• realestate
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    Companies like individuals are granted the right and privilege to own real property in Thailand. However, a differentiation should be made between local and foreign-owned companies since majority shareholding determines the exercise of the right to own land. As a rule, companies having more than fifty percent (50%) of its shareholdings owned by Thai nationals are considered as Thai companies and are therefore permitted to own real property. All other companies are considered as foreign-owned and are therefore subjected to stringent prohibitions.

    Under the current legal system, foreign companies like their individual counterparts are generally prohibited from owning and purchasing real property. This restriction is however subject to several exceptions. Most notable of these are the ownership of condominium units in freehold and the temporary grant of ownership in favour of businesses registered and deemed suited by the Thai Board of Investments. Of the latter exception, foreign companies are allowed the temporary grant of owning real property subject to limited use. The property thus purchased through the Board’s recommendation may not be used for personal, residential and retirement purposes.

    The use of limited companies in Thailand has long been a favoured legal vehicle for dealing with the complications and difficulties faced by foreign investors. A common practice resorted to is the use of nominee shareholders. These are individuals who are made to appear as stakeholders in a particular company but are in fact mere dummies used to circumvent the prohibition regarding land ownership by foreign corporations. It should be noted that the use of this method is considered illegal and may give rise to corresponding penal sanctions. Another method resorted to is the creation of a legal and corporate structure where despite the minority shareholding of the foreign investor, legal safeguards are in place that would ensure his or her active participation in the management of the affairs of the company. This is achieved through the use of preferred shares, or shares which have priority in certain matters involving the company such as in voting, dividend distribution and liquidation. Under such a set-up, even if a foreigner owns a minority shareholding of a company but if his or her shares are preferred voting shares, he may still be able to control and dictate corporate policy.

    Of considerable importance is the effect of Amity treaties entered into between Thailand and other foreign countries such as the United States and Australia. Such treaties permit the creation of companies having a corporate board composed entirely of foreigners. These agreements however, should not be construed as allowing foreign companies to own land in the country. At best, these covenants merely help facilitate the creation of foreign owned companies in the country in order to bolster trade and commerce.

    In conclusion, the capacity of a corporation to own land in the country is determined entirely by its majority shareholding. As with individuals, foreign corporations are also subject to the same restrictions in terms of land ownership. However, unlike its individual equivalent, a corporate entity may use its inherent flexibility to restructure itself in order to circumvent these prohibitions. As such, the use of companies for land acquisition in the country has become a very favoured approach. However, such methods should always be treated with caution.