Company Ownership vs. Work Permit

[PokerFace]

Need some advice from all you work permit experts out there!  In 2011 I purchased 10% ownership in a small Thai startup company.  Since that time I have participated in the management of the company in a very small capacity, mostly as an advisor/business relations consultant and we have done very well.  I have received a monthly salary of 75K Baht per month during this entire period and have held a Non Immigrant B visa and a work permit throughout the entire time.  I split my time almost evenly between Thailand and the US.

 

I am approaching 70 and am contemplating divorcing myself completely from the day to day operations of the company and doing no work whatsoever.  I will obviously also forgo the 75K Baht salary I am currently receiving for my token participation. 

 

Now for the question!!  As 10% owner I am eligible to receive 10% of the net profits of the company on a quarterly basis.  Will I need to maintain a Non Immigrant B visa and a work permit???   Remember, I won’t be working or participating in the operations of the company in any way and plan to continue dividing my time between Thailand and the US!

[ubonjoe]

5 minutes ago, PokerFace said:

Now for the question!!  As 10% owner I am eligible to receive 10% of the net profits of the company on a quarterly basis.  Will I need to maintain a Non Immigrant B visa and a work permit???   Remember, I won’t be working or participating in the operations of the company in any way and plan to continue dividing my time between Thailand and the US!

 

You will not need a non-b visa or work permit.

[Swiss1960]

As ubonjoe.. and you are NOT eligible for profits in line with your share percentage. Only shareholder meetings decide about dividends per share

Sent from my HTC 10 using Thaivisa Connect mobile app

[Maestro]

As Swiss1960 mentioned, a distinction is made between net profit and dividends. Companies generally pay only part of the year's net profit as dividends; the rest is accounted for as "retained earnings" and becomes part of equity.

 

The company of which you are a shareholder has the legal obligation to send you invitations to the shareholders' meetings, a copy of the annual audited financial statements (balance sheet and statement of income and expenses), and a copy of the minutes of the shareholders' meeting.

 

The agenda that comes with the invitation will include the board of directors' proposal regarding the amount of dividend per share, the minutes of meeting will state what dividend amount has been approved, and the financial statements will indicate what dividend has been paid.

 

If you do not already have a copy of the company's Articles of Association, you may want to ask them for it or alternative get a copy from the Department of Business Development at the the Ministry of Commerce, for a small fee.

[BlackJack]

I am sure it's been answered before and I have done a search, maybe one of the mods can maybe point me in the right direction. There are many expat clubs in Thailand and they charge fees. No doubt their work is valuable to the expat community, all the work they do each week and then the Board meetings where they make decisions and pay bills. Do they need a work permit?

[seancbk]

18 hours ago, Swiss1960 said:

As ubonjoe.. and you are NOT eligible for profits in line with your share percentage. Only shareholder meetings decide about dividends per share

Sent from my HTC 10 using Thaivisa Connect mobile app
 

 

You are correct, but then so is he (perhaps).
 

He is eligible if that is what the shareholders have agreed they would do.

It is unusual, and not particularly smart, for a company to share out 100% of profits to it's shareholders, but it is not beyond the realms of possibility that as although the OP is only a 10% shareholder, maybe he actually put in more money to help get the business off the ground; and that his expert guidance over the years is what helped the company become successful, therefore the other shareholders are willing to pay out 10% of the profits to him.  

It could well be written into his shareholder agreement.

 

 

[Caxa]

The OP is asking a question about a work permit.

Why are people discussing whether he will or will not get 10% of the profits?

[seancbk]

1 hour ago, Caxa said:

The OP is asking a question about a work permit.

Why are people discussing whether he will or will not get 10% of the profits?

 

 

Because in his OP he stated "As 10% owner I am eligible to receive 10% of the net profits of the company on a quarterly basis."

His question about Non B Visas and Work Permits was answered - He doesn't need them if he is just a shareholder.

But his statement about being eligible for a share of profits is not necessarily true unless there is a specific agreement in place and it is that which people are commenting on.

 

 

[Artben]

23 hours ago, Maestro said:

As Swiss1960 mentioned, a distinction is made between net profit and dividends. Companies generally pay only part of the year's net profit as dividends; the rest is accounted for as "retained earnings" and becomes part of equity.

 

The company of which you are a shareholder has the legal obligation to send you invitations to the shareholders' meetings, a copy of the annual audited financial statements (balance sheet and statement of income and expenses), and a copy of the minutes of the shareholders' meeting.

 

The agenda that comes with the invitation will include the board of directors' proposal regarding the amount of dividend per share, the minutes of meeting will state what dividend amount has been approved, and the financial statements will indicate what dividend has been paid.

 

If you do not already have a copy of the company's Articles of Association, you may want to ask them for it or alternative get a copy from the Department of Business Development at the the Ministry of Commerce, for a small fee.

If you cannot reach an agreement for continued payment by the company you might consider selling your interest.  Unless the company has a VERY large number of shareholders a 10% interest will not do you any good unless the company declares a dividend every year.

[seancbk]

6 hours ago, Artben said:

If you cannot reach an agreement for continued payment by the company you might consider selling your interest.  Unless the company has a VERY large number of shareholders a 10% interest will not do you any good unless the company declares a dividend every year.

 

What difference does the number of shareholders make?   Unless the company is public there is unlikely to be a very large number of shareholders, and even if there is I don't see how that affects the OP's 10%.

A 10% holding is a 10% holding whether there are 5 shareholders or 5000.

If the company makes (for example) 2 million THB a month in profits, then it will have 24 million in Annual profit.  Let's say the Directors decide to pay just 50% of profits out to the shareholders (which would usually include themselves), that would be 12 million paid to the shareholders, and the OP's '10% share' would amount to 1.2 million baht.

[natway09]

You do not need a work permit as long as only a shareholder.

As a shareholder you are entitled to receive your 10% of any dividends declared by shareholders meetings at AGM.

Are you a Director?