THAI LAW - Share holders

 THAI LAW - Share holders

Thai law

                 Thai law |  When setting up a company, it is important to be aware of the importance of the shareholders. You may want to set yourself up as the Managing Director but that position doesn’t hold any real power over the company and is just another employee.  The real force behind the company are the shareholders.  They are the real owners.  They control everything to do with the company from direction to major decisions.  If your company has a problem, a shareholders meeting needs to be called and the shareholders can vote on a solution to the problem.  Voting is not always straightforward with one vote per share.  This depends upon the way the company was set up.  There may be preference shareholders and the regulations may state how many votes are allocated per share. i.e. 5 votes per share, 10 votes per share etc.

                  As a majority shareholder you can do  as you please with the company because you own most of the company and therefore in full control.  The Managing Director can not dictate to a majority shareholder the policies or the execution of those policies.  He/she is not in control. The Managing Director’s responsibility is to understand the strategy set up by the shareholders and execute policies accordingly.  If the Managing Director fails to fulfill his duties or refuses to act in the best interests of the company then they can be held responsible for an offence against the company.  This is an offence under Thai law and can incur a penalty be it  a fine or a spell in prison.  Offences such as:

• A 20,000 baht fine for not making public a shareholders meeting.
• 50,000 baht fine if the balance sheet and accounts are not kept up to date.
• A sentence up to 7 years for changing the names of shareholders in order to steal shares.  This is a serious offence.


                  Whether the company is a small one, a large company or a public company, Managing Directors are still just employees.  Their task is to adhere to the needs of the shareholders and should conduct their work efficiently and with transparency.  There are many occasions in Thailand where a foreigner has set up a company and made a family member the Managing Director.  Because the role is seen as the highest position, they often abuse their responsibilities and fail to fulfill their duties.  There are many cases like this in the courts of Thailand.  It needs to be remembered that offences committed against the company are criminal and not a civil offence and can end up with a custodial sentence.

THAI LAW - Share holders

THAI LAW - Leased property from a spouse

THAI LAW - Leased property from a spouse

                        Thai law | There are a large number of foreigners who come to settle and live here in Thailand; many spend large sums of money to buy a house and land under the name of a Thai spouse with the aim of leasing for themselves for up to thirty years which can be for the term of their natural lives. This arrangement is usually fine but problems arise when the partners divorce or become separated and the Thai spouse does not agree to return the property to the foreign partner. This usually forces the foreigner to submit a court case against their spouse to declare that the funds used to purchase the property was brought into the country from abroad by them for the specific purpose of buying that property. Because they cannot hold the land under their name they were forced to put it under the spouses name then leasing it back to them. This is illegal under Thai land and if you declare this in court then the judge will order an auction of the property and return the money back to the foreigner.

                        Occasionally the judge will try to compromise between the two parties and share the funds fifty-fifty between the spouse and the foreigner. If this occurs then it is possible for the Thai spouse to return half of the sum and then keep ownership of the property, but usually the Thai spouse will not have the required money to pay back and will keep the case in court. Thus the property will be put on the auction market and resolved as previously mentioned, but during the court proceedings there may be a criminal charge of forgery against the foreigner as it is illegal to own property in this way under Thai law. Actually they didn’t make a lease contract just to lease the land but to protect their investment, a forgery case for a foreigner is a serious case with the penalty if convicted being seven years imprisonment. This can become a tool for the other party to use against the foreign to force a settlement and compromise, always be careful of your actions and protect yourself by ensuring you are operating within the limits of Thai law.

                        If you are in court and are offered a compromise agreement to finish the case, it is recommended to proceed though it is dependent on a case by case basis. The point is that the judge also understands that it is your money and you will be the one that will lose if money is not returned to you. The way to go about business like this should always be made with the proper advice and counsel from a legal aid or business professional in this field. Always make sure that you are protected and are in the right in any business dealings. One thing to keep in mind is that immovable property such as land cannot be held under a foreign citizen but movable property such as a house built on that land can, as such it is possible to go about this process legally. It is always better to lease the land from a third party than from a spouse as it will seem like the two parties have conspired to circumvent the law.

                        What is right or wrong by law is not difficult to ascertain, usually all it takes is common sense and it can save you from getting into a lot of trouble. Actually if you execute a proper lease it is totally fine and legal, it also has the benefit of being cheaper alternative to a transfer of ownership. Though through leasehold you do not have the right to own property, you only the right to possess it and depending on the contract made there are many options still available to you.

THAI LAW - Leased property from a spouse