Connect with us

Property

Phuket Legal: Property purchase in the name of a Thai company

Legacy Phuket Gazette

Published 

 on 

PHUKET: In many cases, foreign investors wish to register a company in Thailand with an eye toward purchasing property in the name of that company to use for business purposes, or simply to use as the company’s registered office.

Although it is commonly believed that a Thai company with foreign shareholders cannot purchase and own land, or that it’s very difficult to achieve, in reality it’s not difficult to accomplish if one follows some simple rules under which the land department will allow the transfer of land and/or buildings to a Thai company that has foreign shareholders.

Lawfully, for a Thai company to purchase land, the company must be set up under section 4 of the Foreign Business Act and section 92 of the land code, which require that the company not have more than 49 per cent foreign shareholding and that the company has more Thai shareholders than foreign shareholders.

In addition, a Thai company is required to have at least three shareholders, therefore, the company should have at least two Thai shareholders and one Thai director (in addition to any foreigner directors). The Thai director must be authorized to sign on behalf of the company for all company matters.

Upon registration of a land purchase by a Thai company, the Thai director, together with all Thai shareholders, are required to appear at the Land Office to satisfy the land official that the Thai directorship and Thai shareholders are bona fide and not mere nominees as such.

Foreign nationals who place nominee Thai directors and/or shareholders into a Thai company structure are considered to have committed a violation under section 111 of the Land Act. Such a violation carries a penalty of up to two years imprisonment and/or a fine of up to 200,000 baht.

If the company is also in violation of the Foreign Business Act, Section 36, the law provides for “imprisonment not exceeding three years, a fine of up to 1,000,000 baht, or both.” Furthermore the court can order a stoppage of the aiding or abetting, or the joint business operation, or the share holding, or a cessation of the partnership. Violators of the court order is subject to punishment ranging from a fine of 10,000 baht to 50,000 baht per day throughout the period of the violation.

In order to demonstrate to the land official that the Thai shareholders are bona fide and not mere nominees, they are frequently required to show their recent bank statements or other evidence that they actually had sufficient funds with which to invest in the company from monies saved, or to demonstrate how they independently acquired the funds.

In lieu of an actual cash contribution, Thai shareholders with valuable skills, knowledge and/or experience may contribute their services to the company through a valid employment contract and receive their shares as compensation for future services to be rendered. All of these Thai shareholders will have to sign a statement to this effect.

The company itself will have to show proof that it has sufficient funds on hand to purchase the property, either as contributed capital, retained earnings or from the proceeds of a documented loan. The company will further be required to show the minutes of the company meeting at which shareholders resolved to purchase the property, and the purpose of its acquisition.

It is easiest to purchase property in the company name if the property will be used as the registered office.

Once the land official has checked all documentation to his satisfaction, the registration of transfer of the property into the name of the Thai company is a routine matter. To be sure all goes smoothly, it is recommended that the company not have more than 39% foreign shareholding. This way the land official has authority to approve the set up on the spot. If the company has more than 39% foreign shareholding, he may need to send the file for approval in Bangkok before registration of the land transfer.

Always declare the full actual purchase price to all government officials when registering a company property purchase (or any property purchase). Never declare a fraudulent figure, as to do so is a tax fraud and a crime.

Therefore, always present truthful and legitimate documentation to all government officials. This includes the minutes of the shareholders’ meeting approving the property purchase with the actual purchase price, and a lawful Power of Attorney if a third party will appear in lieu of the Thai director.

Upon subsequent sale of the property by the company, the foreign director himself/herself may sign on behalf of the company and the company will not be subject to further scrutiny, but it should always comply with the current land code effective at the time.

This article was written by International Law Office Patong Beach Co, Ltd. For any questions you can contact sam@ilo-phuket.com or call ILO’s offices at 076 222 191-5.

— Law Office Patong Beach Co. Ltd

 

Want more from the Thaiger family?

📱 Download our app on Android or iOS for instant updates on your mobile
📧 Subscribe to our daily email newsletter
👍 Like/Follow us on Facebook
🔔 Subscribe to or Join our YouTube channel for daily video updates

image

Join the conversation and have your say on Thailand news published on The Thaiger.

Thaiger Talk is our new Thaiger Community where you can join the discussion on everything happening in Thailand right now.

Please note that articles are not posted to the forum instantly and can take up to 20 min before being visible. Click for more information and the Thaiger Talk Guidelines.



Interested in more property news or buying property in Thailand - check out FazWaz today!

Archiving articles from the Phuket Gazette circa 1998 - 2017. View the Phuket Gazette online archive and Digital Gazette PDF Prints.

Follow Thaiger by email:

Myanmar4 hours ago

Burmese military media outlets say ethnic army killed 25 workers

Thailand6 hours ago

PM Prayut Chan-o-cha says drug suppression should to be a national priority

Thailand7 hours ago

Purchases of fancy street lamps being investigated for possible corruption

Phuket Sandbox July 1st

days
hours
minutes
seconds

Thaiger is getting behind local businesses for the restart of tourism in July - up to 50% discounts across all advertising packages in June!

Sponsored by image

Thailand7 hours ago

Thailand News Today | BKK parks re-open… nearly, tropical storm, airport security upgrade | June 14

Thailand8 hours ago

Missing fisherman’s body found in sea off Nakhon Si Thammarat

Coronavirus (Covid-19)8 hours ago

CCSA: We’re out of vaccines

Coronavirus (Covid-19)9 hours ago

Ayutthaya hospital to test all staff for Covid after 18 test positive

Thailand9 hours ago

13 teenagers arrested in Chon Buri for partying, gathering

Crime9 hours ago

Crime Suppression Division seizes dozens of illegal firearms in a series of raids

Crime10 hours ago

Marijuana valued at 10 million baht seized in Nakhon Phanom, 2 arrested

Coronavirus (Covid-19)11 hours ago

Monday Covid Update: 3,355 new cases, provincial totals

Coronavirus (Covid-19)11 hours ago

Almost 100% of teachers and staff vaccinated in Bangkok

Thailand11 hours ago

Almost 8 million register for stimulus scheme, app briefly goes down

Best of12 hours ago

Top 5 best temples in Bangkok

Thailand12 hours ago

Good Morning Thailand | What’s happening in Pattaya, Phuket sandbox, reopening for tourism

Thailand3 months ago

Thailand News Today | Thai Airways in rehab, All go for Songkran | March 4

Tourism3 months ago

Phuket’s nightlife. Yes, bars and clubs are still open | VIDEO

Phuket3 months ago

Thailand News Today | Covid passport talks, Thai Airways heads to court | March 2

Tourism4 months ago

Phuket Thai food treats you need to try | VIDEO

Thailand4 months ago

Thailand News Today | Bars, pubs and restaurants ‘sort of’ back to normal | Feb 23

Tourism4 months ago

In search of Cat & Dog Cafés in Phuket Town | VIDEO

Thailand5 months ago

Thailand News Today | Gambling crackdown, Seafood market to reopen, Vlogger challenge | Jan 21

Thailand5 months ago

Thailand News Today | Covid testing for visas, Business impact, Vaccine approval | January 19

Thailand5 months ago

Thailand News Today | Weekend Bangkok bombs, Thailand fires, Covid update | January 18

Thailand5 months ago

Thailand News Today | Stray car on runway, Indonesian quake, 300 baht tourist fee | January 15

Thailand5 months ago

Thailand News Today | Governor off respirator, sex-trafficking arrest, condo prices falling | January 14

Thailand5 months ago

Thailand News Today | Chinese vaccine, Thailand ‘drug hub’, Covid update | January 13

Thailand5 months ago

Thailand News Today | Bangkok may ease restrictions, Phuket bar curfew, Vaccine roll out | January 12

Thailand5 months ago

Thailand News Today | Covid latest, Cockfights closed down, Bryde’s Whale beached | January 11

Thailand5 months ago

Thailand News Today | Southern floods, Face mask fines, Thai Air Asia woes | January 8

Trending