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ResourcesThailand Real Estate & Property LawTitleThai DSI Raids Offices of Alleged Nominee Land Holding Companies

Thai DSI Raids Offices of Alleged Nominee Land Holding Companies

Transcript of the above video:

As the title of this video suggests we are discussing Corporations utilized for property ownership by foreigners in the Kingdom. I have discussed this at a little more length in other videos on this channel but this video is pretty readily pertinent as at the time of this filming.

There has recently been an announcement from the Department of Special Investigations here in Thailand that raids were carried out last week on offices of those who are allegedly engaged in the maintenance of Corporate Structures for the purpose of allowing foreigners to own land or control land here in the Kingdom of Thailand; real estate property specifically.  

To be clear this translation is not sort of definitive when it comes to the actual DSI announcement. If you look below in the comment section of this video, there is a link below to not only the translation but that link will also take you through to the actual DSI announcement as well.

Why am I making this video? I'm not really making this video to particularly shed light on the alleged perpetrators here or cast aspersions in any way on them. This video is strictly for informational purposes and it is for informational purposes to make the point that Corporate Structures utilized for property ownership in the Kingdom of Thailand are  a really tricky thing and by tricky I mean as we will get into when I read some excerpts of this translation, they are pretty well forbidden and I will get into some detail on that a little bit further here in a minute but the thing to take away from here is, over the years I have had various people contact us and say “Oh, well I want to set this up because I want to own this house, or own this land”, but as I have explained, the Thais are pretty clear. Thai law is pretty clear with respect to foreigners owning land in the Kingdom, or utilizing land in the Kingdom as are they of, specially with respect to the Foreign Business Act and the notable restrictive list pursuant to the Foreign Business Act in its annex is that land trading companies are also specifically restricted to Thai ownership. That being said there are various, for lack of a better term, structures that can be utilized; either multi-layered in terms of multiple different Corporate structures acting sort of in concert, to go ahead and allow foreign control or foreign benefit foreign enjoyment if you will of real estate, land, property here in the Kingdom., as well as more straightforward structures. In any event it has always been my position that these structures are, for lack of a better term, there is an inherent risk associated with these structures and that inherent risk manifested itself, in my opinion, in these recent raids. That being said, this is not the end of the matter. I am assuming that there will be an adjudication, at least one adjudication or multiple adjudications pertaining to this and in the end, the accused may be cleared. The structures may ultimately be deemed to have been legitimate. But that being said, what this video is intended to get the point across about is that property holding companies in Thailand one needs to be very, very careful when dealing with such matters because there are inherent risks involved.

Quoting from this translation, again check the description below for a link to this translation in its entirety, as well as a reference point which will allow you to go ahead and see the actual DSI announcement as well. The headline if you will of the announcement, DSI in collaboration with the Institute of Communication Science and the Board of Investment are currently investigating a group of law offices in Phuket, Surat Thani and Bangkok that are engaged in “camouflage”, for lack of a better term, Corporate Structures acting as nominees on behalf of foreign shareholders.” Quoting further, “As per government policy to actively pursue foreign investors using Thai nominee companies to own land in order to protect the nation's interest, on 15th of August 2018, Police Colonel Paisit Wongmuang the Head of DSI, and Police Major Suriya Singhakamon (Excuse me.  The translation and everything, we have tried to get this out rather quickly so my apologies for butchering some names here) the second in command in collaboration with the Institute of Communication Science and the Board of investment obtained a warrant to search four addresses as follows”, and as noted previously there's various locations here. I am not going to go in on this video into detail as far as addresses etc. Quoting further from the translation “the search yielded composite documentation, computer data and hardware that will be used as evidence in court proceedings. The investigation has shown that those involved use Thai employees to incorporate Thai companies. The Thai Corporate entities in turn are used to hold shares in other companies for the purpose of allowing foreign investors to buy land. These activities are in violation of the Foreign Business Act 1999.” There is more in this. I urge those who are watching this to check the link below; I'm not going to go into further detail quoting it. But I found interesting one thing is I think it is fairly clear the enforcement apparatus here in Thailand is becoming more sophisticated. There was a time I would often hear people say “Oh it can be possible to use multiple corporations to sort of shield and mask ones activities in the Kingdom; again this was heard anecdotally. We don't particularly deal with these kind of matters ourselves quite frankly but the thing to take away from this video is this is in a state of flux and it is pretty clear to me that Thai enforcement officials are getting really serious when it comes to these landholding entities; clearly. They conducted a combined raid on four different addresses at least from the announcement. Again these are merely allegations,  at least as at the time of this filming so I am assuming that there is probably going to be at least some form of adjudication that is undertaken with respect to these matters before proceeding any further,  or for lack of a better term, assessing guilt or innocence upon anybody.

But that being said, the thing to take away from this video, the enforcement functionaires within the various relevant agencies so as noted, agencies like the Board of Investment, DSI were really concerned with this. They are getting more sophisticated, so those who think it is sort of a simple thing to go ahead and evade the rules in Thailand regarding the restriction on foreigners owning land or controlling land or real estate, real property, I think that is a fairly naïve position to take especially in light of these recent events and for that reason, for those who are serious,  there are other mechanisms, there are other perfectly legal mechanisms in Thailand for those who wish to have long term use of real property. As noted before in multiple other  videos on this channel, things like leases, usufructs; those can be utilized to gain some enjoyment over Thai property, a lease perhaps in tandem with some sort of mortgage structure depending on the circumstance of a given situation this could also be utilized. But that being said, whereas in the past I think it was, for lack of a better term, more common practice to utilize Corporate Structures especially before the illegalization of so called nominee shareholders in the Kingdom, you would see these kind of structures used much more widely. That era has come and gone and we are now in a situation where it appears clear to me that Thai Law enforcement authorities are not only more sophisticated in their investigative ability to, for lack of a better term find these type of entities but they are very, very serious about enforcing their policy and legal mandate with respect to dealing with these matters.