Hi there,
I'm thinking of investing in some property in the HH area and have been reading these forums, which I've found to be very usefull and a lot of help.
However, can someone tell me why using a Limited Liability Company is no longer a safe way to purchase property in Thailand? As I thought this seemed to be a good approach, but I've obviously missed something.
Thanks in advance
Going the company route.
-
lockwood74
- Specialist
- Posts: 123
- Joined: Sun Dec 12, 2004 6:30 pm
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Company route
I set up a company 3 years ago to buy a plot of land. I did just that, I have now almost constructed the house and am so pleased that I set up the company. I have read this website for about 4 years now and enjoy reading the various points of view. I have not encountered any peoblems at all.
Although there is a lot of negative news regarding the setting up of a company to purchase property. If you only require a property for your self and keep your company small, my understanding is that the authorities are unlikely to srutinise your company.
I have invested around £75,ooo pounds. I can afford to loose it and it wont hurt me, bare this in mind for yourself !!!
If you can afford to take the plunge you should do it as it has been a great experience for me.
Don't be put of, there are many people who have it in for those hwo have the opportunity !!!
Best of luck
If you need details of a good accountant to set up your company let me know
Regards JOHN
Although there is a lot of negative news regarding the setting up of a company to purchase property. If you only require a property for your self and keep your company small, my understanding is that the authorities are unlikely to srutinise your company.
I have invested around £75,ooo pounds. I can afford to loose it and it wont hurt me, bare this in mind for yourself !!!
If you can afford to take the plunge you should do it as it has been a great experience for me.
Don't be put of, there are many people who have it in for those hwo have the opportunity !!!
Best of luck
If you need details of a good accountant to set up your company let me know
Regards JOHN
Re: Company route
lockwood74 wrote:I have invested around £75,ooo pounds.I can afford to loose it and it wont hurt me
Regards JOHN
You are welcome to dump them here
I'm even willing to share with Dawn
The charm of asia is more than the girlies !
Re: Company route
That's great !lockwood74 wrote:I have invested around £75,ooo pounds. I can afford to loose it and it wont hurt me
These kind of smart investors are most welcome in Thailand (and around the world).
Hopefully you have many friends with similar qualities, which won't hesitate to follow your brilliant example.
Going The Company Route
I have been trading as a property developer here in Thailand for the last 6 years and can offer the following on this topic:
The basic premise of ownership through limited company is that as a non-Thai may not own freehold property in his own name, he forms a limited company and transfers ownership of the property into the limited company and then controls the use of the land through control of the company. However, you need to be aware of the following:
1. Thai legislation states that a minimum of 51% of the shares issued must be owned by Thai nationals in order for the company to be considered a Thai juristic body.
2. Any company with over 39% (and 29% to be really safe) non-Thai shareholders that applies for ownership of property will have a very high likelihood of being closely scrutinised by the authorities.
To cover these stipulations and to ensure that the non-Thais retain control over the company and therefore the property purchased, you should consider having the following precautions put in place:
1. Restrict the shareholding of non-Thais to 29%.
2. Issue both ordinary shares (with one vote per share) and preference shares (with ten votes per share).
3. Allocate 29% of the share issue as preference shares to the non-Thais and 71% ordinary shares to the Thai shareholders.
This achieves the desired goal of the non-Thais retaining control of the company through a majority of votes (290:71) and stays within the parameters of current Thai legislation. In addition the non-Thais should be appointed the only executive directors with the power to sign cheques and enter into or cancel binding contracts and agreements. This appointment could only be changed by agreement of the majority of shareholders votes which you control.
The recent focus on the use of Limited Companies to own property has come about as fallout from the Thaksin Shincorp deal and the question of Thai nominee shareholders. It is illegal to act as a nominee shareholder in order to circumvent these regulations. Therefore to help establish if this is the case the following questions need to be addressed:
1. Are the Thai shareholders acting as nominees?
2. If not where has the funding for their proportion of the share capital come from?
3. Where has the funding for the purchase of assets by the company come from?
4. Is there a legitimate commercial interest for the company and/or the Thai shareholders. i.e. If they are not nominee shareholders why are they investing in the company (what's in it for them)?
To cover these questions satisfactorily depends a great deal on how the holding company is set up, who owned the land originally and places a great emphasis on structuring the whole ownership process correctly from the beginning. Trying to cut corners and save a few thousand baht will likely result in a much more expensive problem concerning security for the non-Thai of the whole purchase process.
[ Edited by Admin]
Also interested in reaction to the above. Don't you think that too many people have been prone to knee-jerk reactions to recent events?
For those of us that have fallen in love with this beautiful country we will always find a way of finding the glass half full rather than half empty!
The basic premise of ownership through limited company is that as a non-Thai may not own freehold property in his own name, he forms a limited company and transfers ownership of the property into the limited company and then controls the use of the land through control of the company. However, you need to be aware of the following:
1. Thai legislation states that a minimum of 51% of the shares issued must be owned by Thai nationals in order for the company to be considered a Thai juristic body.
2. Any company with over 39% (and 29% to be really safe) non-Thai shareholders that applies for ownership of property will have a very high likelihood of being closely scrutinised by the authorities.
To cover these stipulations and to ensure that the non-Thais retain control over the company and therefore the property purchased, you should consider having the following precautions put in place:
1. Restrict the shareholding of non-Thais to 29%.
2. Issue both ordinary shares (with one vote per share) and preference shares (with ten votes per share).
3. Allocate 29% of the share issue as preference shares to the non-Thais and 71% ordinary shares to the Thai shareholders.
This achieves the desired goal of the non-Thais retaining control of the company through a majority of votes (290:71) and stays within the parameters of current Thai legislation. In addition the non-Thais should be appointed the only executive directors with the power to sign cheques and enter into or cancel binding contracts and agreements. This appointment could only be changed by agreement of the majority of shareholders votes which you control.
The recent focus on the use of Limited Companies to own property has come about as fallout from the Thaksin Shincorp deal and the question of Thai nominee shareholders. It is illegal to act as a nominee shareholder in order to circumvent these regulations. Therefore to help establish if this is the case the following questions need to be addressed:
1. Are the Thai shareholders acting as nominees?
2. If not where has the funding for their proportion of the share capital come from?
3. Where has the funding for the purchase of assets by the company come from?
4. Is there a legitimate commercial interest for the company and/or the Thai shareholders. i.e. If they are not nominee shareholders why are they investing in the company (what's in it for them)?
To cover these questions satisfactorily depends a great deal on how the holding company is set up, who owned the land originally and places a great emphasis on structuring the whole ownership process correctly from the beginning. Trying to cut corners and save a few thousand baht will likely result in a much more expensive problem concerning security for the non-Thai of the whole purchase process.
[ Edited by Admin]
Also interested in reaction to the above. Don't you think that too many people have been prone to knee-jerk reactions to recent events?
For those of us that have fallen in love with this beautiful country we will always find a way of finding the glass half full rather than half empty!
"Stay Flexible & Expect The Unexpected - This Is Thailand!"
