From a forum pieceâ€¦.
>FORUM: I have a question concerning ownership. The coolthaihouse website recommended setting up a Thai limited company with 70% preferred shares (thai owned) and 30% common shares with 10 votes per share (farang owned). Although this arrangement follows the letter of the law, it violates the spirit. It is essentially a company whose purpose is to allow a foreigner to have control over the land. In the US, these types of sham set ups would never hold up in court. But in Thailand, is this set up ever challenged by the authorities? Or will this only become an issue if a private citizen files a civil suit?
Editor: I think it is a good question and I don’t know the answer. Relying on the advice and research of other I would point out the following:
1. The multi-million dollar Phuket Samsara project sold luxury houses in the 30+ million baht range. This is a very well thought out legal strategy (and a legal team with a high budget) which recommends pref share company setup as a proxy for land ownership. Read a copy here. [really good free mega bucks legal research](attachments/pref share company setup example.pdf “nice company setup research”)
2. I had a discussion with a developer of large 10+ million baht houses here in Pattaya. He recommended using one company with preference shares strictly for asset protection and one for trading if any. The idea here is to isolate the trading activities in a separate company from the one being done for asset protection. I note this since this developer had done thorough research on the best method of asset protection for his clients and has been developing properties here for 7 + years.
3. Condos are once again required to be 51% owned by Thai clients. This was not enforced for many years but is now being enforced again. Since in reality there won’t really be 51% Thai clients, most Condos recommend their Expat clients use companies as a proxy for ownership (for the 51% which cannot be owned directly).
4. Lawyers most commonly will recommend a company as the best medium for land ownership.
A definitive answer may not be available on this — the above just points out that using a company as a proxy for land ownership is a very common practice. Obviously the laws here are very ‘anti-foreigner’ with respect to land ownership. Maybe the set-ups using a company are simply the least worst of all possible alternatives. As of yet I haven’t heard of any problems with this kind of structure (asset protection company), but would like to hear of any.
As an alternative, a 30 year lease is also commonly used. This tends to be less costly but is a little more restrictive. I would advise anyone investing more than speculative capital here to think twice, the laws are restrictive and if a problem develops the court system is very expensive and probably in any foreigner vs. Thai conflict the Thai will always emerge ‘the winner’.