You could set up a branch office. In this case you still would need to apply for the Foreign Business License but the odds of you being approved would be not high as your Headquarters Office at this point, is not substantial. If approved, you must bring into Thailand, 5 million Baht cash in the next 4 years.

The worse way is to set up a Thai Limited company with a common share structure, having nominees and they sign proxy votes. Talk about a match soaked with gasoline next to your head. The match may never get lit but many foreigners play with fire. A smart way and a bad way to do business in Thailand.

An example of one bad scenario I can think of is that someone comes along in a few years, makes us an offer we can't refuse to buy our business, and we sell the company. What's to stop our 51% shareholders giving us their bank details and asking us when their share will be paid in? By rights they could do that and we would not have a legal leg to stand to stand on.

Depending how the company was set up, they could have all the rights where they could get all the money or the opposite! Someone having just 1% of the shares can get 99% of the liquidation of the company or dividends. Logic states they would not be able to, but nothing in the Civil Commercial Code forbids it. Its up to the shareholder votes where the money goes and how the by-laws are set up. If you have more voting rights than, you are in control. You of course would want your shares to have more voting rights than the other class of shareholders . Owning 5% of the shares does not mean you automatically get 5% of the dividends or the liquidation value of a company in Thailand.

[rishi]

So we end up working our socks off trying to make the company worth some money, and at the end of the day, 51% of that is owned by people we don't even know.

Surely theres a chance we could lose a significant amount of cash in the future should we decide to sell the comany or it gets dissolved or whatever.

I'll just kick in on this one. You seem to have done your homework on the basics, and others have already kicked in on most of your OP. I have no particular expertice, but am merely a guy, who've spent some thoughts on that issue.

The important thing is you make sure you have absolute control of company affairs (by means of preference shares). The next thing is: Why make the company be worth a lot? If the company makes a lot of profit, you can (strictly within the law) give the md(s) a raise in salary, let the company provide the md(s) with company car and other fringes, etc. If your salary gets so high that you can afford to give the company a loan it can use for expansion --- that'll be your money and the company is obliged to pay back (with interest), when the md(s) decide so ... Continue yourself...

Edited June 19, 2006 by rishi

[simon43]

Bkkmadness, I wrote my post before I saw your comment re wanting to do business in Thailand. So my scenario of a completely offshore business probably isn't relevant.

Cclub75, your comments re exotic offshore jurisdictions is very relevant. But I trade only with a few UK companies, (the mobile networks), and have used my offshore entity for several years with them without problem. (They accept that I use this entity simply to avoid paying tax!). Were I to regularly seek new customers, then I might have some questions raised by one or two of these new customers. But my customer base is literally three or four, (Vodafone, Orange etc), and it never expands unless I start my services in another country. (I am just launching into the USA and no-one has queried my company arrangements....but be interesting to see if the US authorities are interested in money being sent to an offshore jurisdiction!)

Simon

[poorfarang]

Sunbelt: How does this Amnity Treaty work?

I am an american in a similar situation as BKKmadness, how would I be able to structure my company differently from him?

Rishi: Is that legal?

So you basically run your company with extremely little profit by paying yourself a huge sallary, buy company cars, etc, etc. Then you "loan" the company money and the company pays you back with interest? Sounds pretty sketchy.

Edited June 20, 2006 by poorfarang

[rishi]

If kept within reasonable limits it should be okay. There isn't a law against 500,000+ "farlang-packages" with free boarding on the company estate, free use of company car and first class holiday tickets, but it wouldn't be reasonable to give such a packages to a md of a 10-seat bar company that makes 20,000 a month.

The important thing is to have all paperworks and bookkeeping done properly and pay taxes strictly according to the rules.

[SunbeltAsia]

Sunbelt: How does this Amnity Treaty work?

I am an american in a similar situation as BKKmadness, how would I be able to structure my company differently from him?

The U.S.-Thai Treaty of Amity and Economic Relations was originally

signed in 1833. The 1966 reiteration of the Treaty allows U.S. citizens and businesses

incorporated in the U.S., or in Thailand that are majority-owned by U.S. citizens, to

engage in business on the same basis as Thais, exempting them from most of therestrictions on foreign investment imposed by the Alien Business Law of 1972 and its successor, the Alien Business Act of 1999. As a result, U.S. corporations may establish wholly owned subsidiaries or branch offices in Thailand without the constraints that other foreign firms face from the Alien Business Law.

Under the Treaty, Thailand restricts American investment only in the fields of communications, transport, fiduciary functions, banking involving depository functions, the exploitation of land or other natural resources, and domestic trade in agricultural products.

In the Uruguay Round trade negotiations, all parties agreed that the privileges

provided by the Treaty of Amity to U.S. investors in the service sector would be

exempted from “Most Favored Nation” requirements for ten years, beginning with

the establishment of the World Trade Organization in January 1995. By 2005, the

treatment for WTO members was not equal to that provided under the Treaty of Amity, and the

Treaty had to be adjusted.

Since that time, the Thai Government and the USA have been working on a future FTA between Thailand and the U.S. which will continue the Amity Treaty under another name.

However for a short time period, the Thai Government stop taking applications from Americans for round 40 days in the mid of Jan 2006. the window reopened on March 5th and it was stated it would be extended for 90 days. On June 5th it was extended for another 90 days. If you are in the system and your company has been set up under Amity, if they stop taking applications, it does not affect you except your company value will go up.( Other people wanting the structure)

If you are thinking of investing in Thailand by having a company here, we strongly advocate TODAY to form the company. When the Window shuts the next time, it seems it will remain shut. As of now it will be open to the 1st of Sept. 2006.

Our firm is well versed in Amity treaty applications. In fact one year we were told we submitted over 70% of ALL of the applications for that year, We have strongly advocated for Americans to form a company under Amity and continue to do so strongly.

We would welcome the opportunity to help you as well.

www.lawyer.th.com

[poorfarang]

Interesting.

What does a business unders this system look like? How exactly is it structured?

Under this treaty I can own all of my company?

Thanks for the great details. I might have to give you guys a call some day soon

[poorfarang]

Do I need an exisiting US company to take advatage of this?

[SunbeltAsia]

What does a business unders this system look like? How exactly is it structured?

Three basic forms of corporate structure are recognized in Thailand: Sole Proprietorship, Partnership and a Limited Corporation. In addition, Americans can register a company as a branch office, representative office, or regional office

Under this treaty I can own all of my company?

You can be a sole proprietor owning 100% or 99.994% of a Thai limited Company

Thanks for the great details. I might have to give you guys a call some day soon

Glad you found it useful. Feel free to stop by our offices.

Do I need an exisiting US company to take advatage of this?

No, as it allows

U.S. citizens,

businesses incorporated in Thailand., that are majority-owned by U.S. citizens,

and yes, businesses incorporated in The USA., that are majority-owned by U.S. citizens

to apply for Amity Treaty.

www.lawyer.th.com

[poorfarang]

Also, I took a look around the web and I guess that it is not possible for a company under this treaty to own land.

So if I want to start a company and also own land then I would have to make a seperate company to acquire land with?

BKKMadness: What kind of business are you planning on starting? Is it just a website that you will sell advertising space on or will you actually need a company?

[~G~]

2. You could have a 49% foreign own company with preferred ordinary shares. The foreigner has more voting rights. You don't use nominees ( NEVER use nominees) but real Thai shareholders that are looking to invest/ JV.

Is it not a fact that Sunbelt's staff function as nominees and hold shares in many companies they set up?

[~G~]

...we will be taking money from Thai clients here for advertising, and also wish to hire staff here so we definately need a to have some kind of company/branch of a company/business bank account in Thailand. Also, workpermit/visa etc. requirements need to be thought of.

A Representative office cannot Invoice in Thailand - you will not be able to have Thai clients. If you wish to sell in Thailand and your business is not one that allow 100% foreign ownership (and according to what you said it isn't), you will have to either start a Thai company with foreign minorty or a BOI sponsored company (I assume you are not American).

BOI company is a great thing but the lawyer fees to set it uo and take care of the application will be high.

As for the legal arrangements while setting up a Thai majority company, I see that we are now advised by Sunbelt that it is better to use real Thai investors and not nominnes. Sunbelt have set up more than 1,000 companies in the last years, most of them for foreigners. Care to guess how many of those have real Thai investors? If each foreigner that wanted to start a business in Thailand had to find 6 "real" Thai investors, and, in the same time, maintain full control of the company, Sunbelt would have closen their company set up / work permit / business visas and probably most of their biz brokership departments long time ago.

Edited June 21, 2006 by ~G~

[bkkmadness]

Also, I took a look around the web and I guess that it is not possible for a company under this treaty to own land.

So if I want to start a company and also own land then I would have to make a seperate company to acquire land with?

BKKMadness: What kind of business are you planning on starting? Is it just a website that you will sell advertising space on or will you actually need a company?

I will definately need a company of some sorts.

2. You could have a 49% foreign own company with preferred ordinary shares. The foreigner has more voting rights. You don't use nominees ( NEVER use nominees) but real Thai shareholders that are looking to invest/ JV.

Is it not a fact that Sunbelt's staff function as nominees and hold shares in many companies they set up?

As for the legal arrangements while setting up a Thai majority company, I see that we are now advised by Sunbelt that it is better to use real Thai investors and not nominnes. Sunbelt have set up more than 1,000 companies in the last years, most of them for foreigners. Care to guess how many of those have real Thai investors? If each foreigner that wanted to start a business in Thailand had to find 6 "real" Thai investors, and, in the same time, maintain full control of the company, Sunbelt would have closen their company set up / work permit / business visas and probably most of their biz brokership departments long time ago.

Well this is the thing, I contacted Sunbelt last year and they said they would provide the Thai people for me to act as 'shareholders', now correct me if I'm wrong but if I had gone with that advice and set up my company I would now be in charge of an illegaly set up company. Is that correct thinking?

So the thing is who exactly do we turn to when we want to set up our company? Should we just get our own independent lawyer and do it our own way?

Edited June 21, 2006 by bkkmadness

[~G~]

It starts with the bizzare requirement of 7 shareholders. I assume most Thai-owned companies have the relatives or friends as "nominee" shareholders. Foreigners are (or were?) merely advised to follow suit... But.. surprise! Some Thai authorities will investigate companies set up this way when foreigners are involved. Today it is Land Developers or Land Holding companies, no one can guarantee it will not move to other areas in the future.

In my view, having 5 or 6 "real" Thai investors and in the same time setting the company's by-laws in a way that will not give them any power is a joke. Why will any serious investor accept this kind of arrangement?

The bottom line is how profitable you expect to be. If you foresee significant revenues, then pursuing the BOI sposnsorship path might be a good idea. You will still have to have 7 shareholders but those can be your relatives abroad and you and your friend will be able to hold almost all the shares anyway.

Problem is that the BOI process is expensive and difficult. If you expect moderate income and don't want BOI, I just don't see other options then those that were described in this thread.

Edited June 21, 2006 by ~G~

[bkkmadness]

In my view, having 5 or 6 "real" Thai investors and in the same time setting the company's by-laws in a way that will not give them any power is a joke. Why will any serious investor accept this kind of arrangement?

Well its not only that, but what happens if your company gets dissolved for whatever reason or we decide to sell it. Those bylaws that protected our money before dissapear don't they? If the company is sold then the money goes back to the investors doesn't it? And if thats the case we are legally entilted to only 49% of it!

The bottom line is how profitable you expect to be. If you foresee significant revenues, then pursuing the BOI sposnsorship path might be a good idea. You will still have to have 7 shareholders but those can be your relatives from abroad and you and your friend will be able to hold almost all the shares anyway.

Problem is that the BOI process is expensive and difficult. If you expect moderate income and don't want BOI, I just don't see other options then those that were described in this thread.

We have only briefly looked into the BOI path before, but it certainly looks to expensive and difficult for us. We are looking for something basic but secure and it seems to be hard to find. Will certainly look into the BOI route again though.

Edited June 21, 2006 by bkkmadness

[~G~]

In my view, having 5 or 6 "real" Thai investors and in the same time setting the company's by-laws in a way that will not give them any power is a joke. Why will any serious investor accept this kind of arrangement?

Well its not only that, but what happens if your company gets dissolved for whatever reason or we decide to sell it. Those bylaws that protected our money before dissapear don't they? If the company is sold then the money goes back to the investors doesn't it? And if thats the case we are legally entilted to only 49% of it!

Actually I wouldn't worry about dissolving so much - if you want to close it down you just sell all assets (if any) and withdraw all the capital in form of a salary with the only disadvantage of paying high tax rate on this salary. Regarding selling of a company, I am not really sure how should that be handled.

[poorfarang]

So what is the solution?

Finding 6 Thai people who can be trusted to "invest" into your company?

[SunbeltAsia]

Is it not a fact that Sunbelt's staff function as nominees and hold shares in many companies they set up?

No it’s the exact opposite. We have always stressed always for a foreigner to never use a nominee. A nominee is a person that simply signs their name as a promoter and gives a proxy to the foreigner. Any e-mails to clients or potential clients for the last 4 years stated " Don't use a nominee"

However, If we knew of a Thai National who may be interested in investing, then pains were taken to keep it from ever being construed that they were ever a nominee and that the Thai national in fact had the right to invest and wanted to be a shareholder.

If a Thai was looking to help the foreigner, then them simply signing a share transfer and being a Thai nominal shareholders is illegal. Many firms had set up companies having the majority Thai shareholders who are only nominee shareholders.

How many times we warn people, this was simply nuts to use Thai nominee shareholders? Maybe 20,000 Times! The foreigner would think they are protected as they thought a the Thai signing a share transfer form, they were protected. LOL. Nonsense. Just like Snoopy with his blanket. You simply would open yourself to potential problem by having nominees.

You must be more sophisticated to create the proper and justifiable paper trail, not to put a Thai national or themselves at risk.

Lets use another analogy

If a girl goes out with a guy on a third date because she just wants to go out for a expensive dinner, etc. Has zero interests in the guys. Is she considered a prostitute?

What if she marries him and stays married for 20 years because he provides financial security to her family. Is she a prostitute?

How bout the girl that simply takes money for one hour to go out with the guy. Is she a prostitute?

In all three situations, you may of said, yes. For sure the last one, you did and this is one that the police could arrest the girl on and in some countries, the guy too.

But in the first scenario or the second, any chance of being arrested for prostitution? No for the guy or girl.

What about a girl that likes a guy, they go out on a third date to the Four Seasons restaurant. Is she a prositute?

What about the girl that married her college Sweetheart, 20 years later they are still married. Is she a prositute?

It’s the same as a nominee and a shareholder. All shareholders are motivated by a benefit, no matter if they are Thai or a foreigner. Stop and think about it.

To have a nominee is amateur hour. Its the easy way out. Give the Thai National the opportunity to invest in the shares, are they then a nominee? The answer is no.

While I'm on my soapbox, and were talking about “naughty girls”some foreigners perceived that all Thai shareholders must be nominees.

Let me use this example:

My wife is Thai and I feel 100% comfortable walking down the street with her. But a

number of foreigners are uncomfortable walking with a Thai because it is perceive she is in the " Late night activities business"

There are good girls and some naughty girls in any country. You can’t say just because a foreigner is walking with a Thai, that she is "naughty."

The same as a Thai company. Some of the Thai shareholders are good and some of the Thais are straight out a nominee for the foreigner.

This is racism towards some Thais and lets face it, 5 % of the Thai population have more money than most foreigner would dream of having in their lifetime. But God forbid, if a Thai own one share and a foreigner is the MD, they must be a nominee.

The bottom line, be open minded that not all Thai shareholders are nominees. The fact is they are NOT, either by good advice with having the opportunity to invest or in some cases they in fact invested in the company.

[SunbeltAsia]

Well this is the thing, I contacted Sunbelt last year and they said they would provide the Thai people for me to act as 'shareholders', now correct me if I'm wrong but if I had gone with that advice and set up my company I would now be in charge of an illegaly set up company. Is that correct thinking?[

If it was by e-mail, it also stated not to use nominees and warned you not to do so. In my last post, I went to great detail explaining the difference between a nominee and a Thai shareholder.

So the thing is who exactly do we turn to when we want to set up our company? Should we just get our own independent lawyer and do it our own way?

[

Don't know what you mean by independent lawyer and doing it your own way? In your orginal post, you stated you had no way at this time and was looking at other countries to form the company. Did you read the 6 options given to you in this tread by us. Not one of them works for you?

[SunbeltAsia]

Problem is that the BOI process is expensive and difficult. If you expect moderate income and don't want BOI, I just don't see other options then those that were described in this thread.

We have only briefly looked into the BOI path before, but it certainly looks to expensive and difficult for us. We are looking for something basic but secure and it seems to be hard to find. Will certainly look into the BOI route again though.

Expensive is a one time fee of professional fees of 69,000 Baht to apply for BOI approval? You only need to invest one million Baht if you are approved. Thats it with unlimted work permits, Tax Holiday for 8 years. Opportunity to own shares 100% Most folks would say this is not expensive. Perhaps you thought it cost more?

You don't want BOI, apply for the Alien Business License which means no Thai shareholders are required. The Thai government approves it.

Well its not only that, but what happens if your company gets dissolved for whatever reason or we decide to sell it. Those bylaws that protected our money before dissapear don't they?

No

If the company is sold then the money goes back to the investors doesn't it?

No.

It goes to whomever, the shareholder vote was is in the minutes of meeting, authorizing the sale and where those proceeds should be sent to.

And if thats the case we are legally entilted to only 49% of it!

No. This is not the law. You could be entitled to 99.99% of it. Depends how your company was structured in the by-laws on how many votes you had, surmising you voted in the meeting that your shareholding class would get the funds. Depends also on the investors in the company, how you want to reward them. But if set up right, you would have that control.

For that matter even if it was 100% common shares, nothing states in the Civil Code, you must get 49% of the funds, if you own 49% of the shares. Your company is set up wrong, you may get zero.

[~G~]

Is it not a fact that Sunbelt's staff function as nominees and hold shares in many companies they set up?

...No it’s the exact opposite. We have always stressed always for a foreigner to never use a nominee. A nominee is a person that simply signs their name as a promoter and gives a proxy to the foreigner. Any e-mails to clients or potential clients for the last 4 years stated " Don't use a nominee"...

... How many times we warn people, this was simply nuts to use Thai nominee shareholders? Maybe 20,000 Times! The foreigner would think they are protected as they thought a the Thai signing a share transfer form, they were protected. LOL. Nonsense. Just like Snoopy with his blanket. You simply would open yourself to potential problem by having nominees...

It would have been better if you just left the question unanswered. Alternatively, saying that you were wrong in the past, learned from your mistakes, and now give correct advice would have been honourable as well.

I know for a fact that your employees function as shareholders in companies you set up, without investing anything. You don't really want me to give names or upload documents, do you?

This is racism towards some Thais and lets face it, 5 % of the Thai population have more money than most foreigner would dream of having in their lifetime. But God forbid, if a Thai own one share and a foreigner is the MD, they must be a nominee.

That's just nonsense. A person whos invests money or equivalent is entitled to be a shareholder with rights. A person who receives money to sign his name is not entitled to anything.

Edited June 22, 2006 by ~G~

[jaiyenjohn]

FWIW, I also run a 49/51% thai company that sells advertising in Thailand. I'm married so the split is pretty much me 49%, my wife 46%, and the other 5% owned by family members and thai friends of mine. I have a work permit and one year visa through the company. We don't own any land.

Like a previous poster said, just because someone owns 5% of the shares, doesn't mean they own 5% of the company's assets. Talk to a lawyer about this.

One thing you're absolutely going to have to deal with from day one is V.A.T. When selling anything to Thai companies, you will need a VAT number, and you will use it a lot. In our yearly audits, and interviews with the customs department, the single most important issue for them was the amount of V.A.T. collected. They were less interested in taxing our companies profits, than making sure all the V.A.T. was correctly accounted for. Essentially if the V.A.T. is happy, the auditors and customs department are happy.

At the end of the day, you're doing business in a foreign country where you have very few rights. There is no magic iron-clad way to set up a company to protect your investment. The hard truth is that if some well connected Thai wants your business, they will get it regardless of the law. As always see Taksin for an example of this with his last American partner.

That being said, we've been in business for three years now, and have had nothing but maddening bueraucracy to complain about, and if you keep your accounting in order I doubt you'll have any problems. And always keep a large part of your profits off shore, just in case.

Good Luck, and feel free to PM me if you have any questions about ad sales in Thailand.

JB

Edited June 22, 2006 by jaiyenjohn