Abstract:
Residential business investments in Thailand are of great interest to foreign investors because Thailand has ideal geographical and climatic features which are extremely attractive to foreigners who seek to own a residence abroad. Therefore, most foreign investors who understand the demands for property in Thailand, have elected to do a residential business in Thailand. Nevertheless, residential business transactions in Thailand have been subject to restrictions under Thai law, and are thereby strictly regulated. As a result, the conducting of such business that is not in accordance with the principle of the possession of land under the Promulgating Land Code Act, B.E. 2497 (the Land Code). According to the Land Code, foreign investors cannot acquire and own land for a residential business investment, unless they wish to invest in a hotel business that is promoted under the Board of Investment Act, B.E. 2520 (the BOI Act). Furthermore, foreign investors who wish to invest in other types of residential business, such as a serviced apartment business, which is not one of the types of promoted businesses listed under the BOI Act, and wherein they are not allowed to acquire ownership of the land, can process such immovable property for the purpose of carrying out a residential business, i.e. lease the immovable property according to Civil and Commercial Code (CCC) and Lease of Real Estate for Commerce and Industry Act, B.E. 2542 (the Lease Act), and the creation of real rights under the CCC. Further to the current laws, as mentioned above, the possession of immovable property is not appropriate, and indeed, unsuitable for the residential business investments sought by foreign investors. Thus, they have tried to find other ways to hold immovable property for residential business, i.e. to incorporate a Thai company. Such Thai company will be structured so that Thai shareholders hold 51 percent of the registered capital, and whereby the number of Thai shareholders totals more than half of all the shareholders, in order to be classified as a Thai company that is permitted to acquire land. However, the management of such company would be controlled by foreign investors according to its articles of association, and the holding of the Thai shareholders would thus be in the form of a nominee of said foreign investors. The Land Code does not regulate the management control and authority of the entity. Thus, the law only takes in consideration, the capital and the number of shareholders only. Consequently, the real estate holdings of foreign investors, in the manner described above, cannot truly be controlled, and thus they affect the stability of the country. Development of real estate business is crucial for Thailand's economy. On one hand, the control of ownership of immovable property by foreigners is necessary. However, funding and business know-how, in regard to the foreigner, are equally needed. Through research conducted on the current economic and social climate, it has been found that amendments of the following laws will help to give rise to the legitimate ownership of immovable property; (i) list of business types which are eligible to gains benefits from the BOI Act, including real estate business; (ii) leasehold rights under the Lease Act to be considered as real rights, as modeled after English Law and, including the expansion of areas which can be applied to registration of rented property; and (iii) amendment of punishments under the Land Code.