Worawit Thawinthikakul
Counsel – Bangkok Office
STRUCTURE
It would be standard practice to set up special-purpose vehicles in accordance with the local applicable laws in terms of a limited company (the “SPV”).
The property development company (the “Dev Co.”), which is normally listed on the stock exchange, will incorporate the limited company as SPV to own, develop, market, and sell the developed unit to consumers, which would be considered the best practice for the real estate industry in Thailand. Similarly, the initial coin offering for a long-term real estate rental should separate the SPV from both (i) the Dev Co. and (ii) The issuer company (the “Issuer Co.”) to minimize the liability unless the credibility of the Dev Co is required.
REGISTRATION
By reference to the provision of real estate rental contained in the Thai Civil and Commercial Code, the lease of real estate for more than three years shall be made in writing and registered with the relevant authority, including the sub-lease thereof.
We would advise you to procure the thirty (30) years lease agreement between the property owner and the Issuer Co. with the option to renew for another two consecutive sixty (60) years. The accumulated lease term would be 90 (Ninety) years. The executed lease agreement between the property owner and Issuer Co. shall be subject to registration at the local land office per the local applicable laws.
The sub-lease transaction between the Issuer Co. and the investors shall be the lease agreement through the smart contract in the terms of three years with the option to renew twenty-nine (29) times. The accumulated lease term shall be ninety (90) years, provided registration at the local land office is not required.
The offered digital token (the “Token”) contains the sub-lease transaction through the smart contract and shall be secure in the digital wallet and transferable upon agreement. Moreover, the Token shall be listed in the licensed digital assets exchange (the “Exchange”) as the secondary market to procure and ensure the liquidity of the Token as well.
Before subscribing to the Token, we acknowledge that the investor must complete the requirements of know-your-customer (the “KYC”) of the ICO Portal according to the prevailing regulations of Thailand, as well as the buyer who completes the transaction through the Exchange. We would advise that the Token must be secure only through the custodian of the digital asset licensed by the SEC to ensure that the KYC has been properly secured.
TAXATION
Please note that the distribution and solicitation of the token shall be subjected to seven percent value-added taxes according to the prevailing laws for both (i) the first market through the ICO Portal and (ii) the second market through the digital assets exchange.
There will be a tax burden with an effective rate of up to forty (40) percent. However, the foregoing tax burden may be reduced up to the full tax planning with a minimum of five percent without a tax refund. However, you may request a withholding tax refund at the local revenue office to maximize your tax benefit for the proposed scheme.
REGULATION
As a primary regulator for this project, the Thai Security and Exchange Commission (the “SEC”) has designed stable, trustworthy regulations and respective ecosystems for the asset back deal. However, we would need to procure your best knowledge that the green field deal is strictly prohibited according to the current regulations.
The proposed scheme may be varied in detail in terms of tokenization of the long-term lease proposed hereunder. However, we believe the proposed scheme is feasible to proceed and execute according to the current applicable regulations, in which the terms and respective details shall be varied from time to time after being tailor-made to be applicable for each project.
The project shall be offered and customized on a project base for your kind consideration upon request.
Should you have any inquiries, please feel free to contact our Bangkok office via +662 027 7802 or [email protected].