Legal Loop Hole or Legal Black Hole”

The Fineline between the “Legal Loophole” and “Legal Black Hole” for Property Buyers in Pattaya

The Final Frontier of “Justice”

“Money is a Misery” should be the axiom of the Thai government who makes many day-to-day policies to stop money coming into the country. They scare of everything and point the finger around. A gun kills no man but it is a man who kills. Is it comparable to money

Buddha taught us in the “Four Noble Truths of Buddha” to ascertain the hypothesis for every misery in order to properly establish the means and implementation to solve that “Misery”.

The doctrine of Buddha is comparable to the “Law of Causation”, whereby we have to ascertain the “Cause” which produces an “Effect”. Will the problem of John Mark Karr cause the effect to other English teachers in Thailand” Will the arrest of Bandidos who involed with real estate in Samui cause the effect for foreigners in Pattaya” What is the nexus of all problems”

Alexander the Great came to India with his strong belief that “Fortune Favors Only the Bold”. Many foreigners in Pattaya are babyboomers who come to search for the “Happiness” not “Fortune”. They come to Pattaya with the low profile in business but only enjoying their hybernative life style. Most of retirees have enough bread and butter. In the last 10 years, many of them bought properties under their Thai partners” name. 10 years after, the under the old say “Hell hath no fury than a woman scorned”. Now they prefer to set up Thai companies to own property for their retreat. In the past, the Ministry of Commerce just implemented the laisser-faire policy for forieners to easily set up joint venture companies with 51% Thai shareholders. The registrar would not check whether the 51% Thai shareholders are real or nominee shareholders.

In Singapore, the government is quite strict with the company law whereby every company will have to produce a bank statement upon the incorporation to show that all shares have been already fully paid up. They are very pround of the good governance that all companies in the Island Republic are real not only nominee or paper ones. However, the landmark takeover of the Temasek Holdings in Thailand provoked public skepticism on the clandestine transaction by using “Nominee Shareholders”.

Foreigners in Pattaya are always the victims of the sins committed by the others. The Ministry of Commerce opened the law book and easily found out that using a “Nominee Shareholder” is against the Alien Business Law. It is the reason why the Minsitry of Commerce currently implements  the draconian policy against all nominees. From 15th August,2006, all jointly foreign-owned companies will be investigated to verify if their Thai shareholders are nominees.

Many foregners may see the loophole of the law to set up a 100% Thai company to circumvent the restrictions under the Land Code. The newly set up companies with 100% Thai shareholders and directors will not be investigated.The foreigner who is the real mastermind will be asked to become an invisible man until the transfer of land ownership has been completely registered with the Land Office. The invisible man should have a proper immunity not to disappear into the black hole forever.

The “loophole” can become the “black hole” if the Ministry of Commerce deems that many foreigners circumventing the restriction under the Alien Business Law by setting up a 100% Thai company and afterwards changing the shareholding structure and directorship to be a foreigner. We quote the English translation of the latest letter of the Ministry of Commerce which became effective on 15th August, 2006.  Some foreigners may see the legal loophole to set up a 100% Thai nominee company to circumvent the investigation. Up until now, the Ministry of Commerce will investigate only all newly set up companies with foreign shareholders. However, the registrars may open their eyes and investigate all existing companies applying for changing of shareholders and directors to be foreigners.

“What will happen if you set up a 100% Thai company to buy land but the Thai shareholders and directior cannot transfer shares and directorship to you after the transfer of land ownership””

If you don”t want to be the “Invisible Man” disappering in the “Black Hole” forever, please consult with your real lawyer for every transaction you make in relation to the real estate matters. It is advisable to talk, only to a real Thai lawyer, who will be willing to show you his or her lawyer license issued by the Lawyers Council of Thailand.

“In Pattaya, there are many people  who  are ‘Jack of all trades” but master of none”


Regulation of Commercial Registration Department

No. 102/2549

Re:  Documents required for
Partnership and Limited Company Registration Application


Reference is made to the Regulation of the Commercial Registration Department No. 1/2538 Re: Rules of the Commercial Registration Department on Partnership and Company Registration (1995) dated 13 March 1995 stating that anyone who would like to register a partnership or limited company shall submit the application form together with other documents as detailed on the annex to the Rules.

In order to facilitate partnership and limited company registration, by virtue of the provisions in clause 3, section 3 of the Ministerial Regulation establishing the Commercial Registration Department, appointing the Registrar and prescribing rules and procedures pertaining to Registration of Partnerships and Limited Companies (2006) issued under The Civil and Commercial Code (concerning Partnerships and Companies), the Registrar hereby stipulates rules and procedures for partnerships and limited companies. In case of registration if partnerships and limited companies with alien partners or shareholders who invest or own shares from 40% but less than 50% of the registered capital or having alien investors or owning shares less than 40% of the registered capital but an alien is the authorized director, all Thai partners or shareholders shall submit (information concerning) the source of capital together with request for registration. Such documents shall identify the amount of money equivalent to the money that came in for investment or share ownership of each partner or shareholder as detailed below:

1.       Copy of  deposit bank book or bank statements retroactive 6 months, or
2.       Documents issued by the Bank to certify the financial status of the partners or shareholders, or
3.       Copy of evidence showing the source of money for investment or holding shares.

Effective from 15 August 2006.

Given on 20 July 2006.

(signed)  Ornjit  Singkalvanich
(Ms. Ornjit  Singkalvanich)
Director General Department of Business Development
Central Registrar