Can foreigners still own land or a condominium unit beyond the foreign ownership quota with a Thai limited company in Thailand? In new regulations issued by the Thai government (starting in May 2006) this circumvention of the law by foreigners is no longer ignored by the Thai government.

Thai law permits the purchase of land or condominium by a partly foreign owned Thai company so long as the maximum foreign shareholding does not exceed 49%. Foreigners are under Thai law as a minority shareholder allowed to control a Thai company that owns immovable property and therefore some argue that foreigners can have a form of freehold ownership or control over property that would normally be restricted for foreign ownership (land or a condominium unit beyond the foreign ownership quota).

Even though property ownership by a partly foreign owned Thai company is a such not illegal under Thai law the Thai government is restricting and discouraging the misuse by foreigners of Thai companies to circumvent property ownership restrictions in Thailand. The Thai government has issued guidelines and regulation that must be applied by the local land offices when they are dealing with a partly foreign owned company.

Before the land office guidelines issued by the Land Department and Ministry of Interior starting in May 2006 it has been common practice for foreigners to own property through Thai limited companies. Currently this is much less common and foreigners who wish to form a company for property ownership will generally have to circumvent the land office regulations and have the shares in the company only registered in their name after the property is registered to the 'holding' company's name (this to prevent investigations into the Thai company and shareholders by the Land Department when registering the property). Under the current land office guidelines, when a partly foreign owned company is registering property (land), the Thai shareholders in the company must be investigated by the land office official before registration and transfer to the company is allowed (i.e. is it a real company or set up to circumvent the law, are the Thai shareholders in the company real shareholders or acting as nominees on behalf of a foreigner).

Existing partly foreign owned (up to 49%) Thai property holding companies are generally ignored by the Thai government but the main drawbacks the foreigner must be aware of are:

1. The purpose of a company may not be to circumvent foreign property ownership restrictions in Thailand. This would be an illegal purpose, making the whole set up and registration into the company's name void under the Civil and Commercial Code and illegal under the Land Code Act. The company must have a business purpose and must appear in operation as a normal company and file yearly balance sheets and correct accounting (i.e. the company can under Thai law not be a 'special purpose company' or 'land holding company' for the foreigner)

2. Foreigners are not allowed to use Thai nominee shareholders in the company. According to the current guidelines 'real shareholders' are roughly defined as Thais with sufficient income and believable financial history and status, have an employment history and they must be able to proof this at the Land Department when the property is transferred from or to the company's name (investigation into the company and Thai shareholders only takes place at the land office when registering the property or transferring the property).

Whenever registering legal acts (e.g. selling the immovable property, in some cases subdividing land or registering a lease) at the Land Department the land office official must investigate the Thai shareholders when it appears to be a partly foreign owned company or a company set up with foreign promoters/ shareholders. Even if the foreigner is removed from the updated shareholder list but appears on the Memorandum of Association the land official must investigate the Thai shareholders and all Thai shareholders must present themself at the land department at the time of transfer. A company with a foreigner's name on the company formation documents or shareholder's list will be investigated by the Land Department prior to the transfer, and unless the company has acceptable (financially viable) Thai shareholders the company may be unable to sell or transfer the property!

3. If the land and buildings or any other improvements is owned by a company and used for residence of a foreigner the company is required to pay Building and Land Tax, irrespective if they rent the property from the company or not, or if the company receives any income out of it

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