Supplementary Document Required For The Partnership And Company Limited Registration.

[Sunbelt Asia]

Order of the Business Registration Office

Department of Business Development

Order No. 102/2549

Specification of supplementary document required for the partnership and company limited registration.

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

Pursuant to the Order of the Business Registration Office No. 1/2538 Regulations for the Partnership and Company Registration B.E.2538, dated on March 13, 1995 (BE 2538), stipulates that the person, who desires to register a partnership and company limited, is subjected to submit the application form and the supplementary document complying to the appendix of the aforementioned Order;

Now, under the Condition 3, Clause 3, of the Ministerial Regulation regarding to the establishment of the Business Registration Office, the appointment of the registrar and the determination of the rules and regulations for the partnership and company limited registration B.E.2549 which is issued under the Civil and Commercial Code (in the section regarding to the Partnership and Company), the Registrar General hereby stipulates the rules and regulations for the registration of the partnership and company limited which has the foreigner(s) holds the shares of the partnership or company at the proportion begins from 40% but less than 50% of the registered investment capital, or the foreigner holds the shares less than 40% of the registered capital and the foreigner is authorized to act on behalf of the said partnership or the company limited. For the aforementioned case, all Thai national shareholders are subjected to submit the evidences showing the source of the investment together with the application form of the business registration. The said evidence shall contain the detail of the amount of money which matches to the amount of the investment that each Thai shareholder has invested in the Company or the partnership. The required evidence shall be one of the following documents:

1. Copy of the bank statement of the most recent record of the last 6 months or;

2. any document which issued by the Bank to certify the financial status of the shareholder or;

3. Copy of the evidence that shows the source of the investment that the Thai shareholder invested in the partnership or company limited.

This regulation shall be commencing in full force from this August 15, 2006.

Order dated on July 20, 2006

Ms. Orrajit Singkhalawanitch

Director-general of Department of Business Development

The Registrar General

___________________________________________________________________________

If a foreigner wants to use nominees, this will be a issue.

This supplementary document will not be a issue if you JV with Thai shareholding companies who are interested in doing joint venture and provide a service. If you do a JV, your company can be registered and you as a foreigner can be in control of the company.

We utilize other sophisticated legal strategies as well that will allow the company to be registered and legal. The old days of a number of foreigners just having nominees are over.

For Americans, its a no brainer, use the Amity treaty NOW!

www.sunbeltasiagroup.com

[MichaelFromEngland]

It doesn't look good for housing in Thailand.

This should kill the market.

[~G~]

The required evidence shall be one of the following documents:

1. Copy of the bank statement of the most recent record of the last 6 months or;

2. any document which issued by the Bank to certify the financial status of the shareholder or;

3. Copy of the evidence that shows the source of the investment that the Thai shareholder invested in the partnership or company limited.

I don't see that loan agreements are considered as evidence.

[Sunbelt Asia]

The required evidence shall be one of the following documents:

1. Copy of the bank statement of the most recent record of the last 6 months or;

2. any document which issued by the Bank to certify the financial status of the shareholder or;

3. Copy of the evidence that shows the source of the investment that the Thai shareholder invested in the partnership or company limited.

I don't see that loan agreements are considered as evidence.

Hi "G"

We are advising use of more cutting edge strategies. However, a loan still is a legal option as the Department of Business Development is saying “a personal loan is allowed under the third option." The funds now however must go into the bank account of the borrower, and then transferred later into the companies account. “

The name of the game is to document everything with proof, so it can stand up to scrutiny.

www.sunbeltasiagroup.com

[~G~]

We are advising use of more cutting edge strategies.

Which startegies?

[sometime]

The required evidence shall be one of the following documents:

1. Copy of the bank statement of the most recent record of the last 6 months or;

2. any document which issued by the Bank to certify the financial status of the shareholder or;

3. Copy of the evidence that shows the source of the investment that the Thai shareholder invested in the partnership or company limited.

I don't see that loan agreements are considered as evidence.

Hi "G"

We are advising use of more cutting edge strategies. However, a loan still is a legal option as the Department of Business Development is saying “a personal loan is allowed under the third option." The funds now however must go into the bank account of the borrower, and then transferred later into the companies account. “

The name of the game is to document everything with proof, so it can stand up to scrutiny.

www.sunbeltasiagroup.com

I would like to know the ongoing yearly cost of a jv?say for a 5 mill baht house.

[cclub75]

This supplementary document will not be a issue if you JV with Thai shareholding companies who are interested in doing joint venture and provide a service.

Hum... this is what we could call "super nominees" or "luxury nominees" ! You are going fast.

Anyway, it is a clear blow to real estate : now we have restriction with land departement (last memo in may) and with business registration office as well.

And it's a blow for LTD with business on the restricted list.

Actually : they stick to the "letter" of thai law.

-no land ownership

-no business ownership if restricted list

Do I "read" correctly the situation ?

[~G~]

Actually : they stick to the "letter" of thai law.

-no land ownership

-no business ownership if restricted list

Do I "read" correctly the situation ?

Companies started with various legal tricks and so called "cutting edge strategies" seem to have unexpected expirations dates in Thailand... A few weeks ago loan agreements were the cutting edge strategies, obviously full of holes today.

Bottom line, you need play by the basic rules instead of trying to bend the them as much as possible. If one can own a majority of the biz through BOI or an Alien Business license, that's good. If you have a real Thai investor with whom you want to do business, that's another option. Tricks, strategies, semi legal Abracadabra? At your own risk

[Sunbelt Asia]

We are advising use of more cutting edge strategies.

Which startegies?

We'll have to get more involved in a financial sense to share those "startegies"

I would like to know the ongoing yearly cost of a jv?say for a 5 mill baht house.

As it is custom designed for your needs and the JV partner, it is very hard to determine because of the many variables. Every case is different depending on the number of JV partners and how much investment or service the partners are required to invest. But it could be as low as 3,000 Baht per year for our professional fee on the introduction of the JV partner.

www.sunbeltasiagroup.com

[~G~]

We are advising use of more cutting edge strategies.

Which startegies?

We'll have to get more involved in a financial sense to share those "startegies"

Good move Some things are better be kept secret, eh? Gone are the times of "free advice, even from the Boss" That's the way to do it, I would not be surprised to discover that the new requirements for loan agreement came as a result of some companies over-promoting and over-exploiting them

[Sunbelt Asia]

"Bottom line, you need play by the basic rules instead of trying to bend the them as much as possible. If one can own a majority of the biz through BOI or an Alien Business license, that's good. If you have a real Thai investor with whom you want to do business, that's another option."

Well said. I would add Amity Treaty, Branch office, Businesses that are not on the restricted list, personal loan/fund transfer with loan agreement along with four other cleared methods. Every advice we give is cleared with the Government, that it is proper and legal for both the Thai and foreigner. We guarantee that any company we work with will be registered in a correct legal way at that time of registration or we ourselves won't get involved. If it’s not legal at that time, it won't be registered by the government after August 15th in the first place.

[thaiyoda]

Question for Sunbelt:

I am a Thai national in a process of registing a Thai company. My company also have foreigner share holders with 49% holding, with me, my sister and my mother holding 51%. As my company will not be register before 15th August I have also noted the new order. I spoke to the Department of Business Development yesterday about it and been getting some conflicting answers.

DBD at the head office (snambin nam) saids that they requires prove of funds from all share holders.

DBD at Phaholyothin only need the prove from Thai nationals share holders.

DBD at Radchada not even herd of the orders yet.

I am fluent in Reading Thai and I also understood the order to be that only the Thai national requires the additional supplement.

What do you make of this or can you confirm what is correct.

Cheers

[sbk]

I am assuming this is for all new registrations and won't be made retroactive to apply to already registered companies?

[~G~]

I am assuming this is for all new registrations and won't be made retroactive to apply to already registered companies?

That's where it gets interesting...

[JimmyGreaves]

I am assuming this is for all new registrations and won't be made retroactive to apply to already registered companies?

That's where it gets interesting...

Don't think that this will be retrospective as this is a new directive for ALL NEW Companies.

[Mobi]

I am assuming this is for all new registrations and won't be made retroactive to apply to already registered companies?

That's where it gets interesting...

Don't think that this will be retrospective as this is a new directive for ALL NEW Companies.

Well, not according to the Bangkok Post story, of which the following is a snip:

.....Sources at the Business Development Department said a preliminary study found that Kularb Kaew was a proxy of Temasek, and did not qualify as a Thai company. The investigation is expected to be finalised this month.

A recent land scandal on Koh Samui has also raised public questions over the use of nominee shareholders by foreigners to bypass property ownership limits.

Ms Orajit said the department hoped the new rules would discourage the use of nominees by requiring Thai shareholders to prove that they are not acting as simple nominees on behalf of foreign buyers and have the financial means to actually hold shares.

''The department will examine all of those documents before giving approval,'' she said. ''We have learned that Thais have acted as nominees for foreign investors to avoid compliance with the Foreign Business Law, which limited foreign stakes at 49%. Tighter requirements [for proving] one's financial status will help us sort out this problem.''

Companies violating the rules would face dissolution. Complicit shareholders also could face fines of up to one million baht and/or jail terms of up to three years.

In the future, the Business Development Department plans to examine existing registered companies with foreign shareholders to determine whether they breach the new rules or not.

Ms Orajit admitted that mistakes had been made in the past, in part due to department policies aimed at facilitating the establishment of new companies.......

I for one, am not hanging around, waiting for my company to be investigated.

As a poster said on another thread, all they have to do is start sendfing out letters to all companies with farang shareholders, and ask for the Thai shareholders to supply the requisite documents to prove they are not nominees.

Sunbelt, I sent an email to your office this weekend requesting an appointment to discuss sale/leaseback of my house. Is there anyone who I should be contacting specifically on this. Can you point me in the right direction?

Thanks

Edited August 6, 2006 by Mobi D'Ark

[JimmyGreaves]

Ok assuming that the department finds existing companies who have gone the nominee route and dissolves the ltd company. What is the precedent with disposing of the companies assets, any one know?

[splitlid]

all this letter does is reaffirm the previous statement from the land department that all companies will be looked into if they feel necessary.

the land dept have rightly said that the company formation is not their problem and should start at the source. i.e registration!!!!!

and not after the company has been set up.

so therefore any company set up after the 15th of this month will not need scrutiny from the land dept because the company has to be setup properly in the first place.

[Charma]

This is one of those situations where no one really knows what officials will do. On a previous thread on this, Rooo was discussing an investigation of his company:

http://www.thaivisa.com/forum/index.php?sh...77464&st=15

How far will they take this? Will it all die out or will it get worse. These questions are of great importance to many TV members, not just in terms of land purchase, but for other business activities.

Maybe Roo has an update of what happened in his investigation. Like Mobi, I am now steering towards a transfer to my wife as an option. I just don't like the prospect of wondering what Thai officials will do next.

What effect this will have on the property market is another issue. If this is followed through, despite the best efforts of Sunbelt, a large number of potential property buyers could be about to be removed from the market. Who will you sell your house to?

PS I am amazed that Khun Jean has not posted on this thread!!!

[Khun Jean]

Maybe because it is what i expected and people are now talking about the law instead of circumventing it. Which is a good thing. I think everybody wants to have a good night sleep and not be worried about their homes.

The law is clear, and the intention is also clear. Nobody should start a company to own a house. And i see no way it can be done legally without actually doing business to make a profit. No Thai with at least 1 braincell is going to invest in a company that just owns some land and a house. There is no profit, no raise in share prices, nothing. Renting the land and house and booking that as profit for the company is not good enough. It is so obvvious i suggest people who do that to start expanding business. But that was not really the intention was it?

Conclusion is simple, every company setup for the purpose of owning land and house is using nominees. The sooner people realize this the better. Lawyers may create long documents and fancy constructions. In the end it is just the simple question. Did the Thai invest money yes or no.

Anybody asking how laws are enforced is asking the wrong questions. The question instead should be "how can i live in Thailand within the bounds of the law". Never start with bending the law, especially in a country that is not your own and your rights are somewhat unclear.

I am still convinced that renting is the only viable solution. It keeps you mobile, cash in the bank, and when things not turn out the way you planned nothing is lost. With leasing 30 years you have an asset that is depreciating every year. After 15-20 years it would be difficult to find someone who would buy it from you.

So paying almost the same as when you buy it and not being able to have a capital gain on the investment is just burning money.

The ones that did good are the ones that buy/lease land, develop it and sell it all within a 1 to 2 year timeframe. That way time is not catching up on you.

Someone on this board compared it to a casino. We are the players, and Thailand is the house. The house advantage will eventually take everything.

Even buying a condo is not good in the long run, for a period shorter than 10 years you should be fine, anything longer and the poor maintenance, competition from other buildings will eventually cause you to loose money and being unable to sell it for a reasonable price. Moving every 4-5 years to a new condo seems the way to go. Just to keep the small advantage against the "house" to speak in casino terms.

BTW My wife and her family is available for buy/lease back of your property. For free!, well ok the land will be hers in 30 years.