New law, negative effect?

[tuktukmike]

Sounds great,

One exception which was explained at the meeting.

The moment you change the directors of these companies they will investigate.

What no one needs right now is as predicted are more ways to circumvent the laws on land ownership out here.

I have contacted the British Embassy today and they are looking into putting the regulations on their web site.

The sooner the better, then maybe for once and for all everyone can stop blaming the Lawyers/real estate companys and start looking at themselves.

How many times does it had to be said, we all knew this was a risk but for some with large returns if you were lucky.

Mike.

Now back to the footie.

[Burger]

This is interesting, from a large Bangkok solicitor firm who have actually contacted the Ministry of Interior:

"We read with interest the article in the Bangkok Post dated 31 May 2006 entitled, “New Regulation Causes Confusion.â€

[tuktukmike]

limited companies may purchase real estate for resort operations, company headquarters, fitness centers, research facilities, factories and a host of other activities.

And the point????

Siam Global Assosiates, This wouldent be another Thai Lawyers company by chance???.

Lets just wait and see, hopefully all will pan out ok in the end. Maybe.

Mike.

[Burger]

..

[Jaime]

Although the use of Thai nominees to evade the Foreign Business Act or Land Act is illegal, general enforcement is not, apparently, the objective of the circular letter. The circular letter is aimed particularly at the companies engaged in the real estate business and not limited companies that purchase real property for objectives other than the real property business.

I am by no means an expert in deciphering such things but this statement seems to confirm that forming a Thai company solely in order to allow a foreigner to circumvent the legal restrictions and buy a private house/plot of land really is illegal but that the Thai authorities will turn a blind eye (for the time being) as long as the property is not being 'traded' for a profit.

[Burger]

Highlighted quotes for you:

According to that circular letter, a company involved in the real estate business with a significant foreign shareholding, and where the use of Thai nominees (front men) is suspected, may come under investigation when the company has the objective of engaging in the real property business.

Although the use of Thai nominees to evade the Foreign Business Act or Land Act is illegal, general enforcement is not, apparently, the objective of the circular letter.

The circular letter is aimed particularly at the companies engaged in the real estate business and not limited companies that purchase real property for objectives other than the real property business.

There are many business activities other than the real estate business.
For example, limited companies may purchase real estate for resort operations, company headquarters, fitness centers, research facilities, factories and a host of other activities.

The companies that would likely be affected by the circular letter would be real estate development and real estate sales companies using Thai nominees that are in actuality managed by or for the benefit of non-Thai nationals. Such an activity would also be in violation of the Foreign Business Act by engaging in a business listed on List 1 of business activities prohibited to non-Thai nationals.

Burger

[Burger]

I am by no means an expert in deciphering such things but this statement seems to confirm that forming a Thai company solely in order to allow a foreigner to circumvent the legal restrictions and buy a private house/plot of land really is illegal but that the Thai authorities will turn a blind eye (for the time being) as long as the property is not being 'traded' for a profit.

Jaime, I think they mean by that if you purely use Thai front men, and dont operate a business from your 'office'.
It would not be illegal if the shareholders bought their shares and you operated a business etc.

Basically they are saying they know the score, want the investors but are not happy with the foreign developers etc.

Burger

[Jaime]

I understand and accept that the intention of the circular is clear - i.e. that individual property owners are not the intended targets but it also seems to confirm that buying a property through the company route is illegal. Isn't the whole point of forming a Ltd Co. for purpose of buying land to evade the Land Act? Which is illegal, right? Am I right or wrong?

I'm not involved in buying, selling or getting one over on people BTW, I just want to know.

[Jaime]

Burger, I think you beat me to my last post!

[malcolminthemiddle]

Hogus,

Basically a developer on cutting the land into plots and getting the title deed can form companies and transfer the land into the said company. When a buyer chooses to purchase a particular plot the new buyers will replace the original directors in the formed company to own the house built on the company owned land. That is the basic idea, i may have some minor detail incorrect aplogoises if i have.

JW

I think you have misunderstood.

The project land is never subdivided into individual house plots but remains whole whether that is made up of one or more Chanotes.

The Chanotes are in the name of the "Company" and remain an infinite asset of the company.

At completion, a buyer, will be allocated the proportional number of shares within the company allocated to the house he is buying.

Once the project is complete the company's core activity shifts from development to property management, a bit like a Juristic Committee in condos.

In short one project, one company, multiple share holders.

To sell your house, sell your shares.

Drafting of the Company Articles of Agreement to maintain quality and harmony is of paramount importance.

Ensuring that the company remains solvent throughout (in particular the construction phase) is an issue as Hogus has rightly pointed out.

Any one interested in being a part of such a company in order to take advantage of any buying opportunites that may appear in Hua Hin, please PM me.

[Burger]

Malcolm,

I think Hogus misunderstood.

One project, lets call it 'Kings Cross', 12 houses/plots.

Developer sets up 12 Thai companies, 'Kings Cross 1', 'Kings Cross 2', 'Kings Cross 3' etc etc

Buyers comes along and purchases house/plot 1 and transfers shares in company 'Kings Cross 1' into his name/control at completion stage.

Burger

[malcolminthemiddle]

Burger,

Wow,

Never heard of that one before.

Such a scenario would :

1. Have a substantial impact on the Developers cash flow (establishment and maintenance of numerous companies).
2. Offer no benefit to a Thai buyer who would not need a company to buy and in any case why establish pre-emptive companies before knowing who your customers are?
3. Further aggravate those laws now under discussion especially should the developer choose to use the same "nominated Thai share holders" (now being investigated), throughout the multiple companies you describe.

And what about all the common areas and access, who do these belong to?

I don't think so some how?

[hogus]

If I read the last statements, I'm totally agreed with TTM's opinion, that no one needs more ways to circumvent laws on land ownership.
All these loophole-constructions make it more and more clear for me, what was told to us at the meeting with the Land Official already.
There aren't any riskless or even legal ways for foreigners to own land & houses for private purposes in Thailand yet.
Every tricky loophole includes one or more traps, which could make it possible to lose all investments.
End of story!

Let's lean back and enjoy the coming world championship!!!
I suppose, all of us will find out the results of the announced offical investigations earlier than some of us would like to know!

[Burger]

Malcominthemiddle wrote:

Wow, Never heard of that one before.

That's apparent Malcolm.

Such a scenario would: 1. Have a substantial impact on the Developers cash flow (establishment and maintenance of numerous companies).

No, setting up a company is a relatively minimal amount.

2. Offer no benefit to a Thai buyer who would not need a company to buy and in any case why establish pre-emptive companies before knowing who your customers are?

Read the posts, this is mainly aimed at houses that farangs purchase. A Thai buyer can go to the land office and buy from a company, no problem!?

3. Further aggravate those laws now under discussion especially should the developer choose to use the same "nominated Thai share holders" (now being investigated), throughout the multiple companies you describe.

No, it alleviates it as no farangs have to visit the land office.

And what about all the common areas and access, who do these belong to?

The developer/site management company as per normal!?

Burger

[Burger]

Hogus,

Lets be fair, I posted something earlier about a common practice regarding this situation.
You replied that you did not understand it and asked for clarification. You were given clarification.
Now you reply that it is suddenely "more ways to circumvent laws on land ownership" .... No I told you it was already common practice!!

If you don't understand something then fair enough, ask away, but don't come back a couple of hours later making bold statements about the legality of something you were not even aware earlier in the evening.
It's not on and its irresponsible.

Burger