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Foreign Land Ownership - condobangkok - 09-10-2006 05:14 AM

Response to the new interior ministry regulations regarding foreigners purchasing land in Thailand
Belmont Limcharoen International Law Firm. We refer to recent media reports of new regulations issued by the Deputy Ministry of Interior regarding foreigners purchasing land in Thailand...

Land ownership issues will always be a sensitive issue amongst Thai people. There would be controversial political consequences if any government in power attempts to change the Land Code to accommodate foreign ownership of land. Whilst many foreigners elect to arrange, with majority shareholding Thai partners, to set up Thai companies and thereby operate in a ´grey area´ of the law, we believe the most practical and legal way to deal with the issue of foreign ownership would be resolved by legislative means, that is passing an act similar to Landlord and Tenant Acts in other jurisdictions which provide proper protection of lessees under a lease with changes to the maximum term of a lease for foreigners.

Whilst providing an opportunity to foreigners to have more secure investments in Thailand this would also solve the sensitivities attached to the concept or thought of foreigners “owning” or indirectly owning land in the Kingdom of Thailand. Whilst such improved leasehold legislation does not presently exist, there will continue to be, as there has been for many years, debate on what constitutes a company that is set up illegally, or what has been set up legally and which is a good structure for investment in real estate by foreigners. Unless there is a clear law that states foreigners cannot inject monies into a Thai company which has real estate assets there will be opportunities for investment and ways of protecting investors who inject more monies than others into an investment.

Ultimately, the majority of a Thai company which owns land must be owned 51% as a minimum by Thais in any event. If companies are scrutinized when title is due to be transferred this will potentially slow transactions down where the companies do not meet the requirements the officers are looking for. There is no indication that a real transaction with a real Thai company, set up correctly with real Thai shareholders and real foreign shareholders in accordance with the law, will be refused but perhaps will be subject to review. Belmont Limcharoen and its attorneys are trying to encourage the concerned government agencies to look into the possibility to start the process of legislation of a Thai Landlord and Tenant Act, an act that will seemingly take a long time to bear fruit as the nation still has no legislative body.