Issue 14 | Feature brought to you by Pugnatorius Ltd.
When investing in property it is imperative to enlist the expertise of a law firm to guide you through the process and advise you accordingly for a smooth and watertight transaction. PUGNATORIUS Limited is an independent legal practice headquartered in Bangkok providing international corporations, investors and foreign law firms with premium legal and tax services. Having recently opened an office on Koh Samui to specialise in real estate developments, Thailand Property meets with Dr Ulrich Eder, managing director at PUGNATORIUS, to find out more about the company in this exciting chapter of their expansion.
Can you tell me a bit about why PUGNATORIUS recently opened an office on Koh Samui?
We have never solely focused on corporate clients, our legal practice comprised real estate developments from day one. In fact, before founding PUGNATORIUS I worked with an American managed law firm in Bangkok and Phuket mainly on property transactions including hotel developments in Phuket, and the legal and tax structuring of Bangkok’s entertainment industry. Cross-border tax planning is our third business field and tax aspects are frequently underestimated and neglected in real estate transactions.
Why was it then that you set up the office on Koh Samui rather than Phuket?
We serve clients in Phuket, Koh Chang, Hua Hin and Pattaya as well. The main reason for Koh Samui is that we found the right team of like-minded legal professionals. We successfully tested the cooperation and we can be sure to provide a seamless professional service to the same high standard. We would of course be happy to cooperate with Phuket legal teams in the future should they meet our requirements. Our French partner Guillaume Federle has already successfully worked on Koh Samui for a number of years with a strong Thai legal team, as such I expect that the new office will grow fast. Thailand’s foreigner legislation also influences our legal structure and the Koh Samui office is operated by Samui Legal Solutions Ltd. although we work on the business level as one law firm.
What does PUGNATORIUS do differently from the local law firms already present? We offer fresh solutions and sophisticated structures based on an European approach to legal protection requirements and proceedings. Generally, the law provides for two basic purposes: the first to protect the rights holder, for example ownership rights, contractual rights, shareholder rights; the second is to facilitate a change in the legal status, for example a transfer of property ownership, of shareholding or of contractual rights. Personally I feel that the first purpose is highly undervalued in Thailand while the second purpose dominates. The convenience of transfers and contract conclusions have in practice an unreasonable high priority in Thailand that is not the intention of the law. That sounds rather theoretical and abstract.
Can you provide an example of this?
The most obvious example is the handling of share transfers and property protection schemes by blank share transfer agreements. Blank documents to be completed later are certainly very convenient, but from our viewpoint such approach is neither legally valid nor does it provide the investor with any reasonable protection. Therefore, we replace such elements with a more sophisticated solution. In previous years the legal structure of a property investment had no great significance for foreign investors, they were simply told that everyone does it the same way – this deemed to be a sufficient warranty. However, increasingly more foreigners are being made aware that there are different investment structures and one size does not fit all. We are currently very busy restructuring several villa transactions and I expect an even bigger stream of legal assignments to emerge for this task.
Foreigners increasingly comment on the restrictions for them to invest in real estate and companies. Do you feel that investing in Thai property is becoming more and more restricted?
Not at all. The government is well aware that foreign property investments are vital for Thailand’s economy. Cases where foreign investors lose their investment as a result of Thailand’s foreigner legislation are extremely rare and I am not aware of any cases where this is not fully understandable and justified. For one case where a violation of Thailand’s foreigner legislation is discussed, there are definitely a 100 cases where a foreigner loses his land and villa to his Thai wife or a Thai investment partner as a result of a weak and malformed investment structure.
Is a more complex investment structure not a deal breaker? Do project developers find this more complicated and maybe more expensive that they would rather not entertain them?
If you compare the Thai property market with the Philippines, it is interesting to notice that the Thai property value is typically higher but the Thai legal fees are much lower. This sounds convenient but it is not healthy. Times are changing in Thailand, more and more old and new property investors are looking for more secure investments. A simple lease structure of 30 plus 30 plus 30 years does not provide foreigners with enough confidence. If a new development does not give additional protection and assurance then it could be nearly dead stock very soon. Therefore, our protected lease structures, our investment grade company formation model and our overall protection package should be seen as a life saver for a realistic property developer.
The Internet is a vital tool for any company’s marketing strategy, PUGNATORIUS has an extensive Internet presence not only in English, but also in German and French. Is this helpful for marketing purposes?
We have much more than just a French webpage. The website is a portal for up-to-date French posts about Koh Samui, legal developments and investments opportunities in Thailand and France. Being able to advise and provide support in French gives us an edge with our French partner Guillaume as the contact for French speaking clients across Thailand. French used to be the lingua franca of international diplomacy and even today French people choose to use it as often as possible.
Thank you for these insights Dr Eder. We will be keeping a close eye on PUGNATORIUS Ltd. and Samui Legal Solutions Ltd. and their further development.
