EXPLAINING NOMINEE SHAREHOLDERS IN PHUKET REAL ESTATE PURCHASES THROUGH THAI COMPANIES
Understanding Nominee Shareholders When Setting up a Thai Company for Property Ownership
If you plan to buy land or landed property in Thailand by setting up a Thai Co. Ltd., it is crucial to understand what nominee shareholders are before selecting your company’s shareholders. In the past, authorities have cracked down on foreign ownership of property in Thailand, and this is expected to happen again. While owning property through a Thai Company is allowed, it must adhere to all Thai corporate and tax laws and be run as a legitimate business.
Nominee Shareholders: Definition and Scrutiny
Nominee shareholders are fictitious shareholders who have no role or duty in the company and are often used to shield the real owner’s identity. While Thailand does not have its legal definition of nominee shareholders, the authorities view them as a front for the real buyer, usually a foreigner. It is essential to have legitimate shareholders, including Thai nationals, who have a financial stake and interest in the business.
Using nominee shareholders in a Thai Company is illegal under both the Foreign Business Act and the Land Code Act, and it is also illegal for Thai nationals to act as nominees. The authorities are likely to crack down on companies that use nominee shareholders, and if caught, the company may be forced to disband, and the land must be disposed of within one year.
Penalties and Cost of Setting Up a Thai Company
Foreigners found using nominees may face penalties such as disbanding the company, disposing of the land, and paying a fee of 5% of the gross sale price. It is essential to set up a Thai Company properly and ensure it is run as a legitimate business to avoid penalties.
While some accountancy firms charge a nominal fee to set up a Thai Company and offer to take care of shareholders, it is crucial to note that using staff members as nominees is illegal. The cost of setting up a Thai Company may be higher, but it is worth doing it correctly to avoid legal trouble.
It is important to do things correctly when setting up a Thai Company to buy land or landed property in Thailand. Ensuring that legitimate shareholders are in place is a simple step that can prevent future legal issues. While authorities may crack down on foreigners owning property, following the laws and regulations can help avoid penalties.
