Investors invade 100 plots in two provinces

Several former high-ranking officials at the Interior Ministry were involved in land scams in Phuket and Phangnga provinces, the Office of the Public Sector Anti-Corruption Commission has found.

PACC chief Pol Col Dusadee Arayuwuthi said the officials were involved in the misappropriation of more than 100 public land plots in the two provinces.

Mr Dusadee said the officials hoped to push for the issuance of land title deeds for the plots at a later date.

A team of PACC investigators inspected more than 1,000 rai of national reserve forests and coastal areas in the two provinces and found more than 100 cases in which public land had been encroached upon.

The agency also found that in every public land encroachment case, state officials were involved, he said.

The PACC has drawn up a list of suspected public land encroachers following its probe.

“One suspect involved in two plots of land is a former Phuket governor. Another is the daughter of a former permanent secretary to the Interior Ministry,” Pol Col Dusadee said.

The PACC’s revelation came after the Ombudsman aired concerns on Monday over the level of land ownership by foreigners via Thai nominees. Most of the land in foreigners’ hands is in coastal resort areas.

Pol Col Dusadee said that in Phuket’s Krathu district, several investors have invaded reserved forest land in the Kamala Mountain Range, while land in tambon Kamala is being sold at 200 million baht per rai at the moment.

Some have tried to push for the issuance of an ownership document for a 21-rai plot in the area. A beach-front hotel worth 4 billion baht is under construction on the plot, he said.

Another group recently tried to secure a land ownership document for 45 rai of land in Khao Nakkerd forest reserve in Phuket.

Pol Col Dusadee said he would consult with senior officers to try to block the issuance of the ownership document for the land plot.

He said in many public land encroachment cases, foreigners have hired Thais as nominees and set up companies to purchase land in coastal provinces, such as in Chon Buri’s Bang Lamung district and Pattaya city, and in Rayong province.

In Phuket and Phangnga, it was found that almost 70% of forest areas have been encroached on.

Problems in these two provinces are similar to what has happened in Surat Thani’s Koh Samui, where most landowners are registered companies in which shareholders are Thai nominees of foreign investors.

“It is not difficult to trace connections among land owners. Companies set up with nominee shareholders do not have continuous business activities. Most such companies suffer financial losses every year,” Pol Col Dusadee said.

The PACC will meet permanent-secretary for Interior Pranai Suwanrath and permanent-secretary for the environment Chote Trachu on Friday to discuss the problem of public land encroachment in Phuket and Phangnga provinces.

Related:

Samuiforsale: article blog

Answer: The limit of foreign ownership of licensed condos ( the only ones offering outright individual ownership) is 49% of the apartment units without exceptions. The answer can also can be found in a Bangkok Post article (2008). Content text:

‘More protection for buyers of condos’

Condominium buyers are to get better legal protection thanks to the amended Condominium Act, under which developers who do not deliver facilities as advertised will be penalised. The amendment will become effective on July 4. Surasith Sahasthamrangsi of the real estate business promotion bureau of the Land Department said at a seminar yesterday that the new Act would punish de velopers who used misleading advertising to boost sales. “If they can’t deliver what they advertise, the Land Department is empowered to charge them with giving false information,” Surasith said.

The amendment followed complaints by buyers whose purchases did not include what was advertised. Most of the angry buyers were people who bought units before they were completed. From July 4, developers will have to submit advertising plans with their construction proposals. On completion, the Land Department will check if all is as advertised.

Property Perfect’s chief operations officer, Teerachon Manomaiphibul, said this law would hurt only developers who are inclined to cheat buyers.

Meanwhile, experts said the amended law might hurt the resale market, as the provisional clause that allows foreigners or foreign entities to hold more than 49 per cent of condominium units in Bangkok, municipal areas and other specified areas will be scrapped.

The limit will now be 49 per cent, without exception.

Related:

• 1999 condominium act
• Practical condominium knowledge

Is Phuket beach land owned by foreigners?

Published: 24/08/2009 at 12:00 AM
Source: Bangkok Post

Local officials and legal experts have helped clear the way for foreign investors to take control of the country’s rice farms and property in resort provinces, according to research on foreign land ownership by the Thailand Research Fund.

TRF called a seminar on the research findings yesterday attended by economics and legal scholars.

There recently has been speculation that foreign businessmen, particularly from the Middle East, were snapping up rice fields in the central plains and elsewhere through proxy local companies.

Transnational business consortiums were said to be holding the land through Thai nominees, which is against the law.

Some farmers are leasing land they previously owned but have since sold to the foreigners’ proxy firms, observers said.

Siriporn Sajjanont, from the economics faculty at Sukhothai Thammathirat Open University and a member of the research team, said the study showed many kinds of property had been bought by foreigners through Thai nominees.

“About 90% of land along the coastline in Phuket is controlled by foreigners through Thai nominees,” she said.

Foreign investment capital was essential for developing Phuket and Samui, as Thais do not have enough money to invest themselves, Ms Siriporn said.

The coastal areas most sought after by foreign investors were Pattaya in Chon Buri, Koh Phangan and Koh Samui in Surat Thani, Phuket and Hua Hin in Prachuap Khiri Khan.

In Chiang Mai, foreigners had used legal loopholes to exceed the limit on sales of condominium units, Ms Siriporn said.

There was evidence they hold the property through Thai nominees by marrying Thais. In some cases, Thai women were asked to register the foreigners’ property in their own names.

The study found similar problems in Rayong involving foreign landholdings through Thai nominees with foreigners marrying Thais.

In some land lease cases, the period of leasehold was unusually long, Ms Siriporn said. The study found that some lease contracts stated the leasehold was “for life”.

Land ownership by foreigners had been made possible by their Thai lawyers who had found legal loopholes to clear the way for foreigners to take control, the research found.

Village heads also had acted as land brokers to arrange sales of state land given to local people so they could make a living, the panellists said.

Village heads were close to residents and knew which prime land was available.

Some legal entities had been set up with 51% of shares held by Thais, although those Thais turned out to be mere legal advisers for foreigners and had no power to run the legal entities, Ms Siriporn said.

“We also found the same people had set up many entities,” she said.

Some entities’ regulations on shareholding structures allowed foreign shareholders more power than Thais in running those entities.

Col Surin Pikulthong, president of the Community Organisations Development Institute, said he had received information that Hmong people in the US had provided financial support for Hmong in Nan province to buy land and grow rice for shipment to the US.

Silaporn Buasai, vice-president of the institute, said she had heard that investors from Taiwan had bought land here for growing oranges to be sold in Taiwan.

Wichian Phuanglamjiak, vice-president of the Thai Rice Growers’ Association, said rice farmers held additional information on land grabs by foreign investors.

He said the problem had remained unaddressed for too long and no state agency had taken the matter seriously.

Mr Wichian said farmers were pinning their hopes on the Department of Special Investigation to pursue the matter.

DSI investigator Pakorn Sucheevakul on Saturday said the agency was investigating four Thai companies in Ayutthaya which own rice farms of almost 10,000 rai.

Malee Antasin, 59, a farmer in Ayutthaya’s Bang Ban district, said businessmen had bought many plots in her village since 1995.

She said she had felt “besieged” and pressured to sell her rice plot as her land had been enclosed by other plots owned by those investors. She was now taking the matter to court.

Related:

• Thai nominee companies

Answer: Under Thai marriage laws you have to separate personal property from jointly owned property.

Thai law on marital and personal assets in general

Personal property of either spouse:

1. Property belonging to Husband/Wife before marriage;
2. Property for personal use, dress or ornament suitable for station in life, or tools necessary for carrying on the profession of the Husband/Wife;
3. Property acquired by Husband/Wife during marriage through a will or gift;
4. As regards item (1) to item (3) mentioned above, any increase in value of it or if it has been exchanged to other property or income derived from it, other property has been bought or money has been acquired from selling, such other property or money acquired shall be personal property of Husband/Wife;
5. Where item (1) to item (4) mentioned above has been totally or partly destroyed but replaced by other property or money, such other property or money shall be personal property of Husband/Wife.

Common jointly owned property (this has to be divided between husband and wife):

1. Property acquired jointly by the Husband and Wife during marriage (note point 4 above);
2. Property acquired by either Husband or Wife during marriage through a will or gift made in writing if it is declared by such will or deed of gift to be common property;

A: In the divorce only common property must be divided in equal shares. Your wife is not entitled to half of everything you own, she can only ask for division of common property, but is case of doubt if an asset is personal or common it is deemed a common property between husband and wife.

Note: to come well prepared in a divorce in Thailand we recommend to keep a yearly administration of personal assets during the marriage including documentary evidence, in addition to a prenuptial agreement.

The house you bought

A Thai national married to a foreigner cannot register ownership over land unless he/ she can show evidence that all money paid is a personal property under Thai law, or after husband and wife declared together at the land office in a standard certify letter that all money paid for the property is personal property of the Thai spouse.

Note: in the case you did not sign the required land office certify or confirmation letter, and your wife did not declare the marriage when she registered ownership and she cannot prove she had enough money to purchase the land, the property is regarded a common property and she may technically be considered by the court as a person who owns the land on your behalf (your nominee).

A: Normally, when the correct land office procedure has been followed, the house bought on your wife’s name will be considered as personal property of your wife and will not be divided equally.

Her gambling debts

Only common debts are the responsibility of both spouses. Debts from gambling are her personal debt as it is used by her personally and not in any way for joint or family purposes.

A: Upon divroce you are not responsible for her gambling debts (in addition such incurred debt is illegal and collection cannot be enforced by law).

Related:

• Marriage laws
• Marriage and assets
• Prenuptial agreement

Q to a Phuket lawyer: I must ask how Thai law stands on this regarding a specific real estate company in Phuket. Can a company sell fractional ownership in an apartment they do not own?

This company enters into a rental contract with the registered leaseholder, and then bring potential clients to view/stay and then sell fractional ownership weeks to the clients of this apartments in Phuket. Is this legal? Put simply, they do not own the apartment but are selling fractional ownership weeks for this apartment when they only have a rental agreement in place.

Answer from a Phuket lawyer: foreigners cannot own real estate other than condos registered under the condo act. These fractional ownership apartments are usually not registered as condos but are referred to as leasehold apartments. Fractional ownership usually involves in some part a rental element.

Likely it is sold as an interest/ shares in a foreign (non-Thai) company that owns the lease or the building on leased land. There are various structures limited by foreign land ownership restrictions. The contracts should be read carefully to understand what you are actually buying. Mostly there are costly rental pool and maintenance agreements involved. Is it legal? Maybe, but legally it is very poor because foreigners cannot have (fractional) ownership in the land and maybe you just become a fractional tenant for a maximum period of 30 years.

The Phuket police announced some time ago to clamp down on fractional ownership, time share and holiday club tourist selling schemes.

Clamp down on illegal operators

In the press (Phuket Gazette 2011-06-02):

Patong Mayor Pian Keesin called for officials to be investigated.

PHUKET: A multi-agency task force will be set up to investigate timeshare companies operating in Phuket, especially Patong.

Tasked with investigating the companies, their workers and any officials involved in allowing the timeshare companies to operate, the “committee” is expected to launch an investigation by October, just before the annual tourism high season begins, Vice Governor Somkiet Sangkaosutthirak announced.

The committee will comprise officials from agencies including the Tourist Police, Royal Thai Police, Provincial Police, Public Prosecutor’s Office, Provincial Office and Patong Municipality.

“It’s a big problem. Tourists book holidays with timeshare companies, but when they arrive in Patong, the companies don’t have any hotel rooms for them to stay in. That is destroying our tourism reputation,” said V/Gov Somkiet.

Patong Deputy Mayor Chairat Sukkaban identified three types of timeshare companies operating on the island.

“There are genuine timeshare companies that are registered and have their own offices, such as the operation run at the JW Marriott [Resort & Spa in Mai Khao]

“But there are also people who rent hotels and properties for only a couple of years, but then offer clients use of the properties over 10 to 30 years. That’s cheating,” Mr Chairat said.

“Third are companies that don’t have anything at all, but they tell their clients that they have got everything for them,” he added.

“Many of these operators set up companies and ‘sell’ anything they can, making anywhere from 100 to 500 million baht. They then close their companies and run away.

“Later they open a new timeshare company, because it is easy to open such companies in Thailand, and cheat people all over again. It is damaging our tourism,” he added.

Deputy Mayor Chairat called on other government departments to help clamp down on illegal operators.

“Before issuing any work permits for such companies, the Department of Employment needs to look in detail at such operators, such as checking whether they have their own properties and offices,” he said.

Supporting Patong Mayor Pian Keesin’s call for the committee to also investigate officials, V/Gov Somkiet warned that any officials found to be involved in any illegal timeshare operations will be reported to their office chief.

Also, timeshare cheats were not only affecting foreign tourists, V/Gov Somkiet added.

“About 30 Thai people filed complaints at the Damrongtham Center. They said a well-known company in Thalang had cheated them of about 80,000 to 100,000 baht each.

“When they got to the hotels where they had paid to stay, there were no rooms for them,” he said.

The meeting on Tuesday was called after Patong business owners filed complaints to the Damrongtham Center.

The complaints alleged that more than 100 foreign workers were on the streets of Patong selling timeshare without work permits.

The complaints, filed with details and photographs, explained that timeshare workers continually rode motorbikes around Patong looking for potential “customers” and they stopped mid-traffic to pitch their sales.

Related:

• Samui condos

View from Maenam hill (Samui) to Koh Phangan

Q to a Phuket lawyer. What kind of regulations are applied when a partly foreign owned Thai company in Thailand wants to register ownership of land?

Answer

This is a sample of a Land Office regulation only.

General evidence required by the Land Office from the Thai shareholders in partly foreign owned company with the objective to carry out a Hotel Business:

1) The evidence for the investigation of each Thai shareholder on the occupation and monthly income will be a letter from a working entity certifying a position with employment period and monthly salary or other reliable evidence. The investigation will be furthermore on the source of money for the shareholder to buy shares which may come from savings, sale of land, inheritance or loan by showing the evidence, e.g., bank book, agreement to sell the land, evidence showing the inheritance or loan.

2) In case any shareholder is a juristic person with a Thai nationality (even the aforesaid juristic person has not any foreign shareholder or director), the investigation must be made on the source of money to buy shares by investigating the representative of the juristic person to ascertain the source of money by showing evidence which is a balance sheet. If the money to buy shares was borrowed from other person, the evidence being a loan agreement and minutes of meeting involved with the aforesaid matter must be produced.

3) In case a juristic person purchases the land with the price higher than the registered capital, for instance, the company has the registered capital of 500,000 baht but the company purchase the land for the price of 10,000,000 baht without mortgage, the investigation must be made to ascertain the source of money by showing the evidence. If the money was borrowed, minutes of meeting involved with the aforesaid matter with a loan agreement and the following related documents will be required :

• 3.1) If the loan is from a foreigner or foreign juristic person, the evidence showing the source of money, e.g., the evidence showing that the money is remitted from overseas or withdrawal slip of money from a bank account with minutes of meeting of the juristic person who is the lender.
• 3.2) If the loan is from a Thai individual or juristic person (even the aforesaid juristic person has not any foreign shareholder or director), the evidence proving the source of money, e.g., balance sheet, withdrawal slip of money from bank account with minutes of meeting of the juristic person who is the lender must be produced.

If the land official deems the evidence required sufficient, and therefore the Thai shareholders appropriate shareholders, the company may legally own land and the land may be registered in the company’s name. The above investigation into the Thai shareholders is a specification of the Land Office regulations dated May 2006 (enforcement of section 74 of the Land Code Act).

• Section 74: In recording rights and legal acts by the competent authority under Section 71, the competent authority shall have the power to interrogate the parties and summon persons concerned to give oral testimony or send relevant written evidence as may be necessary and then proceed as may be appropriate under the circumstances. If there is reason to believe the recording of such rights and legal acts is in evasion of the law or there is reason to believe the purchaser is purchasing on behalf of an alien, instructions shall be asked of the Minister whose word shall be final.

Rules and regulations change regularly and in specific cases additional or different requirements may apply.

Answer from a Phuket lawyer: You are not allowed to own land in Thailand under the Land Code Act and you are not free to operate a hotel, guest house or bungalow business in Thailand as a foreigner under the Foreign Business Act.

General practice

It is possible to operate a business through a majority Thai owned limited company (meaning at least 51% owned by Thais). You can become director in this Thai company and work through this company but you need a work permit. As a foreigner you can control a Thai company under the current Foreign Business Act through preference shares, but you are not allowed to use Thai nominee shareholders (note the Foreign Business Act around section 36 and 37).

A Thai company must have a minimum of 3 shareholders who can be foreign or Thai.

Note: there have been plans by the previous government to change the Foreign Business Act and any future change in the law MAY affect foreign control in the Thai company.

Owning the property

You cannot own real estate in Thailand as a foreigner because land ownership is prohibited for foreigners.

If the company set up for running the hotel business has a majority of Thai shareholders (in number of shareholders and percentage of shares) and these Thai shareholders are deemed appropriate by the Land Office the property can be registered in the Thai company name.

Generally registration of ownership of land in a partly foreign owned Thai company is currently only achieved by circumventing the law. I.e. because of the Land Office registration rules applied when dealing with a partly foreign owned Thai company you will only become a director in the company and have the shares registered in your name after the land transfer and ownership registration in the Thai company name. Circumvention of these regulations is not recommended but commonly still happen.

If you put the property in a Thai friend’s name your friend may under the Land Code Act also not be your nominee for the purpose of holding land. This is illegal under the Land Code Act. If this structure is put in place the property is generally rented back under a 30 year lease agreement.

In short

The Thai company is the most common vehicle that is used by individual foreigners who want to operate a small business in Thailand. A drawback is that often the law (Foreign Business Act and if applicable the Land Code Act) must be circumvented to achieve your goals of running a small business as a foreigner in Thailand and/ or owning real estate.

Any future changes in the law or change in policy of enforcement of existing laws may affect the Thai company structure with foreign shareholders. If you decide to invest through a majority Thai owned company as a foreigner there is always a risk factor involved and you must calculate this in before you invest money into Thailand.

A few basic steps involved for operating a guest house, bungalow or hotel business:

• find Thai promoters and shareholders for the formation of the company (shareholders may be offered by the law or accounting office setting up the company, but that does not make the structure legal)
• formation of a Thai company with a minimum capital of 2 million baht
• work permit application (the above share capital allows 1 work permit for 1 foreigner)
• application hotel license (note there are separate requirements for licensing under the Hotel Act)
• registration of the property in the company name (if the land office deems the evidence required for registration of ownership in a partly foreign owned company sufficient)

Note: this article applies in general for individual foreign investors who want to operate a hotel or guest house business in Thailand. Foreigners may under strict conditions operate such a business as a foreign company with approval of the Board of Investment, but this is not a viable option for most individual foreigner investors.

Thai Vessel Act B.E. 2481

Part I – Thai Vessel Registration

Section 6 – Thai vessel registration according to this Act shall be filed at vessel registrar.

Section 7 – A person who have ownership in Thai registered vessel for commercial purpose in inland water shall have following qualifications;

(1) Being Thai nationals
(2) Being unregistered ordinary partnership where all partners are Thai.
(3) Being state enterprise according to the Budget Act.
(4) Being juristic entities under Thai law as follows;
(a) Registered ordinary partnership where all partners are Thai nationals.
(b) Limited partnership where all unlimited liability partners are Thai nationals.
(c) Limited company where not less than half of directors are Thai nationals and not less than 70% of registered capitals are owned by a person who is not “Alien” and no provisions permit to issue bearer shares.
(d) Public limited company where not less than half of directors are Thai nationals and not less than 70% of registered capitals are owned by a person who is not “Alien”.

In the interest of this section, “Alien” refers to alien according to Foreign Business Act.

Section 7 bis – A person who have ownership in Thai registered vessels which are used for international marine transport and not perform commercial activities according to Section 47 shall be Thai juristic person where not less than half of directors are Thai nationals and obtain one of these following qualifications;

(1) Being limited company where not less than 51% of registered capitals are owned by a person who is not alien and no provisions permit to issue bearer shares.
(2) Being public limited company where not less than 51% of paid-up capitals are owned by a person who is not alien.

Section 7 ter – No Thai nationals nor juristic person who can have ownership in Thai registered vessels performs following acts;

(1) Having ownership in Thai registered vessels according to Section 7 on behalf of alien.
(2) Being a partner on behalf of alien in partnership who can have ownership in Thai registered vessels according to Section 7.
(3) Holding shares on behalf of alien in limited company or public limited company who can have ownership in Thai registered vessels according to Section 7 and Section 7 bis.

Section 7 quarter – No limited company nor public limited company who can have ownership in Thai registered vessels according to Section 7 bis perform following acts;

(1) Having ownership in Thai registered vessels according to Section 7 bis on behalf of alien.
(2) Holding shares on behalf of alien in limited company or public limited company who can have ownership in Thai registered vessels according to Section 7 bis.

Full text: Thai Vessel Act
________________

The Treaty of Amity and Economic Relation between Thailand and United Stated.

Article IV

2. Each party reserves the right to prohibit aliens from establishing or acquiring interests, or to limit the extent to which aliens may establish or acquire interests, in enterprises engaged within its territories in communications, transport, fiduciary function, banking involving depository function, the exploitation of land, or other natural resources, or domestic trade in indigenous agricultural products, provided that it shall accord to nationals and companies of the other Party treatment no less favorable in this connection than that accorded nationals and companies of any third country.

Related: Buying a boat in Thailand

A lease agreement for a property purchase in a residential complex (leasehold apartment or villa) often includes mandatory rules and regulations of the project, a maintenance and property management contract, and sometimes even a rental pool agreement governing sub-rental of the property.

What is lease in Thailand? Lease in Thailand is a prepaid rental contract with a maximum term of 30 years. Rent is calculated yearly but paid in advance for the term of the tenancy.

Lease is placed under the section contracts in Thai law and governed by the specific section Hire of Property in the Civil and Commercial Code. A leasehold in Thailand is therefore not a fixed asset, not a mortgage-able asset, not a trade-able asset, but in essence a tenancy contract.

Though any lease of immovable property exceeding 3 years must be registered on the title deed a lease agreement is not a property right attached to the property. This for example means that a lease is by law terminated upon death of the lessee. In addition, as a tenancy contract a landlord can evict a tenant (lessee) who does not comply with the contract or in case of a residential property in a development, the contract structure under which possession of the property is bought. Here lies the importance of the supplementary contracts in the purchase of any residential housing or apartment under a lease agreement in Thailand.

Supplemental contracts could put an significant extra financial burden on the lessee for the duration of his lease, or limit his rights and legal protection considerably.

The supplemental agreements are part of the tenancy and non-compliance could lead to premature termination of the lease agreement and loss of possession of the real estate property. Thailand does not know tenant protection and hire of property laws are considered pro landlord.

Is it all bad? No, some developers of leasehold property in Thailand have given the control over the residential complex to the residents of the project, but still the majority of the property developers aiming their services at foreigners in Thailand have set up more dictatorial contract structures in which they fully control every aspect of the development and ongoing costs and the tenants have to comply with the desicions made by the developer/ landlord, even though made in his own (financial) interest.

The rule with every residential real estate project aimed at foreigner in Thailand (this could for example also be time sharing or fractional ownership) is to double or triple check the agreements as written Thai law does not protect leasehold purchasers in Thailand and these contracts could follow you for the term of the leasehold.

Thai law generally permits the purchase of land through a legitimate partly foreign owned Thai company as long as the maximum foreign shareholding does not exceed 49% in percentage of shares and number of shareholders. Foreigners are under current legislation allowed to control a majority Thai owned company through the issue of preference shares and weighted voting rights in the company. Voting rights are written into the articles of association of the company.

Juristic persons (e.g. limited companies) incorporated under Thai law which are deemed ‘foreign’ entities are not allowed to own land, or condominium beyond the foreign ownership quota¹.

Thai law: Foreigner definition of a Thai limited company:

1. Section 96 of the Land Code Act: Limited companies with more than forty-nine per cent of their capital owned by foreigners or more than half of whose shareholders are foreigners
2. Section 4 Foreign Business Act: Having half or more of the juristic person’s capital shares held by foreigners or a juristic person having foreigners investing with a value of half or more of the total capital of the juristic parson
3. Business Registration Rules and Land Office Guidelines aimed at preventing the use of Thai nominee shareholders by foreigners (a partly foreign owned company structured with Thai nominee shareholders is deemed a foreign company).

Nominee shareholders in a Thai company

Foreigners are prohibited from using nominee or Thai proxy shareholders (under 1, 2 and 3 above). The company can also not be incorporated as a land holding or special purpose company to hold real estate property on behalf of the foreigner. This has an illegal purpose under the Land Code Act and Civil and Commercial Code of Thailand. A dormant holding company or a company merely incorporated to circumvent foreign real estate ownership restrictions is not allowed in Thailand.

Not land holding but a business purpose

The company must have a business purpose, money should pass through the company so the company will be actively trading according to its business objectives, so the company will not be liable for a Registrar’s application to strike off the company from the register for being inactive. The foreigner will be a director of a running Thai Limited company and obliged to fulfill his duty as a director and comply with the Foreign Employment Act (work permit). The director(s) of a Thai company are required by law to cause an audited financial report to be prepared annually and to be filed with the Commercial Registration Department of the Ministry of Commerce before the first of May each year, irrespective if the company received any income or has been inactive.

Property investment through a Thai company

A property purchase through a Thai limited company is a legally weak investment structure because controversial legal basis and as it is insecure how the government will deal with limited companies set up by foreigners to circumvent foreign real estate ownership restrictions. Companies controlled by foreigners in terms of voting rights and/or majority foreign management (directors) could under possible future law be classified as foreign, even if direct foreign shareholdings are in a minority (e.g. foreigner definition under Foreign Business Act amendments).

1. A Thai company must have a legitimate business purpose and actively trading. In case of foreign participation the company must comply with the Foreign Business Act.
2. Foreigners a prohibited from using Thai nominee shareholders. Foreigners who circumvent the law with Thai nominee shareholders may be able to do so, but are liable for severe penalties.
3. Possible future laws and regulations restricting foreign control in a Thai company will affect existing companies and would force foreigners to give up control in a Thai company.

1. Note any company deemed foreign under the Land Code Act or Foreign Business Act is deemed a foreign company under the Condominium Act under section 19