Individual Property ownership in Thailand
Generally speaking, foreigners may not own land in Thailand. Layan Hills Estate was structured to comply with the existing laws whilst ensuring that foreigners get as close to full legal ownership in the underlying land as possible. Foreigners may, however, own the Villa to be built at Layan Hills Estate) in their own name.
Corporate ownership of Land
Thai corporate structures are very similar to those of British common law. Thai law allows for various types of corporate entities including limited companies. Once these are formed, they are referred to, in Thai legal jargon, as Juristic persons (legal entities).
Juristic Persons in Thailand in which Thai shareholders (either individuals or legal entities which qualify as Thai) hold at least 51% of the issued share capital are considered in terms of land ownership, to be “Thai” and therefore, may own property in Thailand. Note that majority ownership does not necessarily equate to actual control of the Juristic Person. This is important to understand the proposed structure explained below. The most popular form of corporate entity used to own land is the Private Limited Liability Company (LLC).
Control of the land Limited Liability Company
Thai Law allows the issuing of various classes of shares which may have different rights. Hence shares of the LLC may include "Ordinary Shares" where the holder of one share is entitled to one vote, and “Preferred Shares” where a shareholder must have multiple shares in order to obtain one vote. The Thai majority shares may be issued as "Preferred" and the foreign minority shares as "Ordinary". Thereby allowing the foreign minority shareholders to hold a fewer number of shares, but in fact have control of the company by voting rights. The same applies to profit entitlements whereby the preferred shares can be structured in such a way that the holders of these shares only get a fixed, nominal dividend each year when there are profits.
In the past, control over these Thai companies was achieved by using nominees (Thai lawyers, accountants, and support staff) as holders of the majority of shares, and having them proxy their voting rights to the foreign minority shareholders, for an annual fee. Although the use of nominees has always been against the law the government has become much stricter in the past year or so. We have legitimate Thai shareholders and are comfortable that our structure will pass the scrutiny of Thai government officials.
Structure
The Land at our development is owned by L.H.E. Co. Ltd., a Thai company (“Land Owner”). The Preferred Shares in Land Owner are owned by Sea Wave Builders Co. Ltd. (the “DEVELOPER”), another Thai company which is an operating company and the Ordinary Shares are owned by Layan Hills Estate Owners Limited ("OWNERS"), a British Virgin Islands based company. Each Purchaser at "Layan Hills Estate" receives one share of the common stock of “OWNERS” thereby giving the lessees indirect control over the Land Owner and ensuring the future extension of their land leases by the Land Owner.
Development / Marketing
SWB Estates Group includes Sea Wave Builders Co. Ltd, a Phuket based Construction company that has extensive expertise (including in relation to the recently completed & acclaimed “LAYAN ESTATE”) and will act as Developer and build and sell the 32 Villas inclusive of arranging 32 Prepaid 30 year (with two 30 year renewal options) Land Leases for the individual Lots upon which the Luxury Villas will be constructed.
Ownership / Lease
At completion of the payments for the agreed Total Purchase amount, each Buyer at Layan Hills Estate will own 3 Assets : their Villa; plus an equal share in OWNERS; and the Lease.
