Integrity Legal

Posts Tagged ‘nominees’

5th November 2015

During the month of October 2015, it came to this blogger’s attention that the Thai government began to heavily enforce regulations against those overstaying their Thai visa and those utilizing nominees in order to control companies in Thailand. In a recent article on the Khaosod English website it was noted that more than 9000 people were arrested and detained pending deportation for overstaying their visas. The article went on to note:

The penalties announced Sunday are identical to regulations announced by the immigration bureau last year that have been in effect since Aug. 17, 2014. Foreign nationals who remain in the country more than 90 days after their visa expires are to be banned for one year. Those who overstay for one year, three years or five years are forbidden from re-entering the country for three years, five years and 10 years respectively. If they don’t turn themselves in and are instead caught by police, those who have overstayed less than a year would be blacklisted for five years while those with over a year face a 10-year ban…

The penalties referred to above were apparently applied to those detained in the aforementioned roundup and it would appear that such measures are likely to be applied to overstayers in the future. For this reason it is strongly recommended that those wishing to stay in Thailand obtain a visa and leave within the specified period of validity unless a Thai visa extension is obtained. There are many types of Thai visa categories including business visas, retirement visas, O visas for family members of Thai nationals, and the greatly anticipated long stay tourist visa which is set to begin being issued in mid-November.

Meanwhile, Thai officials in the Ministry of Commerce seem to be implementing stricter enforcement of rules regarding the use of nominee shareholders in Thai companies. Under the Foreign Business Act, foreign nationals are not permitted to use Thai nominee shareholders in order to circumvent the restrictions on foreign ownership of Thai companies. Those caught violating this law can face fines or possible imprisonment. Apparently, officials with the Department of Business Development will be investigating certain companies to determine if nominees are in use. To quote directly from The Nation:

The 10 sectors to be inspected are food and beverage, tourism, property rental, the property trade, car rental, spa, handicraft and souvenir retail, Internet retailing, direct sales, and education consultants. Chainarong said that those sectors would be targeted because it was believed that a high proportion of their businesses were foreign controlled through the use of Thai nominees…

Clearly Thai regulators are becoming increasingly serious regarding the enforcement of Thai law in both the realm of immigration and business. It should be noted that American Citizens are permitted to own 100% of certain types of Thai corporations pursuant to the provisions of the US-Thai Treaty of Amity.

more Comments: 04

14th February 2010

The Treaty of Amity between the United States of America and the Kingdom of Thailand (US-Thai Treaty of Amity) allows American Citizens to own virtually one hundred percent of a Thai company. This can prove highly beneficial to American expatriates in Thailand who wish to conduct business. That being said, there are restrictions to the types of activity that an Amity Treaty Company can undertake. Most notable amongst the restricted activities are: land ownership, internal communications, internal transportation, fiduciary functions, and the liberal professions.

Under Thai law, there is a de facto prohibition placed upon foreigners when it comes to land ownership. This means that foreign nationals are not permitted to take freehold title to Thai property without first obtaining permission from the Thai Minister of the Interior. This prohibition is not all-encompassing as foreign nationals are permitted to take freehold title to Thai condominiums. However, the condominium complex must comport to the relevant provisions of the Thai Condominium Act. Most notable among the requirements in the Thai Condominium Act is the provision that a Thai condo complex must be primarily owned by Thai nationals, meaning that 51% of the Condo units must be owned by Thais while 49% percent of the units may be owned by foreigners.

In many cases, a condominium complex is owned by a company in Thailand. Some opt to own a condo in this way in order to make selling the condominium easier, while others initially purchase the condo indirectly through a corporate entity. In either case, the practice is technically legal. Although, use of so-called “nominee shareholders,” is illegal in Thailand and Thai authorities are increasingly on the lookout for corporate structures utilizing nominees. That being said, the definition of “nominee” is somewhat vague.

This leads us back to the issue of Amity Treaty Companies. Amity Companies are specifically precluded from ownership of Thai real estate pursuant to the provisions of the Treaty of Amity, while the Thai Condominium Act allows foreigners to own a Condominium outright. This begs the question: can an Amity Treaty Company own a Thai Condo in the same manner as a foreign natural person could? This author has not adequately settled this question in his own mind and welcomes any comments regarding this issue. The provisions of the Treaty of Amity preclude land ownership and although many believe that Condo ownership is simply ownership of a unit, the Chanote does pass title to an interest in the underlying land, so there would seem to be a compelling argument that a condo owner is something of a landowner and, if so, this practice would likely be precluded under the provisions of the Amity Treaty.

more Comments: 04

The hiring of a lawyer is an important decision that should not be based solely on advertisement. Before you decide, ask us to send you free written information about our qualifications and experience. The information presented on this site should not be construed to be formal legal advice nor the formation of a lawyer/client relationship.