Foreign-owned companies urged to fix shareholding structures
KANANA KATHARANGSIPORN
Real-estate companies owned by foreigners through nominees should restructure their shareholdings now to avoid future problems involving land-holding rights, according to a local lawyer. Foreigners seeking rights to property in Thailand should also consider alternative laws, especially the long-overlooked Real Rights Act, said Nirut Dej-udom, a partner with Bangkok Jurist Limited.
Mr Nirut said that for several decades the governments' stance on the enforcement of real-estate laws had been inconsistent and unclear. This had led foreign-owned developers to exploit lax supervision and loopholes and register themselves as Thai entities. But the amendments to the Foreign Business Act were about to change all that, he added.
Therefore, he urged the companies with nominees to seek real Thai partners who could genuinely invest in their businesses. Once the amended law takes effect, their shareholding structures might be explored and the credibility of the investment by each shareholder scrutinised.
A company that neglects to declare the sources of investment by its shareholders, in particular Thai ones, will face legal action with a maximum jail term of three years and/or a fine of 20,000 baht for an individual and a 50,000-baht fine for a business.
For foreigners seeking the rights to Thai property, he suggested that their contracts be based on the real rights law, which offered more protection to rights holders than normal leasing contracts. Under this law, the rights are attached to the assets, while under leasing contracts, they are attached to individuals.
The Real Rights Act endorses the rights of holders to use the property according to the agreed terms within a specific period. This law has been in place for a long time but is not popular due to its complications.
Clayton Wave, managing director of the property consulting firm Senior Home Real Estate, noted that the amended law had put an end to a decade-long boom in Pattaya's real-estate market during which foreign demand had pushed land prices in the resort city by about 20% a year.
Sophon Pornchokchai, managing director of the Agency for Real Estate Affairs, viewed that Thailand should not fully allow foreigners to own land, citing similar restrictions in neighbouring countries.
He said the government should focus instead on foreign direct investment in export-oriented industries to further strengthen the economy. To attract such inflows, long land leases with low fees could be used as an incentive.
''Vietnam, Cambodia and China allow only long-term land leasing. Although they don't allow foreigners to buy land, foreigners flock to them. It's not necessary to lure investors with the prospects of land ownership,'' said Dr Sophon.
I think this article is good, because it is a warning of things to come.
But what will happen when all these foreign companies/individuals start looking for partners and no Thais will come in and buy?
What happens then?
How far will prices drop?
How much will foreigners get fined?
How many will be forced just to abandon their projects and their homes?
And I wonder which political and economic interests will come in and pick up all these assets on the cheap?
Will The Nation and Bangkok Post ever print that information? Of course not.
4 comments:
Foreigners can buy land in China so he's talking out of his rectum.
Caveat emptor - especially if you are using loopholes to get around intention of the rules.
It's about time the laws became clear cut, instead of having shady nominee/company arrangements.
Hobby-
I agree that if you start a business with a nominee structure like that then there is a risk. And the buyer is responsible also.
It is interesting, however, that Thai lawyers were the ones who collected millions of baht in fees to advise and arrange these deals, and they are getting off scot-free. But I guess those Thai lawyers will disappear like a hit and run driver when all the angry clients come to their offices and demand an explanation.
But the truth is that the Thais are out to screw the foreigners out of their property, which is what this new reform is all about.
It is an anti-foreigner reform law.
And think it is ironic that you care about the law only when it is used against foreigners, yet you don't seem to give a shit that the law of the land, the constitution, was torn up by a military junta.
The nominee arrangements should never have been allowed - they were clearly a sham and the buyer knew it.
Greedy thai lawyers, greedy foreigners, greedy sellers, greedy government & officials - makes a good mix.
I still view the coup as a catalyst for change, which will be better in the long run than had Thaksin remained in power.
As for the constitution - how many constitutions has Thailand had over the years?
There will be a new constitution.
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