Preference Shares: The Control Structure

There's a legal structure that allows foreigners to maintain significant control even when holding less than 51% of shares. It's called the Preference Share Structure.

 

How It Works

Thai company law allows different classes of shares with different voting rights. By creating "preference shares" with enhanced voting, you can:

• Own 49% or less of ordinary shares
• Hold 100% of preference shares with higher votes
• Achieve majority voting control legally

 

Example Structure

Ordinary Shares (100 total):

• Foreign investor: 30 shares = 30 votes
• Thai investor: 70 shares = 70 votes

Preference Shares (100 total):

• Foreign investor: 100 shares × 2 votes each = 200 votes
• Thai investor: 0 shares

Total Voting Power:

• Foreign: 30 + 200 = 230 votes (76.6%)
• Thai: 70 votes (23.4%)

 

Why This is Legal

The Foreign Business Act looks at ordinary share ownership. In this structure:

• Thai nationals own 70% of ordinary shares ✓
• FBA compliance maintained ✓
• Foreign investor has voting control through preference shares ✓

 

When to Use This

✅ Your business is in a restricted category ✅ You don't qualify for BOI or Treaty of Amity ✅ You have a genuine Thai partner (contributing real capital) ✅ You want documented control mechanisms

 

Important Caveats

This structure requires:

• Real Thai investors (not nominees)
• Proper legal documentation
• Expert setup to ensure compliance

Improperly structured, it can still be challenged. Professional guidance is essential.

 

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Related Service: Company Registration & Legal Services — Expert preference share structuring.