The number of foreign visitors in Thailand has increased remarkably over the recent past. Interest in retaining business and property has likewise escalated. Despite this, the Thai government has not relaxed rules on foreign ownership of land in the country.
While foreign land ownership is generally not available in Thailand, corporations are allowed to buy and own land in the State. Even corporations owned partly by foreigners are allowed to buy land. Foreigners have seen this as an opportunity to own property in the country. They have since availed of this option as a solution to the restriction.
Incorporation: The most common corporate form exploited by foreigners is the Thai Limited Company. The Thai Limited Company is easy to set up and requires few principals.
Here are a few guidelines on company registration in Thailand:
The company must first register with the Thai authorities. To register as a Thai company, the majority of the shares must be held by Thai citizens. The company requires at least three shareholders. Once the corporation has filed with the Thai authorities, they are already allowed to purchase land. Note that this option is different from the allowances for U.S. corporations under the Amity Treaty. Corporations registered under the Amity Treaty may not purchase land.
The Thai Limited Company offers investment options while protecting the principal investors. First, shareholders are only liable for any unpaid shares. Additionally, the registration process is relatively straightforward. So long as the majority of the shareholders are Thai citizens, the corporation merely has to file the paperwork with the proper government office.
Thai law requires that Thai citizens hold the majority of shares in a Thai corporation. However, Thai law allows for different kinds of shares. Ordinary shares grant the shareholder one vote per share. Preferred shares allow the shareholder multiple votes per share. In the case at hand, the corporation may choose to grant multiple Thai shareholders ordinary shares while issuing preferred shares to fewer foreign shareholders. Therefore, the company will qualify under Thai law. However, the foreign party may still retain control over the operations because they can assign more votes.
Land Acquisition: Once the foreign party has properly incorporated, they may purchase property like any other juristic person in Thailand. The favorable voting distribution allows the foreigner to retain total control over the assets held by the corporation. Therefore, the foreigner can decide when and where to buy and sell land. They may also determine how the land is used. All of the facets make this an attractive option for foreigners. Effectively, they may own land.
Despite these advantages, foreign investors must always consider certain issues. First, the foreigner must find a Thai citizen that they feel comfortable going into business with. This will involve networking which may be difficult with the language barrier. Thai and foreign parties may also have a hard time agreeing on the terms of the business arrangement. In any culture, it is difficult to find someone willing to offer his or her "services" free of charge. Finally, there are several minimum investment requirements. The foreign investor will likely have to deposit 10 million baht into a Thai bank account. This minimum often puts this option out of reach for the average investor. However, foreigners who can afford this minimum and meet the other requirements can effectively enter into business and own land.
About this Author
Rebecca Ponce works as Legal Advisor for Siam Legal International, the largest legal service network in Thailand with offices in Bangkok, Manila, London, Los Angeles, Phuket, Samui, Pattaya, Chiang Mai and Hua Hin. Contact Siam Legal by email for more inquiries on land acquisition in Thailand & more information on setting up a Thai limited company.
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