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BANGKOK 19 April 2019 17:19
camckz

Buying existing Thai ltd company which owns land/house freehold

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Hello everyone.

I'm currently in the process of buying a property through a existing Thai ltd company.

The Thai ltd has been set up for the past 12 years and I will be going down as the new director with a 49% share with the other 51% being split between three Thai nationals with shares of 20-20-11%. Any advice on things that I need to be aware of or things to check out before purchase would be highly appreciated.

 

 

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Thanks for your reply Thomas.

Im not currently in Thailand and this is very new to me but I have been doing what I can before I travel over.
The guy who is dealing with the sale is a friend of a friend of mine who himself has property over there. I've spoken to him and he has said I can have a copy of the land deeds, the building licence and a copy of the the company details to get it all checked over by a solicitor. So I'm thinking about taking them to a company called Siam legal international to have them go over them before I go.
In regards to the share holders he's told me that as I'm the majority shareholder and director I make all the decisions, also that when I am director I can change the other directors if I like and that the minority shareholders ( directors ) have signed a contract to say they have no rights. Does this sound like common practice in these kind of set ups ? From what I've read I've heard of this being a way that a foreigner can own a house in Thailand and be in full control , so when he has said these things to me it's kinda adds up?
When you say about transferring the chanote to a new set up is that in regards to putting new shareholders/directors in place ?
Also if possible could you explain what the usufruct is in simple terms as I've looked it up and it sounds quite complicated.
I really appreciate your replies, it's a great help to me as this is the first time of attempting to do anything of this sort and there seems to be some grey areas and I don't want to get burnt along the way.
Thanks again.



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Posted (edited)

What u did might be common practice, but it's not ok. No. That is not a correct setup to have some land rights here at all. 

 

I guess you are american? 

There are tons of american law firms in bangkok like baker Mckenzie, freshfield etc. 

 

If you are german, there's also big german law firms like lorenz and partners and i am sure also many qualified british and australians. 

 

Good overview: 

https://www.lorenz-partners.com/download/thailand/NL019E-Foreigners-as-Owners-of-Land-and-Houses-in-Thailand-and-Legal-Instruments-to-Secure-the-Possession-of-Land-Jan15.pdf

Edited by ThomasThBKK

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Posted (edited)

 What the current owner is actually selling is that which he legally owns i.e.

A His share allocation -in this  case 49% of total

B His voting rights-100% of total.

A is not too important

B is vitally important

 The process total   is quite bizarre by normal commercial standards

it goes like this:

Stage one -you will transfer money to a stranger.

There will be no invoice and you will not issue  receipt.

With this in place

Stage two. The stranger will sign documents. He will keep signing until the lawyer -who is over seeing the procedure-tells him to stop

Stage three -you will also sign -until you are told to stop

All will be written in Thai -unlikely that any farang will understand that which he is signing.

The lawyer will declare the process has ended.

Somebody has to pay the lawyer.

I think that you have to be in the same room as the stranger and the lawyer

Also you have to ensure that the house is vacated.

My guess is that  in 99% of cases the forementioned procedure works out successfully.It happens all the time.

There has been cases where this procedure is deemed illegal. However ,it seems to me, that the authorities want the farang for some un related offence. They cannot find any evidence that will stand up in court -so they get him on his house set up.

 

You asked about a Usufruct set up.

In your case it would be this way.

The house and land will be transferred to a Thai. there is some noticeable cost for this. Main cost is closing down the existing company. People quote 100000 Baht just for this.

At the same time a Usufruct will be issued giving you the right to live there until you die.

Transferring to  a Thai girlfrieed is better than transferring to a Thai wife . It gets complicated in the event of a divorce.

Diownside -You can never sell the house without the explicit agreement of the owner. You own zero!

Up side -all is neat and tidy when you die -your girlfriend gets the lot.

Ofcourse the owner could be your lawyer.

Given that there are no pockets in shrouds -maybe the lawyer -or law company -is better

 

 

 

 

Edited by Delight
Added detail

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Thanks guys. These comments are most appreciated.. if I read between the lines it's kinda what I have been led to believe through my own research. It can be done, possible risks involved but as long as the company's legit and has no hidden dept all should be ok...yes it's not the right way to do it but it is done this way.
What are the key points to establish then before I proceed to make sure all is in order would you guys say... also what or who is DBD?
Would anyone here know of a reputable lawyer in the hua Hin area that speaks fluent English that may be able to help me once over... thanks again for your input guys any advice on this matter will be most appreciated.


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DBD is the department of business dev, where all companies are registered, share transfers noted etc.

 

Not sure about hua hin lawyers, but every bangkok lawyer can easily go there if needed and some prolly have an office there too.

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4 minutes ago, camckz said:

Thanks guys. These comments are most appreciated.. if I read between the lines it's kinda what I have been led to believe through my own research. It can be done, possible risks involved but as long as the company's legit and has no hidden dept all should be ok...yes it's not the right way to do it but it is done this way.
What are the key points to establish then before I proceed to make sure all is in order would you guys say... also what or who is DBD?
Would anyone here know of a reputable lawyer in the hua Hin area that speaks fluent English that may be able to help me once over... thanks again for your input guys any advice on this matter will be most appreciated.


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You must , just must, know who the nominated directors are.  You must also understand that you are taking a risk, how much of a risk is debatable, but it is real.  My house is owned by our family owned company, but the directors are myself , my Thai/Brit daughter and my wife, so it's legal and accountable. It also trades in consultancy, pays taxes and submits accounts. My strong recommendation is that you use a very reputable law firm to check and carry out  your due diligence, and explain to you the legal situation and outline any risks you may be taking.  It's doable, so don't be put off, but you need to be wary. 

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Thanks Thomas.

Pilotman, thanks for your advice.
I am super wary and am trying not to let this put me off as I know it can be done, just as long as it's done in the right way..hence I don't want to miss something. All comments and advice are being taken on board and to be considered before making my final decision. All are appreciated.

Referring to your first point, would I need to know them personally as they have already signed over their rights to the current owner ?
The property will be let out for 80% of the year with the other 20% being for me and my family's use.
So I'm presuming this would actually be a functioning business as I'd be paying and more than happy to be paying tax on the income which will be submitted once a year.
Can you recommend a reasonable company to deal with the matter for me and also what kind of prices should I expect to be paying for their services as once again don't want to get ripped off ? Thanks again for everyone's input.


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3 hours ago, camckz said:

The property will be let out for 80% of the year

You will be very very very lucky if it’s let out 80% of the year.hope your not dropping your life savings on it and thinking a reliable income from it.

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4 hours ago, camckz said:

The property will be let out for 80% of the year with the other 20% being for me and my family's use. 

Are you aware that short term rentals (less than 30 days) are illegal unless you have a hotel license?

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Posted (edited)
4 hours ago, camckz said:

Thanks Thomas.

Pilotman, thanks for your advice.
I am super wary and am trying not to let this put me off as I know it can be done, just as long as it's done in the right way..hence I don't want to miss something. All comments and advice are being taken on board and to be considered before making my final decision. All are appreciated.

Referring to your first point, would I need to know them personally as they have already signed over their rights to the current owner ?
The property will be let out for 80% of the year with the other 20% being for me and my family's use.
So I'm presuming this would actually be a functioning business as I'd be paying and more than happy to be paying tax on the income which will be submitted once a year.
Can you recommend a reasonable company to deal with the matter for me and also what kind of prices should I expect to be paying for their services as once again don't want to get ripped off ? Thanks again for everyone's input.


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That's a difficult question to answer, as a foreigner using  nominated directors to control 100% of the shares of a company specifically set up to circumvent Thai property law is illegal.  As we had last year, you could be subject to a Government audit of the company and an illegal set up like the one you are considering would be picked up immediately.  Get best legal advice you can and see what you think.

 

We used an International law firm in Bangkok, Freshfields Bruckhaus Deringer.  I forget the cost,  as they were dealing with other issues for us at the time and they were setting up our company, rather than buying an existing one.   

Edited by Pilotman

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