Tag Archives: company

Offences Relating to Partnerships, Companies, Associations and Foundations

It is important for any foreign managing director of a Thai company to become familiar with the requirements of the Thailand Civil and Commercial Code so as not to unintentionally commit an offence.

More and more private limited companies registering in Thailand are being managed by foreign directors, who often lack any or any proper Thai language skills, and find themselves leaving the rules and regulations of Thai business law to their admin staff to handle.

If the  Civil and Commercial Code  is breached,  a managing director could be rendered liable for criminal penalties under the Act Determining Offences Relating to the Registered Partnership, Limited Partnership, Limited Company, Association and Foundation of 1956.

Even though this law has in fact been Thai law since 1956, few directors are aware of it and the impact it can have on them as individuals.

Relevant Document:

Offences Relating to Partnerships, Companies, Associations and Foundations

Registering A Company In Thailand: Thai Nominee Shareholders

Many people move to Thailand and decide to register a company or move to Thailand with the specific aim of registering a company in Thailand.

Such individuals would be well advised to become familiar with a piece of legislation called the Foreign Business Act (FBA). This sets out the rights of foreign companies in Thailand, as well as what is not permitted.

The first and biggest obstacle is that most, although not all, foreign businesses looking to register in Thailand require a Thai majority shareholding.

It is also possible obtain an alien business license,  and Americans can set up an amity treaty company, but many companies prefer to have a Thai majority shareholding. Many foreigners choose to form a Thai majority company, so that the Company is able to operate a business in a category that is restricted to foreigners. The registration of a Thai majority company generally requires less registered capital and less paperwork than the registration of a foreign company. A Thai majority company can also buy land.

Unfortunately some foreign companies choose to take the easy way out. A nominee shareholder is a shareholder in name only: in reality nominee shareholders lacks any real financial stake or interest in the company.  Under the FBA, the practice of Thai nominee shareholders is illegal.

There are companies in Thailand who will offer to supply Thai nominees. This is extremely high risk:

  1. you will have no knowledge of who the shareholder of your company is;
  2. they are employees who will probably be listed as shareholders in multiple companies
  3. if they leave employment they have no relationship with you and owe you no loyalty.

Relevant Video:

Landmark Divorce Ruling Regarding Company Assets

The House of Lords, the UK’s Supreme Court handed down an important ruling yesterday in ongoing divorce proceedings between an oil tycoon and his estranged wife. The decision has been heralded as a landmark for other couples in a similar situation.

Mrs Prest argued that she was entitled to a larger settlement than she was being offered by her ex husband. The case concerned assets belonging to Mr Prest’s numerous companies. The presiding judges agreed with Mrs Prest and ordered that any properties at the centre of the dispute should be transferred to her.

The judges were quick to state that this case was fact specific rather than rule of thumb law.

However Mrs Prest’s legal team disagree and believe this ruling could be relied on by others in a similar situation and stop individuals hiding assets behind a “corporate veil”.

In our view, this ruling would be not unexpected under Thailand divorce law. We would expect Courts to pierce corporate veils to enable the discovery of all assets.

Sidestepping away slightly, it is interest to consider what impact does the judgement have on assets held outside its jurisdiction? Without a treaty of reciprocal enforcements of civil judgements has been entered into, most foreign courts are not bound to follow the judgements of others.

However even if such treaty exists, it may not in any event apply to divorce cases. Thailand for example has no treaty for reciprocal enforcement of foreign court judgements with any other nations. Therefore the only relevance this decision can have in Thailand is supporting evidence.

This case lastly, and perhaps most importantly, serves as a reminder that individuals must be fully aware of your rights under Thailand divorce law. It reminds us that there are individuals out there who think it is acceptable hide assets away from proceedings. It is important that individuals adopt measures to ensure they are full protected during divorce proceedings to ensure the playing field is levelled.

Relevant Video:

 Relevant Articles: Thailand Divorce Law: Financial Considerations

                                              Marriage and Divorce in Thailand: When Love Turns Deadly