Buying condominium in Thailand

Land Department Regulation Relating to the Ownership of Condominium Units by Aliens and Juristic Persons which the Law Considers Aliens of B.E. 2547 (2004) details the evidence that must be presented to the competent official by a prospective foreign owner. Section 5.5.1(6) specifies that where foreign currency is brought into Thailand from April 1, 2004 to the present, evidence must be presented as follows: if the value of the foreign currency is either 50,000 USD or the equivalent or more, evidence of a foreign currency transaction must be presented (in other words, a Tor Tor 3, or Foreign Exchange Transaction Form).

However, if the value of foreign currency is less than 50,000 USD or the equivalent, the regulation specifies that written evidence issued from an authorized purchaser of foreign currency certifying that it has purchased the foreign currency may be presented. Section 5.5.2 deals with foreigners who withdraw money from the Thai Baht account of a non-resident. The Section states that regardless of whether the account belongs to an alien, the foreigner may present evidence of a written statement from a commercial bank certifying that the money was withdrawn from a Thai Baht account belonging to a person residing outside of the country. Section 5.5.3(4) states that where the money is withdrawn from a foreign currency deposit account, evidence must be presented as follows: if the amount of money is 50,000 USD or the equivalent or more, evidence of a foreign currency transaction issued by a commercial bank must be presented. If the amount is less than 50,000 USD, then written evidence issued by a commercial bank that it has purchased the foreign currency may be presented.

Section 5 also states that in instances where a foreign purchaser transfers money into the country by wire transfer or by transferring money into the deposit account of the condominium project owner, even without having actually entered the country or setting up a deposit account in the country, a Tor Tor 3 form may be used as evidence, where it clearly specifies that the condominium project owner is the recipient of the money and that the purpose of the transfer is for the purchase of a condominium in Thailand. Finally, Section 5 makes clear that in all cases, the amount of money transfer cannot be less than the cost of the condominium unit itself.

There is no legal obligation for states to recognize foreign judgments of divorce issued by other countries.  However, most states in the US recognize divorces granted to its citizens by foreign countries because of comity.  Comity is a principle between states of practicing mutual respect for each other’s laws and legal processes.

Generally, US courts will recognize and enforce a foreign divorce only if both spouses received proper notice of the divorce proceeding through proper service of process.  Thus, if the spouses are living in separate countries and the divorce is filed in a foreign state, the other party should be served adequate notice so as to allow him or her to respond to the petition.  Take note that different countries have different rules on the service of processes.  These rules must be properly complied with in order for the service to be considered sufficient.

Divorce in Thailand

Thailand has two forms of divorce: Uncontested or Administrative Divorce and Contested or Judicial Divorce.

Uncontested divorce in Thailand is the equivalent of mutual or no fault divorce in other states.  This divorce necessitates the presence of the spouses before the divorce can be granted to them.  No proxy or representative shall be entertained as the parties themselves are required to express their consent to the divorce before the administrative officer.   By the requirement of personal appearance, the parties are definitely given notice of the procedure.

In a contested divorce in Thailand, the process is usually started by the aggrieved party.  He or she comes to court, ready to prove at least one ground for divorce.  The court will not proceed to hear the case unless the erring spouse is given proper notice of the proceedings.  This is mandatory so the courts may have jurisdiction over the case, and for the erring party to be given the opportunity to respond to the petition.  The erring party may choose not to answer the allegations or express his consent to the divorce.  Whatever the choice may be, what matters is that the opportunity to answer was given before hearings on the petition start.

Divorce in Thailand will also involve the determination of related issues like child custody, child support, spousal alimony and marital property distribution.  Before an uncontested or contested divorce is decreed, the above issues must have been settled by the parties themselves or determined by the court.  Since these issues will bind the parties even after the divorce is granted, there is more reason why the respondent needs to be served with the petition.

If proper service of processes had been complied with, and this fact is proven before US courts, there is food reason to believe that the foreign judgment of divorce shall be recognized by the United States.

Americans doing business in Thailand must remember that they are not only subjected to Thai law, but that in certain situations, U.S. laws still apply as well. For example, U.S. employment laws, environmental laws, antitrust laws, and tax laws all potentially apply to American companies doing business abroad. However, one of the most important laws to consider is the Foreign Corrupt Practices Act of 1977 (FCPA) (15 U.S.C. § 78dd-1, et seq). The FCPA is a U.S. federal law which penalizes bribery by American businesspeople operating outside the United States. The FCPA contains two sections: one related to accounting and the other related to anti-bribery. The accounting provisions require companies registered with the Securities and Exchange Commission (SEC) to regularly maintain accurate books, records, and accounting and to report such information to the SEC. The anti-bribery provisions, with which we are primarily concerned, generally prohibit any company registered with the SEC or any U.S. national, resident, or company from giving or promising anything of value to a foreign government official for the purpose of doing business or gaining an improper advantage. The accounting provisions are non-criminal and are enforced by the SEC through civil proceedings. The anti-bribery provisions, on the other hand, are enforced by the Department of Justice and carry criminal penalties for their violation.

Although many of us would never think of brazenly offering a bribe, the fact is that in Thailand, the distinction between “offering a gift” and offering a bribe is rather ambiguous. Furthermore, it goes without saying that corruption is somewhat common in Thailand. Hosting a dinner for a Thai government minister, for example, may very well fall within the prohibition of the FCPA. Therefore, Americans doing business in Thailand should have a firm grasp of how the scope of the anti-bribery prohibition could be applied in this country.

Routine Governmental Action

Would the payment of a fee to the Department of Business Development of the Ministry of Commerce, in order to apply for the issuance of a foreign business license under Thai law, be an offense under the FCPA? It clearly would not. The FCPA makes an exception for payments made to foreign government officials in order to secure or facilitate the performance of a routine governmental action (15 U.S.C. §§ 78dd-1(b), 78dd-2(b), 78dd-3(b)). Specifically, it states that “routine governmental action” includes, among other actions, the “obtaining [of] permits, licenses, or other official documents to qualify a person to do business in a foreign country.”

However, the FCPA does state that “routine governmental action” does not include “any decision by a foreign official whether, or on what terms, to award new business to or to continue business with a particular party, or any action taken by a foreign official involved in the decision-making process to encourage a decision to award new business to or continue business with a particular party.” An interesting issue here is whether certain practices, such as engaging in direct negotiations with a government procurement officer before or during the bidding process, or colluding with other suppliers to fix prices, would be considered offenses under the FCPA. The Regulations of the Office of the Prime Minister on Procurement of B.E. 2535 (1992), as amended up to No. 7 B.E. 2552 (A.D. 2009) require transparency in the bidding process for public contracts in Thailand; further, government procurement officers are required to only take into account the qualifications and abilities of the bidders. Under Thai procurement regulations, colluding with other suppliers is clearly prohibited (Regulations of the Office of the Prime Minister on Procurement of B.E. 2535, Chapter 2, Part 1, Clause 15), although facially, it would not constitute a violation of the basic prohibition of the FCPA since it would be an instance of private-private corruption, rather than public-private corruption. The FCPA is concerned with the latter and not the former.

Lawful under Foreign Law

An affirmative defense to a charge of violating anti-bribery provisions of the FCPA would be that the alleged act was lawful under the written laws and regulations of the foreign official’s country (15 U.S.C. §§ 78dd-1(c)(1), 78dd-2(c)(1),78dd-3(c)(1)). An interesting issue is that the aforementioned Thai procurement regulations do not expressly prohibit the offering of bribes or generally, the offering of benefits to government procurement officers. Furthermore, the regulations also provide that the principles of transparency and open competition, as required by Clause 15 of the regulations, do not necessarily have to be applied in every situation. The Thai procurement regulations state that the government officer in charge does not have to apply the principles of transparency and fair competition in a situation where an exception should apply (Regulations of the Office of the Prime Minister on Procurement of B.E. 2535, Chapter 2, Part 1, Clause 15). However, Clause 15 appears to imply that any such exceptions would be narrow, since they would only be allowed as designated in the regulations and not at the discretion of the officer in charge. Furthermore, Clause 15 could also be understood to mean that the government procurement officer is required to record the reasons for his decision-making in any case. Therefore, as it stands, Thai procurement regulations cannot reasonably be interpreted to allow the payment or promise of payment of anything of value to a government procurement officer. Additionally, any exceptions to the transparency and open competition requirements of Clause 15 would only apply to the extent the regulations permit it and not at the discretion of the government procurement officer.

Final Comments

The FCPA also provides that payments may be made to a foreign government official in order to demonstrate, explain, or promote a product or service. There is also an exception provided for payments related to the performance of a public contract.

In 2007, on the 12th ASEAN Summit in Cebu, Philippines, a blueprint for the establishment of the AEC by 2015 was implemented. In line with this, each country in the region had certain obligations to meet based on its level of economic development. In particular, the AEC has the following key pillars, which it aims to achieve. This includes the establishment of a single market and production base. This means that it will need to have a free flow of the following:

1. Goods;
2. Services;
3. Investment;
4. Capital;
5. Skilled labor.

Free Flow of Goods

A free and unrestricted flow that essentially sets up a free trading area is an integral part of the AEC. In terms of goods and commodities, the removal of tariffs as well as non-tariff barriers are largely considered as the major purpose of creating such a community in the first place so it makes sense that such considerations are dealt with as a matter or priority. Other issues to be considered are the implementation of the single window for custom entries in the region not just for other countries but within the ASEAN countries as well. The progress in this area appears to be going well with all the ASEAN countries and is so far in line with the timetable set out in the agenda.

Legal Challenges on Liberalization of other Economic Sectors

To be expected, the free flow of services, investment and capital is one that would be challenging to many of the ASEAN members except perhaps Singapore, which has long since liberalized foreign investment. However, for the majority of the ASEAN countries including Thailand, significant amendments are required in order to open up the market to its ASEAN counterparts.

In Thailand, the most prominent body of law, which governs this, is the Foreign Business Act B.E 2542. Over the years, this legislation has experienced its fair share of controversy and is certainly no stranger to exposure. The FBA restricts foreign participation in a wide range of business sectors in Thailand to 49%. The Ministry of Commerce, however, does have the power to grant a Foreign Business License (FBL) to certain foreign businesses within the listed categories provided certain conditions are met.

The AEC blueprint, however, aims to have equity participation of up to 70% to its ASEAN counterparts as part of the integration process. Currently, up to four sectors have been prioritized to receive such treatment and this includes air transport, e-ASEAN (otherwise known as the IT related industries), healthcare and tourism by 2010 and logistics by 2013. According to Ronnarong Poonpipat, the Director of the Trade Negotiations Department, speaking last year at the AEC 2015 seminar at the Software Park, this 70% equity participation is already being implemented.

Possible Solutions to the Key Challenges

The question from a legal point of view is the standing of the FBA when it applies to ASEAN participation. With the changing equity participation of ASEAN countries, it is probably likely that the Ministry of Commerce would just, in practice, rely on the exceptions and discretionary power it has to provide licenses to businesses that are from the ASEAN region. It may be, in fact, more practical to make amendments to the legislations of each sector in order to allow greater equity participation rather than to amend the FBA as a whole due to the preferential treatment it needs to provide to certain participants. This appears to be the current trend with the draft bill covering the logistics sector currently underway in line with its liberalization in 2013. There is probably no easy way to overcome this and many of the other ASEAN countries are also experiencing similar challenges.

Not everyone appears to be looking forward to the AEC 2015. There is at least one sector in Thailand that appears to be resistant to the liberalization of their industry. The Association of Thai Travel Agents (ATTA) recently expressed concern over their ability to compete with their ASEAN counterparts due to the level of English in general in comparison to other member countries. Tour guides in particular are concerned as it is one of the most restricted occupations under the Tourism and Guide Business Act B.E. 2542 and have enjoyed this protection for some years.

Looking Ahead to 2015

It appears there is still a lot of work to do in preparation of the AEC 2015. Both government and private sectors are working together in implementing this integration. However, as such an integration on this scale is unprecedented, there are naturally a number of challenges, which must be faced in order to make this single economic community possible.  Many legal challenges lie ahead and it will take a certain degree of political will in each member country to forge ahead and make such changes possible. For some, it would be a complete makeover of the legal structure and process while for others it will only require minor amendments. Thailand is probably somewhere around the middle of this scale.

Thailand has been thriving as a destination for film production companies. Its beautiful natural scenery, exotic locale, and cheaper production costs make it an attractive option to many foreign filmmakers. Another reason is that Thailand already has a developed film production infrastructure in place, which makes it less necessary to import equipment from outside the country. The Board of Investment (BOI) promotes the movie industry under Activity 7.17 (“Thai motion picture production, motion picture supporting services, or multimedia services”) of the “List of Activities Eligible for Investment Promotion” (BOI Announcement No. 2/2543). The BOI defines the scope of the eligible business activity in BOI Announcement No. Por 6/2547, which supersedes the previous Announcement No. 15/2543. The Announcement defines “motion pictures” as including documentaries and television programs, but specifically excludes commercials from BOI promotion. This is not surprising since the advertising business is a restricted business under category List 3 of the Foreign Business Act of B.E. 2542 (1999).

“Motion picture supporting services or multimedia services” includes the following activities: equipment rental services, film processing and film printing services, sound recording services, imaging services, coordinating services, and studio rental services. Furthermore, the BOI defines the scope of approved business activities in this category according to the minimum equipment and tools that must be used for each activity. Therefore, rental services for movie production equipment and props must have a camera, light set, electric generator and camera accessories. Film processing and printing services must have a film development machine, film coloring machine, film cutting machine, and film cleaning machine. Sound recording services are required to have a digital sound recorder, digital sound editing machine, digital sound mixing machine and a standard recording room. Imaging services are required to have “special equipment for motion picture production and TV programs that cannot be done by camera, such as standard and high-definition digital video recording equipment, telecine, editing suite, digital composing and special effect creation equipment.” Coordinating services must include the services of coordinating with relevant government agencies for permits, location scouting, staff recruitment and acquisition of equipment for production.

A particularly important feature to discuss in regards to this topic is the BOI’s promotion of an 8 billion baht “Movie Town” industrial estate which is projected to be completed in Chiang Mai by 2014. In Announcement No. Sor 2/2547 (“Re: Investment Promotion Policy for Movie Industry”) the BOI has created a new promotion category specifically for the project under Activity 7.5.7 (“Movie Town”). Approved projects under the Movie Town category will be required to be located in the Movie Town industrial estate and also be required to have an indoor and outdoor studio and post production services, such as film developing, special effects, computer animation, sound lab, etc. Finally, movie projects eligible for BOI promotion will be exempted from import duties for machinery and receive a 5 year corporate income tax exemption regardless of BOI Zone. Approved projects located in Movie Town will be exempted from import duties on machinery and receive an 8 year corporate income tax exemption, also regardless of BOI Zone.

Article 110 of TCCC specifies a foundation as “A foundation consists of property specially appropriated to public charity, religious, affairs art, scientific, literary, education or other purposes for the public benefit and not for sharing profit, and has been registered under the provision of this Code.
The property of a foundation must be managed for implementing the objects of that foundation and not for seeking interest for any person”. Therefore, not all types of charitable are eligible for the foundation. The purposes are, instead, limited to public purposes as mentioned above. Moreover, the foundation is not allowed to use for any person own purpose or for personal goals.

Referring to article 110 of TCCC, characteristics of a foundation in Thailand are as follows;

1. Special allocated assets: In order to use as operating fund of a foundation
2. Objectives: The above fund, allocated assets, is to be used solely for the objectives of the foundation and not for any person own purpose/interest.
3. Not seeking for personal interest: Even the foundation is allowed to earn or generate revenue, it has to be strictly used for the objectives of the foundation itself and not divided or shared between its members.
4. Registered as a Juristic person as specified in article 110 and 122 of TCCC.

However, the above is merely an overview of a foundation. There are details in relation to registering of a foundation ie. name, office, objectives, allocated assets, directors, member etc to be further discussed.

The concept of sin sodt is a tradition initially undertaken to ensure that a Thai would-be bride does not marry below her perceived status in life.  One’s financial, social, and professional standing in the society is taken into consideration.  Before the bride’s family consents to the marriage, the groom should be able to provide evidence that he deserves to be with the bride.  He must be able to show that he is financially stable and responsible enough to sustain a family.  He must prove that he is worthy.  As such, he is expected to give a sum of money to the bride’s family to compensate the latter and exhibit financial stability.

There is no specific amount of dowry that is given as it is a case-to-case based computation.  Several aspects are taken into consideration before setting the amount, such as the groom’s perceived wealth and status in life.  More importantly, the value of the bride is also assessed, not to mention her educational qualifications, personality and beauty.

Although the dowry system is part of Thai marriage culture, there are instances when the giving of dowry is merely treated as a symbolic gesture to conform to tradition.  Sometimes, the amount given to the in-laws will be returned to the newlyweds after the wedding.  This may be given to the married couple as a gift.  There are also times when no dowry is given, when for example, the in-laws does not require dowry.  It may also be that the amount of money intended for sin sodt may instead be used for the preparation of the weddings.  It cannot be doubted that Thai wedding ceremonies are lavish so it is expected that both families will spend for this once-in-a-lifetime event.  Hence, the money will be used for expenses related to the wedding.

Thais are adherent to tradition so if the groom is a foreigner, the latter can expect that a dowry will be asked.  This is because Thais view foreigners as capable and good providers of a family.  Hence, it is important for foreigners to gain knowledge about Thai customs and traditions, particularly on weddings and marriages in order to adopt and be the best future in-law.

Divorce in Thailand can only be constituted either by mutual consent of the spouses or Court intervention.  If the parties choose to severe the marriage ties by mutual consent, the same must be made in writing and signed in the presence of at least two witnesses, who will certify to the authenticity of the divorce agreement.  The right of one spouse to cause the filing of a divorce shall be terminated if there is evidence or declaration of forgiveness from said spouse on the action which is the basis for the divorce.  In addition, no divorce shall be granted if the Court establishes the fact that there was connivance between the spouses or consent was freely given by one spouse to the other to execute the acts which become the basis for the divorce.

Section 1516, Title I of the Civil and Commercial Code of Thailand provides that “Grounds for divorce” are as follows:

1. The husband has given maintenance to or honored such other woman as his wife, or the wife has committed adultery, the other spouse may enter a claim for divorce;

2. One spouse is guilty of misconduct, notwithstanding whether such misconduct is a criminal offence or not, if it causes the other:

1. to be seriously ashamed;

2. to be insulted of hated or account of continuance of being husband or wife of the spouse having committed the misconduct; or

3. to sustain excessive injury or trouble where the condition, position and cohabitation as husband and wife are taken into consideration; the latter may enter a claim for divorce;

3. One spouse has caused serious harm or torture to the body or mind of the other, or has seriously insulted the other or his or her ascendants, the latter may enter a claim for divorce;

4. One spouse has deserted the other for more than one year, the latter may enter a claim for divorce;

1. one spouse had been sentenced by a final judgment of the Court and has been imprisoned for more than one year in the offence committed without any participation, consent or in the knowledge of the other, and the cohabitation as husband and wife will cause the other party sustain excessive injury or trouble, the latter may enter a claim for divorce;

2. the husband and wife voluntarily live separately because of being unable to cohabit peacefully for more than three years, or live separately for more than three years by the order of the Court, either spouse may enter a claim for divorce;

5. One spouse has been adjudged to have disappeared, or as left his or her domicile or residence for more than three years and being uncertain whether he or she is living or dead;

6. One spouse has failed to give proper maintenance and support to the other, or committed acts seriously adverse to the relationship of husband and wife to such an extent that the other has been in excessive trouble where the condition, position and cohabitation as husband and wife are taking into consideration, the latter may enter a claim for divorce;

7. One spouse has been an insane person for more than three years continuously and such insanity is hardly curable so that the continuance of marriage cannot be expected, the other may enter a claim for divorce;

8. One spouse has broken a bond of good behavior executed by him or her, the other spouse may enter a claim for divorce;

9. One spouse is suffering from a communicable and dangerous disease which is incurable and may cause injury to the other, the latter may file a claim for divorce;

10. One spouse has a physical disadvantage so as to be permanently unable to cohabit as husband and wife, the other may enter a claim for divorce.

When filing for an action for divorce, it is recommended that the spouse secures the legal services of a reputable lawyer from a commendable law firm who seeks to protect the rights and interests of its clients.

The Board of Investment (BOI) is promoting some business activities in order to earnestly awake Thai economy. The BOI promoted activities are categorized in seven main sections. If you look into the list of activities eligible for BOI promotion, “Software” is one of the most popular activities which is sub-categorized under Section 5: Electronic Industry and Electrical Appliance. It is also divided in three types as follows: (5.8.1) Enterprise Software, (5.8.2) Digital Content and (5.8.3) Embedded Software. In this article we will review about “Games” under Digital Content for Software Activity as follows:

• What is the definition of “Games” which is eligible for BOI promotion?
• What are the conditions and privileges provided by the Board of Investment under this promotion?

According to the Announcement of the Office of the Board of Investment No. Por. 5/2547, it defines  the meaning of “Games” under Digital Content for Software Activity as an entertainment software that operates on various devices, consisting of graphics and programming, with rules, conditions of the game that players can follow, such as Windows-based, mobile platform, console, PDA, online game, Massive Multi-player Online Game (MMOG), etc.  In additional, investors who solely perform as online game service providers seem not to be qualified for the aforesaid promotion if they do not have any processes in relation to the software development.

The general conditions attached to the aforesaid promotion as of software activity are as follows:

1. The minimum investment capital must be at least one million baht excluding cost of land and working capital of the company.
2. The ratio of debt to equity should not exceed three to one for a newly established project.
3. Project must include software development processes specified by the Software Industry Promotion Agency (SIPA).
4. If the project has investment capital of 10 million baht or more, the project must obtain a quality standard certificate from Software Industry Promotion Agency or receive a Capability Maturity Model Integration quality standard certificate or any equivalent standard within 2 years from the start-up date.
5. Revenues derived from sales or the provision of services that are directly related to a promoted software business shall be regarded as revenue of such promoted business.

Once the company is promoted, the applicant who applies for the Software activity promotion will be granted privileges as an activity of Special Important and Benefits to the Country as follows:

• Exemption of import duties on machinery for all zones.
• Eight-year corporate income tax exemption for all zones which is not subject to the corporate income tax exemption cap.
• Other relevant location-based incentives.

“Where the registrar has reasonable cause to believe that a registered partnership, a limited partnership or a Thai limited company is not carrying on business or in operation, he shall send to the partnership or company by post with acknowledgement of receipt a letter inquiring whether the partnership or company is carrying on business or in operation and informing it that if an answer is not received within thirty days from the sending date thereof, a notice will be published in a newspaper with a view to striking the name of the partnership or company off the registrar

If the registrar either receives an answer from the partnerships or company to the effect that it is not carrying on business or in operation, or does not withinthirty days after sending the letter receive any answer, he may publish once at least in one of the local news papers, and send to the partnership or company by post with acknowledgement of receipt, a notice that at the expiration of ninety days from the sending date of that notice the name of the partnership or company mentioned therein will, unless cause is shown to the contrary, be struck off the register”.

Even though the company’s name is struck off the record and the status of the company is not anymore considered as a business entity, the liability of the directors as well as shareholders of the company has nothing to do with this termination. In other words, even the business’s name is struck off, the directors and shareholders of the company are still liable for the liability they may have before the company’s name is getting rid of. Therefore, for instance, the creditors of the company are still able to bring the case to court for the debt over company etc.

Moreover, as the company is not a juristic person anymore, the company cannot register any change or submit any change to the officer.