How can a Thailand company purchase land?

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How can a Thailand company purchase land?

Generally only Thai majority companies are given the right to purchase land in Thailand. Foreign majority companies registered in Thailand may, in certain circumstances, be given the right to own land for a short period of time by the Board of Investment (BOI).

Buying property with a Thai majority company is fairly common for foreign investors. Over 50% of the shareholding in a Thai majority company must belong to Thai shareholders. Articles of Association and preferred share structures may provide protection to foreign minority shareholders. Proposed changes to regulations governing the business activities of foreign nationals however, have made the use of Thai majority companies less attractive than in the past. A fuller explanation of the proposed changes may be found on the Thailand Law Forum.

No. Although the Amity Treaty affords Americans the right to own a majority of shares in a Thailand company and conduct a wide range of business activities, the Amity Treaty does not permit foreign majority companies to own land.

The main advantage is that it allows foreigners to acquire ownership interests in freehold land in Thailand. Unlike land leases, the ownership is continuous as long as the company stays in existence and does not sell or transfer the land. Forming a company may make sense for people seeking to hold land for long-term or investment purposes, to provide for their future heirs, or for those contemplating doing business in Thailand. Also, with ownership, it is possible to mortgage the land and/or subdivide the land for resale. These are not normally rights conferred by land leases. Finally, there may be tax advantages.

Many foreigners consider hiring or using Thai shareholders to act as their nominees when using a Thai company to buy land. The use of nominee shareholders is illegal and has come under increased scrutiny by the Thailand Land Department and other governmental agencies. A 2006 regulation requires Land Department officials to investigate the contributions of Thai shareholders when companies comprised of more than 40% foreign shareholders purchase land.

In the past, mechanisms such as registration of dual classes of shares have been used to protect the interest of foreign minority shareholders. If proposed amendments to the legislation regulating foreigners’ business activities go into effect, some of these mechanisms may no longer be possible. See the Thailand Law Forum for a fuller explanation of the proposed changes.

Another issue to consider before registering a Thai company to purchase land or buy property is maintaining regulatory compliance of the company. Thai law requires balance sheets to be filed yearly and a company address must be maintained. Technically, inactive companies (companies not earning income) are subject to de-listing.