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The family office: Looking for sound Thai investments

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Thailand in the focus of international family offices

Family offices are highly specialized private wealth management advisory firms with a multi-generational approach. They provide an outsourced financial and investment solution for high-net-worth investors (HNWI’s). As a single-family office (SFO), first pioneered by the Rockefellers in the late 1800s, the client is only one individual or a rich family, while multi-family offices (MFO’s) serve numerous ultra-high net worth clients.

Apart from performing the day-to-day administration, centralized management or oversight of investments, tax planning, estate planning, and asset protection, they are typically in charge of insurance, family related employment, philanthropic intentions and charitable giving, family governance, and even concierge services and lifestyle management.

Under local legislation, single-family offices do not have to register as investment advisers and are widely unregulated. It can be estimated that there are more than 10,000 globally, about half of them set up in the past fifteen years and roughly 3,000 in North America alone. While a family office makes sense with a wealth of US$ 500 million or more, all combined control an estimated US$4 trillion.

A sensible asset diversification across several asset classes, jurisdictions and risk profiles is a cardinal aspect of a private wealth management practice. Therefore, family offices from Europe, North America, Arabia, Russia and even Asia show increasing interest for a family-style investment in Thailand’s industries, properties, and people for wealthy clans abroad.

Family affairs in Thailand: The foreign family office as venture investor

Traditionally, family offices are engaged in direct investments in private equity and venture capital, agriculture and commodities, real estate and valuables (art, etc.). They have the ambition and ability to cherry-pick the best deals. However, particular requirements have to be met.

The primary goal of a family office is to invest wealth prudently and extend it beyond generations. Accordingly, investments have to fit the family’s long-term wealth-generation strategy. As an additional requirement, they typically desire more transparency in underlying investments. Specific rules might disallow any connection to corruption and bribery, child labor, workers’ exploitation, environmental destruction and other forms of non-compliance with the family’s fundamental beliefs and social values.

Typical family office ventures in Thailand are sustainable energy, agriculture, and livestock investments. Examples are the acquisition of solar farms with long-term offtake agreements with government agencies, the breeding of halal and Kobe-style cattle, and a farm for superfoods free of poisons and toxics.

The Consulting House: The family office office in Thailand

Investments in unknown territories require qualified and trustworthy advice. Not everything that is legally permitted is also solid and sound. The Consulting House advises international family offices how to prudently invest in Thailand’s industries, property, and people.

While not providing financial services and investment advice, the Consulting House has the long-term experience and wisdom to separate risky or unreasonable ventures from sustainable family-style investments in the land of smile. This includes the practical implementation of investment strategies taking into consideration the family’s values and compliance requirements.

From its strategically favorable location in Bangkok’s central business district, investments all over Thailand can be implemented, maintained, monitored and controlled. This includes legal and tax aspects, accounting, audit and more. A sophisticated reporting system gives the foreign family office around-the-clock access to its investments and ventures.

The Consulting House offers to international family offices trustworthy cooperation from the first consideration, the successful investment and financial closing as well as the whole investment lifecycle till a possible exit and disinvestment. Confidential talks can be arranged instantly.

Company formation: The twelve-in-one concept

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The company set-up in Thailand: Protected corporate structures

To do business in Thailand, the foreign investor typically needs to set-up a Thai company. In nearly all cases the limited company (Co., Ltd.) is the only reasonable option to do things legally. The Co., Ltd. requires a minimum of three shareholders and at least one individual as the director. Additional requirements result from the necessity to apply for a work permit for each foreigner working in Thailand.

The Thai company can be set-up with a Thai majority partner as a nominee structure, which is currently still tolerated in Thailand but not at all advisable. However, with a little bit more complex corporate structure, a company can be set-up entirely in compliance with Thailand’s foreigner legislation. Under such arrangement, the foreigner is allowed and enabled to dominate “his” Thai company with a shareholding of only 49%

If the foreigner prefers a more protected investment model, this can be achieved by various tools and modules. One of such protection schemes is the two-tier-structure which integrates an own Thai holding structure in the corporate design. It incorporates a legal firewall into the investment structure.

Foreign investors can utilize from various promotion schemes offered by Thailand’s jurisdiction and government regulations. Thailand’s Board of Investment (BOI) promotes specific business activities. Additional tax benefits are provided, for example in case of an International Headquarters.

The Thai corporation is in most cases no isolated stand-alone business. A comprehensive tax structuring is advisable to integrate the value chain and minimize the overall tax burden. Cross-border tax advice is the key to efficient transfer pricing, avoidance of double taxation and optimization of the expat taxation under Thailand’s corporate and personal income tax environment as well as the tax system in the home country respectively headquarters.

Beyond legal and tax services: The business set-up

Each Thai company needs a registered address. In the typical business case of a foreign direct investment, this can’t be limited to a mailbox but requires real office space for the director and the foreign and Thai employees. A prestigious business address adds significant value to the corporation. If the business is directly linked to public transport facilities, this makes it even more attractive for employees and visitors.

One of the legal requirements for foreigners working in a Thai company is the employment of four Thai staff for each work permit. Given the problematic Thai labor market, the successful search for motivated and capable Thai employees requires specific knowledge and access to business networks and other resources.

Starting from its day of incorporation, the Thai company is required to maintain a proper accounting by a certified public accountant. Such CPA may be employed or this legal obligation has to be outsourced to an accredited accounting firm. The financial statement of the company has to be audited on a yearly basis by a licensed auditor.

Depending on the business background of the foreign investor and his planned activities in Thailand, it is critical for the business success to get access to suppliers, subcontractors, and other business partners. To start with nothing than enthusiasm results in an uphill battle which wastes time and efforts. It makes perfect sense to use existing business networks and proofed contacts to governmental agencies, local players and decision makers in Thailand and the ASEAN countries.

The Consulting House concept: Twelve solutions by an integrated one-stop service

The Consulting House joins all the elements described above together on the 42nd floor of the Exchange Tower in Bangkok’s central business district:

  1. Comprehensive advice on a legally compliant and tax efficient corporate and investment structure.
  2. Company formation within ten business days, in urgent cases even quicker.
  3. Protected corporate structures, entirely in compliance with Thailand’s foreigner legislation.
  4. Advice and support on investment promotion by the Board of Investment BOI or similar investment benefits.
  5. Comprehensive legal support and advice on visa and work permit, business licensing, trademark registration, corporate, investment and labor law issues.
  6. Initial and ongoing Thai and cross-border tax advice to optimize the investment structure tax-wise.
  7. First-class business address and office space in a renowned business center in the heart of Bangkok.
  8. Recruitment of Thai employees and operation as interim manager.
  9. Arrangement of business contacts and matchmaking in Thailand and ASEAN.
  10. Provision of an extensive Asian business network for networking, lobbying and connecting with local industries and global players.
  11. Tax and social security registration, monthly accounting, reporting and yearly audit.
  12. A holistic approach to business consulting for the Thai and ASEAN market development.

The Consulting House encourages foreign investors to benefit from this twelve-in-one approach to reduce expenses, administrative burdens, and internal coordination work. A comprehensive consultancy and support offer is available on request.