Opening of company bank account declined because of "too many shares". How is that possible?

[bombis]

I had a strange thing happen today. Im a shareholder in a Thai company. I am not working in this company and I am not a director of the company. I invested as its my friend company who is Thai.

I have over 40% of the shares. There is nothing fishy here, all shareholders are valid and there are no nominated shareholder or anything like that.

Now the bank (Kasikorn) told us that to open the bank business account with them, I need to show them a work permit. I said I cant as I do not work for this company, Im just a shareholder.

They didn't accept this and told me that if we want to open a bank account with them I need to have a work permit because I have "too many shares". I can have 20% shares at the most or they cannot do it.

Im baffled. It doesn't make sense to me because not every shareholder going to work for the company, how can they ask for a work permit based on the fact I own more than 20% of the shares?

Has anybody ever experienced this or knows anything about this?

We are going to try another bank now and see what they say but I just wanted to get feedback from you guys as well on this.

[Gsxrnz]

Pass the appropriate resolutions to get you off the shareholder list.

Go to a different bank and open an account.

Issue the 40% shares in your name.

I'm assuming you can trust the other shareholders and director/s implicitly?

[sunnyjim5]

If you are "just a shareholder" why are you attempting to conduct business on behalf of the Company ?

In my opinion the Bank, rightfully, are suspicious and do not wish to be involved.

[bombis]

I do not want to conduct business for the company. That is the point.

But they tell the director of the company that because I have more than 40% its a requirement to have my name on the account....but they will not add it because I don't have a work permit.

It really does not make sense to me.

[bombis]

@gsxrnz

Yes I can trust the them. And thanks for the suggestion. that could work. We are still trying other banks now.

But its so weird to have to do that. I mean, I don't even care to have my name on the bank account. I don't need to. But the bank says I have to, its a requirement because of the amount of shares I hold......but then they tell me I can only be added with a work permit.

[heina]

Do the bank clerk gives you the list of requirements for the limited company?

Actually besides from regular limited company paperwork you just need company shareholders meeting minutes decision to open company account.

I suggest that just to change the branch and ask list of paperwork for the limited company.

[Gsxrnz]

@gsxrnz

Yes I can trust the them. And thanks for the suggestion. that could work. We are still trying other banks now.

But its so weird to have to do that. I mean, I don't even care to have my name on the bank account. I don't need to. But the bank says I have to, its a requirement because of the amount of shares I hold......but then they tell me I can only be added with a work permit.

It's actually not such a strange request. It also happens in the real world.

I recently set up a holding company in NZ with existing shareholders of other companies we are all partners in. The bank knows us all well, but even though the new company only had two of us as directors, they still required the signatures of all shareholders to authorise the bank account and assign/accept liability of the two directors as signatories.

It's called covering their arse and very common in banking.

In Thailand of course you have the added complexity of work permits etc etc.

If you try and point out the stupidity of their decision you'll only make it worse.

You have to be expedient if you want to beat them at their own game. Just do as I suggested. Change the shareholdings, get your Thai partner/s go to a different bank and open an account, re-jig the shareholdings.

Sorted.

[Thunder26]

This is Thailand. Their logic is twisted. You need a lot of patience and look for other ways like the posters above suggested.

[Maestro]

Your mistake was to ask for a business account. You should have simply asked for a savings account in your name. Completely unnecessary to mention any shares you hold in any Thai company.

If the company of which you are a shareholder needs a bank account, it is up to the board of directors to pass a resolution to that effect and name the the employee who will be authorised to sign for that account. You, who are not an employee, can obviously not be authorised to sign for the business account.

[Gutenberg]

@gsxrnz

Yes I can trust the them. And thanks for the suggestion. that could work. We are still trying other banks now.

But its so weird to have to do that. I mean, I don't even care to have my name on the bank account. I don't need to. But the bank says I have to, its a requirement because of the amount of shares I hold......but then they tell me I can only be added with a work permit.

If you were going to the bank with the director/s you were in fact working.

In Thailand every bank branch is individually managed, so they just didn't want to supply a company where a foreigner is invested with a bank account and made something up to deny it.

It happens to all of us. Don't mind it.

Just send your directors to the next Kasikorn branch and so on, problem 100% solved.

[KimSamui]

@gsxrnz

Yes I can trust the them. And thanks for the suggestion. that could work. We are still trying other banks now.

But its so weird to have to do that. I mean, I don't even care to have my name on the bank account. I don't need to. But the bank says I have to, its a requirement because of the amount of shares I hold......but then they tell me I can only be added with a work permit.

Unfortunately the Law is not the issue here in Thailand, It is whatever Thai people think.

Just a personal experience but it only gets worse from here, and has done more so over the last few years.

Note to Self: Avoid all dealings with Business in Thailand.

[sixthelement]

If you are just a shareholder, you have no business doing the paperwork for that company.

Your are wrong. Period

[ubonjoe]

Since this is more of a business and banking topic than visas or work permits I am moving it to that forum.

[jaycor]

A director that is authorized by the Board of Directors in the minutes of the meeting is the only one person permitted to open an account.

There is also a recent Bank of Thailand directive requiring Work Permits in the opening of accounts.

[maccraw]

Any accountant or lawyer would point out to you that your shareholding does not help the business and you must recognise that it does not protect any investment you may have made in any way. The opening of an account which requires only one signature,not yours, is dangerous for anyone involved except the company director. If you want to help your friend then go talk to an accountant and do not go to any bank meetings. Best of luck,be careful !!

[realenglish1]

If you do not have a work permit as a shareholder then you cannot be a signatory on the bank account Only the Thais who are shareholders can If you get a work permit then there is no problem with you being a signatory

[fletchsmile]

Pass the appropriate resolutions to get you off the shareholder list.

Go to a different bank and open an account.

Issue the 40% shares in your name.

I'm assuming you can trust the other shareholders and director/s implicitly?

I really wouldn't want to do that. It would solve getting a bank account, but is just inviting problems from elsewhere, and a messy solution to do correctly.

They can't just "pass a resolution" to remove a shareholder like you would do for a director.

The shares reflect ownership. Hence the shares need to be "disposed of" in some way to remove him from the register via changing ownership rights. The most likely valid ways would be 1) a transfer of ownership either via a sale or gift and then a repurchase or gift back or 2) cancellation of the shares and then re-issue the shares.

Done properly there needs to be a paper trail for these ownership transfers:

1) both for a disposal and re-acquisition, as well as expected passing of consideration on disposal price and re-acquisition price. Then there's the issue of whether this would expose him to capital gains tax anywhere (some countries also tax worldwide assets), etc etc

2) If the shares are cancelled then what price/consideration is he given for doing so? Where does the money come from? Because when the shares are re-issued there needs to be a subscription price in line with the class of shares issues and whether at par etc, and money needs to be paid for that, and be shown entering a bank account with share purchase agreements.

It really is inviting administrative nightmares, which could end up with worse problems than started. Wouldn't like to be explaining this stuff either if a tax audit gets triggered for example. Would they know there's stamp duty on the shares etc etc.

Simpler just to go to another bank and understand their requirements and the rules better. If their company staff and directors are struggling to open a bank account, they're not the ideal people to be wading thru legal and tax rules on temporary share transfers, and the things that go wrong if not done correctly.

Edited January 22, 2016 by fletchsmile

[bombis]

Thanks for the many replies. Just to clarify a few things as some of you didn't understand the situation correctly:

- I did not go to the bank myself, just the Thai director, I didn't do any paperwork as was suggested here

- it didn't matter even if I'm not signatory on the bank account. They still wanted a work permit from me

- it doesn't help me to open an account in my name. This is a business, so obviously a company account is needed

We checked 2 more banks. One said the same thing and asked for a work permit

Bank No 3 was OK with it and made an exception.

So problem was solved by trying long enough.

[Gutenberg]

Thanks for the many replies. Just to clarify a few things as some of you didn't understand the situation correctly:

- I did not go to the bank myself, just the Thai director, I didn't do any paperwork as was suggested here

- it didn't matter even if I'm not signatory on the bank account. They still wanted a work permit from me

- it doesn't help me to open an account in my name. This is a business, so obviously a company account is needed

We checked 2 more banks. One said the same thing and asked for a work permit

Bank No 3 was OK with it and made an exception.

So problem was solved by trying long enough.

Welcome to Thailand.

[Farangdanny]

It's a long time since I read so many ill informed, incorrect and misleading replies to one post on here.

I opened my fourth COMPANY BANK ACCOUNT last Thursday, with fourth different Bank.

IT IS VERY EASY.

First ask the bank what they need. Nearly all the same.

THEN:

1. Get original set of company's papers from DEPARTMENT OF BUSINESS DEVELOPMENT (DBD), less than 3 months old, 200 Baht.

2. Report of Shareholder meeting agreeing to open a SAVINGS account at......xxxx........Bank, with address of bank, and name of person (any person(s)) who is/are to be signatory(ies) on account, including their ID/Passport number(s).

3. The named signatory, and Managing Director (as named in the DBD documents), if different persons, take(s) those papers to the bank with his/her/their ID's/Passports and Housebook/Proof of address(if foreigner), AND COMPANY STAMP. Need funds to open account with, usually only 500 Baht.

Can collect Debit Card at same time and can set up on-line banking and money transfer services.

EASY

[Maestro]

...

2. Report of Shareholder meeting agreeing to open a SAVINGS account at......xxxx........Bank, with address of bank, and name of person (any person(s)) who is/are to be signatory(ies) on account, including their ID/Passport number(s)

...

Must it necessarily be approved by a shareholders' meeting? I believe a resolution of the board of directors is usually the way to open a corporate bank account and designate the authorised signatories (unless, of course, the Articles of Association mandates a resolution of a shareholders' meeting)

[Farangdanny]

...

2. Report of Shareholder meeting agreeing to open a SAVINGS account at......xxxx........Bank, with address of bank, and name of person (any person(s)) who is/are to be signatory(ies) on account, including their ID/Passport number(s)

...

Must it necessarily be approved by a shareholders' meeting? I believe a resolution of the board of directors is usually the way to open a corporate bank account and designate the authorised signatories (unless, of course, the Articles of Association mandates a resolution of a shareholders' meeting)

You are quite right. I used that terminology because most Foreigners opening new company here for first time, don't, need/have Board of Directors, just the minimum required three shareholders, and the OP did say he was a shareholder. so KISS ! In actual fact, the physical meeting rarely actually takes place !!!

[beerzy]

I do not want to conduct business for the company. That is the point.

But they tell the director of the company that because I have more than 40% its a requirement to have my name on the account....but they will not add it because I don't have a work permit.

It really does not make sense to me.

I am glkad problem has been solved. but just hold on a moment.

I give you an example....

say if i was a shareholder in an australian company say BHP. I go tro bank and ask to open a business account on behalf of BHP. you get the same answer as you do here....Cannot

[bombis]

One more time because I still see some replies here that did not represent the situation correctly:

I did NOT go to the bank and tried to open an account on behalf of the company.

As I said I never was at the bank even one single time. The registered Thai director of the company went to the bank to open a business account. And even with me NOT made a signatory of the account they still declined on the basis of the company having a foreign shareholder with over 40% of shares. That was the point why I was so surprised. The upper limit they told him are 20%. If I have up to that many shares they would be OK with it.

I should also say that I opened another Thai company about 4 years ago and at that time there was never any such issue with opening a company account. I ran through the process before. So I was thinking that maybe some rules had changed in the meantime.

The bank accepting to open the account by the way did so because a Thai shareholder of the company knows somebody working at that branch. I just found that out.