Can Thailand trust India

The law of trusts has been a component of the common law system for many years. Under the common law system the idea of title was bifurcated into legal title and equitable title. Under this system, one could hold legal title to real estate or property while equitable title was held by another. This made it possible to circumvent legal mechanisms such as probate or avoid certain types of taxation. Many Expats who originate in common law countries mistakenly believe that this concept can be applied in Thailand. Unfortunately, Thai law does not codify the idea of trust law and as a result business and property structures should probably not be based upon such concepts.

In England many years ago, two courts came about to deal with civil and criminal issues. At first there were the courts of law where cases could be heard. However, there were many instances where the courts of law could not effectively deal with some matters. Therefore, a Court of the King’s Conscience was established and certain cases were resolved in this “court of equity.” Trust law evolved from this bifurcation of equity and law. One could hold equitable title in the court of equity, but not hold legal title in the court of law. Often, the result was to the advantage of the holder of equitable title because it allowed him to enjoy the benefits of the property without the burdens of legal ownership (most notably taxation). In countries where the common law system became the law of the land, these principles of equitable and legal title were passed on. As a result, in many common law countries today, the idea of nominee shareholders is a commonly accepted method of maintaining control of a business or property interest. Also, controlling a trust that owns land is a common method of lawfully avoiding taxes.

In countries that did not adhere to common law principles, the notion of equitable and legal title is somewhat foreign and often not recogized as a legitimate method of property ownership. In Thailand, which utilizes a civil code legal system, trusts and equity are not regarded as mutually exclusive methods of property ownership. Although similar concepts such as usufructs, superficies, and escrows exist, for the most part Thailand does not recognize many equitable concepts. A case in point is the Thai view of nominee shareholders. Nominees are strictly forbidden under statutes passed by the Thai parliament (while the definition of nominee is left somewhat vague). Further, nominees are viewed with extra hostility where they are being utilized for the purpose of maintaining control of a Thai company to own land.


Tags: Civil Code, Common Law, Thai Company, Thai Property, Thai Real Estate, Thailand Nominee Shareholders, Trust Law, Trusts, Trusts in Thailand