Phuket Post :: Article :: Loans to Thai companies acceptable foreign investment

Last month Phuket Post reported on the recent tightening of procedures at the Ministry of Commerce and land offices across Thailand regarding companies in which there are foreign interests and the issue of �nominee shareholders�.

The wider context of nominee shareholders is presently being examined in the courts, in relation to a matter of national interest for the Kingdom of Thailand. The outcome of this will be decided with reference to a larger number of matters than that considered in normal corporate incorporation.

However, in relation to Land Department announcement, section 4.1 states:

�If a loan is granted by a foreigner or a foreign juristic person, the evidence of the sources of fund, such as statement of fund transfers from overseas or withdrawal slip of a saving account, and minutes of meeting of a juristic person who loaned the fund, must be produced.�

This confirms that � subject to the proper incorporation of a company, the signing of the declaration forms issued by the land offices and the legitimate inclusion of Thai shareholders � a loan may be made to a Thai company by a foreigner with that same company being able to receive a loan involved in the purchase of land.

The underlying theme of the letter is the prevention of the use of nominees, the source of their funds, and providing forms to ensure shareholders acknowledge understanding of the concept of nominees and restrictions under the Land Code.

This document implies that a properly documented loan from foreign sources will be acceptable into such a Thai company engaged in the business of real estate in the correct and legal circumstances prescribed by law and under the regulations of the land office and Ministry of Commerce.

On that basis, it is evident that foreigners who wish to invest into Thai companies may do so, subject to laws on nominees and in adherence of guidelines provided by the government authorities. Foreign investors should, of course, seek the advice of their accountants, tax advisers and lawyers before doing so.

Desmond Hughes is a partner in Belmont Limcharoen.
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