Integrity Legal

In Thailand, a major concern for expatriates, tourists, and permanent residents is banking. Many people need to set up Thai bank accounts in order to transact personal business in the Kingdom or for international financial purposes. Unfortunately, like many things in Thailand, setting up a Thai bank account can be somewhat difficult, especially for a new arrival trying to establish themselves. In Thailand, each financial institution has its own unique set of rules and regulations imposed upon those who wish to set up an account. Compounding this byzantine situation is the fact that rules and requirements depend upon the type of account one wishes to set up. Business accounts, Foreign Currency accounts, personal savings accounts, and checking accounts all have differing documentation requirements.

For those entering the Kingdom on a Thai visa exemption, opening a bank account in Thailand may prove difficult as many banks are now requiring that an applicant have at least a long term non-immigrant Thailand visa. Some banks take their due diligence efforts one step further and require that a prospective account holder provide a Thai work permit. The practice of requiring a Thai work permit seems to have become a common requirement for nearly all Thai banks in recent months.

There are others who wish to set up Thai corporate bank accounts in the Kingdom, these people are often either the Managing Director of a Thai company or they are thinking of setting up a Thai company. In either case, a great deal of documentation must be submitted in order to obtain a Thai bank account for a Thai corporation. Even where a corporate account can be established, a personal savings account may be necessary if one wishes to have a debit card. As a general rule in Thailand, banks will not issue debit cards for corporate checking accounts. Credit Cards are also notoriously difficult to obtain for corporations as well as individuals who are not Thai Citizens. It is possible to obtain a Thai Credit card, but in many cases the requirements are extremely stringent.

An issue ancillary to Thai banking is Thai mortgages. Obtaining a Thai mortgage can be very difficult for a foreigner. For those wishing to buy a Thai condo it must be remembered that funds for purchase must be brought into the Kingdom from abroad. How this requirement interacts with issues surrounding the Thai mortgage likely is dependent upon the unique facts of the situation.

Tags: Thai Bank Account, Thai Banking, Thai Company, Thai Condo, Thai Credit Card, Thai Mortgage, Thai Visa, Thai Work Permit, Thailand Bank Account, Thailand Banking, Thailand company, Thailand Credit Card, Thailand Visa
Posted in General Legal Information, Legal Opinion, Miscellaneous, Thailand Business, Thailand Property, Thailand Real Estate | No Comments »

The Bangkok Post is reporting that the World Bank has released a new report regarding the ease of doing business throughout the world. According to the report, Thailand achieved an overall rank of 12 when compared against other countries.

The Bangkok Post was quoted as saying:

“Thailand ranked relatively well in terms of property registration, trade, investor protection and ease in dealing with construction permits… Kirida Bhaopichitr, senior country economist for the World Bank in Bangkok, said Thailand benefited from improvements in the time and procedures needed to register a business and reduced bureaucracy in customs clearance.”

One of the major benefits to those doing business in the Kingdom of Thailand is the improved registration process for setting up a Thai company. At one time, the process of registering a Thai company was extremely time consuming and also required the seven shareholders.

Recently, the corporate laws have been changed to allow companies to have a minimum of three shareholders. If correctly executed, the company registration process can now be completed in as little as one day.

One slightly misleading aspect of this article concerns Thai property registration. Although it is true that Thai property can be registered relatively easily, the article does not go on to mention the fact that foreign nationals are virtually barred from owning land in the Kingdom of Thailand. In theory, it is possible for foreign nationals to own land in Thailand, but they must have the transaction signed off by the Minister of the Interior. Obtaining this signature is considered nearly impossible in some cases.

The Bangkok Post article also said, “Penelope Brook, acting vice-president for financial and private sector development at the World Bank, said Thailand could do more to improve areas such as transparency and investor protection.” There is some truth to this criticism as regulation of Thai investments is enforced less strenuously than in other countries. However, the Thai economy is often more transparent than many countries. That being said, one of the main reasons many people consider it non-transparent is due to the fact that the Thai method of doing business is very different from that of the West. Therefore, a result of these differences is that the economy is viewed as less transparent when the real issue is probably one of culture clash.

This article only dealt with the economic sphere and did not really deal with the political front. That being said, business and politics will always have an impact upon each other.

Tags: Thai Company, Thailand Business, Thailand Property Registration
Posted in Thailand Business, Thailand Property, Thailand Real Estate | 2 Comments »

The government of the Kingdom of Thailand has announced that they will be launching investigations into the buying of agricultural Thai real estate by foreign nationals in the Kingdom of Thailand.  Apparently there have been rumblings among the Thai farming community concerning an influx of foreigners buying land in Thailand in order to grow crops for eventual sale on the open market.

Many individuals are concerned that a foreigner will use a Thai company to own land and thereby circumvent the laws on the books regarding foreign real estate ownership. The Nation Newspaper in conjunction with ThaiVisa.com is reporting on the issue, to quote their article:

“Concerned Thai officials will continue monitoring whether foreigners have violated law on buying or renting farmland to engage in agriculture in the kingdom although initial investigation found that such a practice does not exist, Deputy Commerce Minister Alongkorn Ponlaboot said on Saturday…Farming as an occupation is reserved for Thais only and the probe was conducted following an outcry by some farmers that foreigners have bought numerous plots of farmland here and hired farmers to provide the labour.”

People moving to Thailand or wishing to live part time in the Kingdom should be aware of the somewhat xenophobic attitude of many Thai people when it comes to the subject of Thai property law. Regulations regarding Thai real estate reflect a negative attitude toward foreign ownership of Thai property. Many Thai people consider Thai property ownership to be a right that ought to be held in reserve for Thai citizens. That being said, there are exceptions to this general mood. Most Thai people do not see a problem allowing foreign nationals to own a Thai Condo in freehold. Further, obtaining a Yellow Tabien Baan (foreign house registration booklet) is becoming somewhat commonplace. However, this nonchalance does not extend to feelings regarding ownership of farm land and Thai government policy is a reflection of these feelings.

Evidence of this attitude can be found throughout the Thai foreign business act. A Thai company that is owned by a foreign national is specifically barred from engaging in business activities involving Thai farming. Even the US-Thai Treaty of Amity specifically precludes land ownership and agricultural activity. An Amity Treaty Company, although accorded preferential “national treatment,” is still subject to somewhat stringent regulation regarding Thai agriculture.

With the current global economy still in a somewhat less than optimal condition, it seems logical to assume that these restrictive measures will remain part of the law of the Kingdom of Thailand. It does not seem likely that the Thai government will allow foreigners to engage in farming activities in the near future.

Tags: Amity Company, Amity Treaty Company, Tabien Baan, Thai Company, Thai Farm land, Thailand Property Law, Thailand Real Estate Law, US-Thai Treaty of Amity
Posted in General Legal Information, Legal Opinion, Thailand Business, Thailand Property, Thailand Real Estate | No Comments »

On this blog and in other places on our site we have discussed the US-Thai Amity Treaty and how it can be beneficial for those doing business in the Kingdom of Thailand. However, most of these writings have made the assumption that one would be setting up a Thai Limited Company as an entity certified by the Foreign business office as protected under the Treaty.

One aspect Thai corporate law that is of some interest to American operators in Thailand is the notion of establishing a sole proprietorship and obtaining Amity Treaty certification. In theory, this is possible, although in practice it can be somewhat difficult to arrange and has some drawbacks from a legal viewpoint.

One positive aspect of Treaty Certification on a sole proprietorship is the fact that income garnered by the sole proprietor can be taxed as if it were personal income. Therefore, issues of so-called “double taxation” do not come into play when dealing with some sole proprietorships. Also, with regard to a sole proprietorship the paperwork necessary to establish the entity is far less substantial. In the case of proper Thai limited companies, it may be necessary to promulgate meeting minutes of shareholders and directors. Sole proprietorships generally do not require meeting minutes because the sole proprietor is the only person with authority to make decisions on behalf of the company.

One of the major warnings that any legal professional will give to one seeking to establish a sole proprietorship is to think about the ramifications of a lack of limited liability. Sole proprietorships do not have limited liability and therefore, should an adversely affected party wish to sue the sole proprietorship, then the sole proprietor’s personal assets could be placed in jeopardy. Thai limited companies do not have unlimited liability which means that should one sue the company, then the company would only be liable up to the amount of their registered capital.

Finally, from a practical standpoint there are some professions for which a foreigner cannot obtain a work permit to perform. Therefore, it may be possible to set up a sole proprietorship to engage in the entertainment business, but not be able to get a Thai work permit in order to perform the activities inherent to the business. In some ways setting up a limited company sidesteps this problem because the Thai company is viewed as a separate legal entity in the eyes of the law and therefore, the activities that the company engages in may not be the same as the foreigner’s actual job within the organization. Therefore, the Ministry of Labour might authorize the work permit for one working for a Thai Limited Company with Amity Treaty Certification.

(Nothing contained herein should be acted upon as legal advice. No attorney-client relationship is created between author and reader.)

Tags: Amity Treaty, Amity Treaty Company, Thai Company, Thailand company, Thailand company registration, US-Thai Treaty of Amity
Posted in General Legal Information, Thailand Business | No Comments »

The government of the Kingdom of Thailand has erected many protectionist economic measures. One of the most prevalent legal restrictions imposed upon foreigners in Thailand is the de facto prohibition on land ownership under Thailand Real Estate Law. There is a common misconception that foreigners are not allowed to own land. Technically, this is not the case. In reality, the law states that a foreigner may purchase Thai Real Estate if he or she obtains approval from the Minister of the Interior of Thailand. As a practical matter, obtaining this approval is extremely difficult, if not impossible. The upshot of these restrictions is a virtual bar on foreign ownership of Thai Real Estate.

In Thailand, a freehold Title deed is known as a “Chanote.” Due to the aforementioned legal restrictions it is a virtual impossibility for a foreign national to obtain a Chanote for Thai property. That being said, some years ago the Thai government carved out a legal niche whereby a foreigner could obtain a Freehold Title to a Condominium in Thailand. This exemption is subject to certain conditions. First, the Condo must meet the definition of “Condominium” under the act which means that the paperwork for the building must be completely in order. Another very important aspect of this legislation is the fact that a foreign quota is imposed upon a condominium complex. The law states that foreign ownership may only account for 49% of a condominium’s total number of units. The other 51% must be set aside for those of Thai nationality.

This foreign quota provision can lead to a problem because Condos that are highly desired or in desirable areas are not available for foreign purchase. Further, it can be a great disadvantage to Condominium developers in Thailand because there is generally an income discrepancy between foreign and Thai property buyers. As a result, legal devices are sometimes utilized to circumvent the foreign freehold quota on a Thai condo.

For many years, the classic method of providing foreign control of Thai real property was through the use of a Thai Company to own land. In the recent past, the Thai parliament passed legislation which outlawed the use of “nominee shareholders” in ostensibly Thai companies to own real estate. This mechanism has been employed by Condominium developers to get around the freehold quota. Basically, the developer sets up a Thai company, sell the condo to the company, and then sells the company, that now owns an otherwise quota restricted condo, to a foreigner. As a result, the foreigner owns a company which owns a condo in freehold that could not be legally purchased outright. As with any corporate structure involving “nominees,” the use of nominees is prohibited, but the definition of “nominee” is left somewhat vague under Thai law. Specialized legal advice should be sought where corporate structures are utilized for property ownership.

For more on Special Exemptions under Thai law for foreigners please see Amity Company Thailand

(This article is not legal advice. For such advice contact a licensed lawyer. No Lawyer-Client relationship is formed by reading this piece.)

Tags: Property Lawyer Thailand, Real Estate Lawyer Thailand, Thai Company, Thai Company Registration, Thai Company Setup, Thai Condo, Thailand company, Thailand Condo, Thailand Condo Law, Thailand Property, Thailand Property Law, Thailand Real Estate, Thailand Real Estate Law
Posted in Thailand Business, Thailand Property, Thailand Real Estate | No Comments »

For a foreign small business owner in Thailand in order to obtain a Thai visa extension the foreigner must hold a valid Thai work permit, the business must employ 4 Thais per foreign employee, and must get those Thai employees social security benefits. All of this is  fairly straightforward, but a question arises when the non-Thai foreigner is the Managing Director of the company: is the Managing Director entitled to sign up for and receive social security benefits?

Many issues are left to the discretion of the Thai government officers so one of the frustrating aspects of doing business in Thailand is the fact that different offices interpret the Thai laws and internal administrative regulations differently. Case in point, some social security offices view the Managing Director of a Thai company as ineligible to receive social security benefits because he is not “labor,” and therefore is not someone who should be accorded labor protections under Thai law.

This is an odd stance to take particularly when looking at the issue from a common-law perspective because under the jurisprudence of most common law jurisdictions an incorporated entity is viewed as a legal person, separate and distinct from natural persons (even where a natural person is the sole owner or director of a company, or juristic person). Therefore, under the common law, the stance would probably be that the Managing Director works for the company and therefore is entitled to employment benefits like social security.

A counterargument to this position could be that although working on behalf of the company, this role is different than actually working “for” the company. As the Managing Director is, in a sense, the living embodiment of the company. It is a very semantic argument, but not one without at least some merit.

All of this begs the question: How does one  obtain social security benefits for the managing director of a company in Thailand? Where the person seeking the benefit has already enrolled for social security, the benefit can be rolled over when the person becomes managing director. However, the person seeking to roll over the benefit must have left their previous employment no more than 6 month prior to roll over (and this time frame may be left to the discretion of the Social Security legal officer). Another method for obtaining the benefits in this situation is by delineating and distinguishing between Managing Director functions and functions as an employee. In order to do this, one must also show separate pay for the separate endeavors. At the end of the day, it is up to the officer’s discretion and it is always wise to consult a Thai lawyer before making any major business decisions in Thailand.

For more information, please see:

Thailand Visa

Thai Company Incorporation

Note: None of the above should be construed nor used as a substitute for individualized advice from a duly licensed attorney in good standing. No attorney client relationship should be inferred from reading this post

An oddity of Thailand’s Social Security benefits scheme

Tags: Managing Director, Thai Company, Thai Visa Extension, Thai Work Permit, Thailand Business, Thailand Social Security, Thailand Visa
Posted in Thailand Business | 1 Comment »