2252-2560

Glossaries

Term	Definition
2252-2560	A Thai company fully funded and controlled by a foreigner was ruled a de facto foreign entity. Land ownership was voided under the Land Code Act section 86 and the FBA. Thai Supreme Court Decision 2252/2560 (2017) – Offshore Investor Deemed Real Land Owner Decision 2252/2560 (2017): Offshore-Funded Company Ruled Foreign. An offshore investor supplied 100 % of the capital for a Phuket resort project but appeared to hold only 35 % of the shares in the Thai vehicle; the remaining 65 % stood in the names of local nominees. The Supreme Court looked past the share register and found that funding, control, and profit rights were entirely foreign. Under Land Code section 86 and the Foreign Business Act the company was therefore a de facto foreign entity and could neither own nor trade land. The purchase contract was declared void and the land office ordered to cancel title. Practical impact Equity percentage on paper is irrelevant if foreigners provide the money and make the decisions. Nominee-shareholder schemes trigger title cancellation and possible criminal penalties for all parties. Reinforces substance-over-form doctrine first seen in 17923/2557 (2014) and 5457/2560 (2017). Foreign Land Ownership→

Term

Definition

A Thai company fully funded and controlled by a foreigner was ruled a de facto foreign entity. Land ownership was voided under the Land Code Act section 86 and the FBA.

Thai Supreme Court Decision 2252/2560 (2017) – Offshore Investor Deemed Real Land Owner

Decision 2252/2560 (2017): Offshore-Funded Company Ruled Foreign. An offshore investor supplied 100 % of the capital for a Phuket resort project but appeared to hold only 35 % of the shares in the Thai vehicle; the remaining 65 % stood in the names of local nominees. The Supreme Court looked past the share register and found that funding, control, and profit rights were entirely foreign. Under Land Code section 86 and the Foreign Business Act the company was therefore a de facto foreign entity and could neither own nor trade land. The purchase contract was declared void and the land office ordered to cancel title.

Practical impact

Equity percentage on paper is irrelevant if foreigners provide the money and make the decisions.
Nominee-shareholder schemes trigger title cancellation and possible criminal penalties for all parties.
Reinforces substance-over-form doctrine first seen in 17923/2557 (2014) and 5457/2560 (2017).

Foreign Land Ownership→