Can foreigners still own real estate property in Thailand via a Thai company limited? Or is this circumvention of foreign ownership limitations an ambiguity in the law that is now closed by the Thai government.
Section 96Land Code Act: 'The following juristic persons (Thai company) shall be considered foreign (under 1); limited companies or the public limited companies with its registered shares held by foreigners more than 49 % of the registered capital, or those in which foreign shareholders account for more than half of the total number of shareholders, as the case may be. For the purpose of this chapter, any share certificate to bearer issued by the limited company shall be deemed as it is held by the foreigner, ...' (read complete section 96).
Foreigners have registered Thai companies solely for the purpose of land ownership and used Thai nominee shareholders to create a majority Thai owned company. As a majority Thai company (on paper) they were able to buy and hold land (pursuant to section 96 under 1 above). In 2006 new regulations for the land offices were established preventing land ownership registration by such nominee structured limited companies (the business registration departments received similar instructions). The reason for these new regulations were the widespread misuse of Thai companies and illegal use of Thai nominee shareholder structures by foreigners for property and business acquisitions that were normally restricted for foreign ownership.
Currently the Thai government is actively investigating the Thai shareholders in partly foreign owned limited companies owning property in Thailand.
Nominee shareholding structures
The use of Thai nominee shareholders by foreigners is illegal, not only under the land code act but also under the foreign business act. When a nominee shareholding structure exist, the shares held by the Thai nominee shareholders will be deemed held by the foreigner (as with bearer shares) and the Thai limited company therefore considered foreign. Pursuant to section 97 under 1 the company will be considered foreign and therefore as a foreign company illegally and without permission holding land.
The above also applies to a company formed for the purpose of acquisition of a condominium unit by a foreigner outside the 49% foreign ownership quota (i.e. in the required 51% Thai side of ownership side of a condominium) pursuant section 19 first paragraph under 3 of the Condominium Act.