Thai Businesses with Foreign Owners


thailand-345514_640This past week I met with a representative from a European company that sold vitamin products. The company has established branch offices in multiple countries. They were interested in opening a small office in Thailand. Thailand is an attractive place for retail stores. There is a large upper middle income population with disposable income and an established consumer culture.

However, establishing a business in Thailand is not a simple matter. There are many restrictions on foreigners operating in Thailand. The Foreign Business Act restricts foreign owned companies from most professional occupations and business services. In addition, foreign owned businesses are generally not allowed to own land.

For non-Thais who want to do business in Thailand, there are a few options. Some foreign companies form a partnership with Thai nationals to form a Thai company. A Thai company requires that a Thai national or company owns 51% of the shares of the company. This means that foreigners can only own up to 49% of a Thai company.

In Thailand, the most popular form of company is a private limited company. In a private limited company, shareholders have limited liability while the directors have unlimited liability. Thai private limited companies require a minimum of three promoters and minimum of 1 million baht of capitalization.

The benefits of a Thai company are that they are not restricted from engaging in most types of business services. In addition, Thai companies can own property. However, foreign owners need to be careful who they choose to be their Thai partner since they can lose management control of the company because they are not majority shareholders of the Thai company.

The 49% foreign ownership limit for certain business activities can be exceeded or exempted if a Foreign Business License is granted. A Foreign Business License is granted to foreign owned businesses that are unique and do not compete with Thai businesses. Applications for a foreign business license are evaluated on whether the business will violate Thai law or morals and whether the business will be beneficial to the economy of Thailand. The process of obtaining a foreign business license is time consuming and complicated but it allows foreign businesses to operate in Thailand.

The negatives of a obtaining a foreign business license is that there is an increased capitalization requirement of 3 million baht per service and the capitalization must be fully paid up prior to operating. In addition, foreign owned businesses are not allowed to own property and there are additional regulatory requirements when obtaining licenses, opening bank accounts, and doing business in Thailand.

Many foreign own businesses try to bypass Thai regulations by having Thai nominee shareholders. Thai nominee shareholders are unrelated third parties who are registered as shareholders but do not have any real financial interest in the company. They are used to secure the privacy of the actual owners of the company.

The use of nominee shareholders is generally legal unless nominee shareholders are used to by foreign nationals to circumvent the Foreign Business Act and the Land Act. Businesses that use nominee shareholders come under additional scrutiny in the registration of their company and licensure. Foreign businesses who use Thai nominee shareholders to bypass the company?s true owners may have difficulty protecting their interests if there is litigation.

There are legal work arounds which protect the interests of foreign owners without the need of Thai nominee shareholders. While every type of business has different requirements, some of the legal ways of maintaining management control of a company are through the use of preference and ordinary shares, controlling the number and powers of the board of directors, and through internal company regulation. These methods are not a guarantee that foreign owners will not lose management control but it helps to reduce the chances of that occurring. The most important reason for properly registering a company is to protect the company?s legal rights and to do business with confidence without fear of being exposed.

Mr. Robert R. Virasin is a licensed U.S. Attorney and managing director of Virasin & Partners. Ms. Parthomrat Punyacharoenwat is a licensed Thai Attorney whose primary focus is corporate and tax law. They can be reached at or at



Thai Property Contracts



Real estate contracts are used to transfer real property from one person to another. The real estate contract will contain the terms of the sales agreement between the seller and the buyer. The sales agreement details how the seller will transfer the property, the responsible party for the sales taxes, and contingency actions if the sale is not completed. In Thailand, specific regulatory requirements must be met to ensure the legality of the property transfer. The primary issue for foreign nationals is that the property contract is written in Thai.

After an initial deposit, a contract for the sale to purchase land is issued by the seller. The sales contract is usually written in Thai and is translation into English, if the purchasing party is a foreigner. Before signing the sales contract, a buyer should read and understand the contract thoroughly. It should reflect the basic rights of the consumer. And the contract should be legal, complete, and enforceable. The Thai version of the contract will be used in a court of law in case of a disagreement.

The foreigner should be represented by independent counsel to ensure that the English translation conforms to the original Thai document. A competent property attorney can recommend amendments to the contract to ensure that it meets the needs of their foreign client. In addition, an attorney can ensure that there are no hidden provisions or charges in the contract.

For a foreigner who has leased land in Thailand, it is important to ensure that their rights are protected. The rights include the right to use the land and build on the land for the purpose intended by the foreigner. These are separate from the right to own the land. Generally the right to lease the property can be given for up to thirty years. The rights should also be transferred if the property lease has been extended. All of these documents should be properly registered with the local provincial government.

Marriage in Thailand


The number of foreigners moving to Thailand seems to be growing every year. For many foreign nationals, they come to Thailand for a short visit then fall in love with the country. For others it was not the country but it was a specific person that they found that has kept them in the country. Whether the new couple has decided to live in Thailand or move overseas, they usually begin their lives together in matrimony.

What are the laws in regards to engagement and marriage in Thailand?

An engagement is not required to get married but it is custom and Thai law covers the particulars of the engagement and dowry. There are two types of dowry. An engagement is not valid until the man gives or transfer property to the woman which is called the Khongman. The man can also give property to the woman’s parents in return for the woman agreeing to marry which is called the Sinsod. If the woman causes the marriage to not take place, the man can request the return of the Khongman and Sinsod. An accepted engagement however does not force the woman or the man to marry each other. There cannot be an agreement for one party to pay a penalty if the marriage does not occur.

If there is an asset imbalance where one party is entering into the marriage with a larger financial assets than the other party, a premarital agreement should be considered. A prenuptial agreement is an agreement between the couple summarizing their personal assets and liabilities before marriage and outlining the property division in case of a breakup. A prenuptial agreement must be in writing, signed and witnessed by two witnesses, and registered at the local provincial office (Amphur) before the marriage registration. A prenuptial agreement cannot be altered except with authorization of a court.

A religious marriage ceremony in Thailand is not a legal marriage. Thailand is a civil law country that requires couples to register their marriage with the local Amphur. The documents required for marriage registration is different for a foreigner/Thai couple versus a Thai couple.

Foreigners who want to marry in Thailand must submit proof of the eligibility to get married. Since a Thai?s marriage history is recorded, a Thai national is not required to submit an affidavit of the ability to marry. Most foreign nationals can obtain an affidavit at their local embassy or consulate. The affidavit must be executed at the consulate, translated into Thai, and then legalized at the local Ministry of Foreign Affairs. There is no minimum period of stay in Thailand required before a marriage can take place.

The minimum age for marriage in Thailand is seventeen. If either one of the marrying couple is under 20 years old, the Ampur will require written consent of the marriage from the parents. If either one of the couple has been previously married, they will need to submit an original, government issued document showing that the previous marriage has been terminated. The documents could be in the form of a death certificate, divorce certificate, or court annulment.

Foreign nationals have to bring their original passport, 2 copies of their passport, copies of the entry visa, authenticated affidavit of the freedom to marry with copies, and original proof of the termination of previous marriages with copies. The Thai national will have to submit their Thai identification card and house registration with copies. All non-Thai documents need to be translated into Thai. A marriage registered in Thailand is legally binding and is generally recognized all over the world.

Property obtained prior to the marriage, property that is used for personal use, or property acquired as a gift or by will is considered separate party of the husband or wife. Property acquired during the marriage, by gift or will to the married couple, and fruits from separate property are considered marital property. The couple can designate separate property and marital property prior to the marriage through a properly prepared and filed premarital agreement.

If you are a foreign national, a marriage in Thailand is generally recognized all over the world unless it comes in conflict with local laws. Some countries allow same sex marriages and some countries will not recognize them. Other countries allow polygamous marriages while other nations outlaw them. There are also differences in the age of consent and the degree of family relationships in varying nation?s marital laws. It is best to review the applicable laws and regulations for both countries before deciding to get married. In addition, it is important not to be rush into a marriage without considering the consequences of a break up.

Due Diligence and Purchasing Property in Thailand


The experience of the lessees who lose their homes and investment is an a fraudulent property provides clear examples of why due diligence is required when purchasing property. It is important for purchasers to be aware of the potential legal issues with their property purchases. For foreigners attempting to purchase or lease property or buildings in Thailand, it important to understand Thailand’s restrictions on foreign ownership of property.

Due Diligence goes beyond the terms of the contact. It is necessary to complete a title check, to physically inspect the property, review government permits, and review liens on the property. In addition, they need to complete a background check on the property developer and seller. The complex method of registering property creates situations where fraud can easily take place.

Title Search

A Title search is important prior to purchasing property or entering into a long-term lease. Condominium development projects may have to go heavily into debt to start development. It is necessary to ensure that the property does not have any liens or mortgages on the property. Liens or mortgages attached to a property may make the property unsellable.

Before placing a deposit on the property, buyers should search and review the legal documents pertaining to the property at the government land office. Each type of land title confers different property rights. There Tor Bor Tor Hok which was essentially squatter claims to a property to Chanote Title which is a true title deed that allows a property to be transferred or sold. There are many other types of property rights in between. In addition, there may be easements or appurtenances that confer rights to third parties over portions of the property.


Physical Inspection

An independent surveyor should inspect the property to see if the property is connected to a public road. The boundaries of the land should be clear and the title deed accurately reflects the actual boundaries. Access from public roads to the property will affect the property price. If there isn’t a direct access to a public road, the owner can legally force adjacent property owners to provide access but there will be legal costs and problems with neighbors.

In addition, there should be a review of the local zoning ordinances to see what will be built in nearby lands. A view of the beach or mountains might be blocked by a planned tall resort hotel, a large super mart, or a loud highway. The property value for property with an uninterrupted view of the ocean or the mountains may decline if the view is blocked.


Building Permits Review

It is important to ensure that the developer or seller has approved building permits and permission for development. Due diligence requires a review of the government filings to ensure that the type of development does not conflict with local restrictions in the area.

There have been recent news of condominium complexes and resorts being torn down because they encroach on national parks or government protected lands. An Environment Examination Report of the property can confirm that the property is being developed in accordance of environmental regulations.

Seller Background Review

The condominium project in Phuket is an example of the dangers of a developer who is not properly funded. There are also circumstances where people claim to own property which they do not actually own. In order to reduce the potential for fraud or abandoned projects, it is important to review the credentials of the seller or property developer.

The individual sellers and developers must be identified. If the developer or seller is a corporation, it is important to review the credentials of the primary shareholders of the company. The property developer and seller’s financial and criminal background should be checked. The property owners and developers names should be crossed checked with check names in court records for ongoing or past litigation. Litigation against the property developers and sellers is a sign of past or current problems.

Due diligence requires a visit to the seller or property developers past projects or sales. The buyer should review the maintenance condition of the project and interview the current residences for any problems with the seller or ongoing issues with the property. The buyer should review the satisfaction level of the current owners. While not all projects are perfect, the investigation may reveal situations which can help the buyer bring up potential after sale concerns during the contract negotiation.

Thai Property Laws

Foreign ownership of property is complicated. The laws create hurdles for non-Thais to own property in Thailand. Under Thai law, foreign nationals are not allowed to outright own land in Thailand. The foreign national may lease the property but the lease cannot exceed thirty years. If the terms of the property contract says the lease is more than thirty years, the term will be reduced to thirty years. The lease can contain a renewal option for another thirty years but there may be problems with the renewal.

There may also be complications with family law and ownership of property in Thailand. When the foreign national is married to a Thai citizen, there may be some benefits during the marriage and problems if there are a divorce. The property can be purchased in the name of the Thai spouse but if there is a divorce, the foreign national may lose the property. There will also be issues with inheritance if the foreign national wants to transfer property such as a condominium to a non-Thai person.

Before embarking on the purchase of Thai property, it is in the buyer’s best interest to seek counsel of a disinterested English speaking Thai lawyer who can discuss Thai laws and regulations as it pertains to the buyer’s specific situation. In addition, a Thai attorney can review the contract terms and negotiate with the seller or property developer for changes to the purchase contract. A property contract is required to be in Thai. An English translation is allowed but the Thai version controls in court.

Purchasing property in Thailand is a complex process. If a foreign national wants to purchase property, the buyer should seek the assistance of a non-interested, knowledgeable, and experienced professional to navigate them through the process. Be careful of guidance by someone who has a personal interest in the sale of the property. They may not have your best interest in their mind.