Formichella & Sritawat - Thailand’s Nominee Crackdown: Function Over Form in Foreign Investment

Posted by Dr. Paul Crosio on 20 October, 2026

“The question is no longer who appears on the register. It is who really invested, controls the business, and benefits.”

Thailand has tightened scrutiny of nominee shareholding for years. On 19 October 2026, Prime Minister Anutin Charnvirakul announced a nationwide operation targeting suspected illegal nominees and landholdings. The announcement marked a change in scale and coordination—not a new prohibition. Nominee arrangements were already unlawful when used to circumvent restrictions on foreign business or land ownership.

The shift is in enforcement method. Authorities say they will coordinate law enforcement, tax, business registration, immigration and land records to trace beneficial owners, financial flows and control behind the names on share registers and title deeds. For investors, a Thai majority on paper is therefore only the start of the analysis.

THE PRACTICAL TEST   Can the company show that its ownership, funding, governance and economic outcomes reflect the real investment arrangement?

From registration checks to coordinated enforcement

The campaign builds on earlier investigations. In March 2026, the Department of Business Development (DBD) referred 15 fruit-packing companies suspected of nominee shareholding to relevant agencies, including the Central Investigation Bureau, the Department of Special Investigation (DSI) and the Anti-Money Laundering Office. The cases illustrate that authorities may examine an entire supply chain, not merely the paperwork of a single company.

On 19 October, the government announced a three-part programme: conclude priority investigations by December 2026; enforce compulsory disposal where land is unlawfully held and monitor buyers; and strengthen preventive checks before and after land transactions. The stated goal is to identify the real beneficiaries and prevent property from simply passing to another nominee. Suspected conduct remains subject to investigation and proof; an announcement or a document request is not a finding of liability.

What the DBD’s 2026 order requires—and what it does not

Central Partnership and Company Registration Office Order No. 2/2569 took effect on 1 August 2026, consolidating and replacing earlier DBD measures. It targets specific incorporation and director-change situations—not every Thai company or every corporate amendment.

At incorporation, the order applies where a new company has mixed Thai and foreign shareholders with foreign ownership below 50%, or is wholly Thai-owned but has a foreign authorised director. Required evidence includes relevant Thai shareholders’ three-month bank statements showing the share-capital payment, the receiving director’s bank evidence of receipt, and an investment statement.

A later change from all-Thai to include a foreign authorised director requires a declaration of genuine investment. For a company incorporated on or after 1 August 2026, making that change within its first year also requires evidence that the company received the capital reported to the DBD, along with an investment statement for the amendment. The precise trigger and required documents depend on the company’s history and filing.

IMPORTANT DISTINCTION: A DBD filing check is not a legal safe harbour. Registration does not establish that an arrangement complies with the Foreign Business Act or Land Code.

The law looks beyond the 51/49 shorthand

The Foreign Business Act B.E. 2542 (1999) restricts foreign participation in activities listed in its schedule unless an applicable permission or exemption applies. Under section 4, a Thai-registered company is generally treated as foreign when foreign persons hold at least half of its shares or provide at least half of its capital, subject to the Act’s detailed definitions and rules. A genuine Thai-majority company with foreign minority investment is not inherently unlawful; the issue is whether Thai shareholders own and invest their shares or merely hold them for a foreigner to evade the Act.

Section 36 makes it an offence for a Thai national or qualifying Thai entity to assist or act as a nominee in a restricted business to enable a foreigner to circumvent the Act; it also applies to the foreigner who allows the nominee arrangement. The penalty may be imprisonment for up to three years, a fine of THB 100,000–1,000,000, or both. A court may order the assistance, operation or shareholding to cease; non-compliance can attract a daily fine of THB 10,000–50,000. Other offences and consequences may apply depending on the facts.

The practical inquiry is holistic. Investigators may compare who supplied capital, whether each Thai shareholder could afford the investment, who bears commercial risk, how profits and losses are allocated, and who makes decisions. A loan or minority-protection right is not automatically improper; it must be assessed in context. Nor does complexity substitute for substance: layered companies or reciprocal holdings may have legitimate commercial purposes, but they do not transform a nominee arrangement into genuine ownership.

Land ownership is a separate legal test

Business permission and land rights should not be conflated. The Land Code defines foreign juristic persons separately. Section 97 includes limited companies where foreign shareholders hold more than 49% of registered capital or account for more than half of shareholders; section 98 applies the test through corporate ownership chains. The Land Code also separately prohibits a person from acquiring land as an agent for an alien or covered juristic person. A company may therefore need a land-law review even where its business structure is assessed under a different threshold.

The October operation makes land a particular enforcement focus, including investigations into beneficial ownership and financial trails. For any company holding land, check its share capital and shareholder headcount, ownership via related companies, the source of acquisition funds, and the property’s actual use and control against the Land Code and any relevant approval or exception. The title deed alone does not resolve the nominee question.

A focused review for existing businesses

A short, evidence-led review can identify issues early. It should test the records against the commercial reality—not seek to manufacture paperwork after the event.

• Capital: Who paid for each share, from what source, and can contemporaneous bank records substantiate it?
• Thai shareholders: Do they hold a real economic interest and participate in risk and return?
• Control: Do board powers, signing authority, reserved matters and day-to-day decisions match the stated ownership?
• Business activity: Is the actual activity restricted under the Foreign Business Act, and if so, what licence, certificate, promotion or treaty route applies?
• Land: Does the company meet the separate Land Code tests, including shareholder count and indirect ownership?
• Records: Are share registers, filings, accounts, bank flows and tax positions consistent?

If a problem appears, obtain Thai legal advice before changing the structure. Lawful remediation may be available, but changes should be prospective, properly documented and consistent with what actually occurred. Backdating or creating artificial evidence can worsen exposure.

Compliance and investment are not opposites

Thailand continues to seek foreign capital through lawful channels. BOI figures show investment-promotion applications totalling THB 1.47 trillion across 1,299 projects in the first half of 2026, up 37% year on year; foreign direct investment applications totalled THB 1.37 trillion. The BOI separately reported approvals for 1,300 projects worth THB 1.31 trillion. Applications and approvals are distinct measures and should not be conflated.

For an eligible activity, lawful routes may include a Treaty of Amity Company, operations under a Foreign Business Licence, a Foreign Business Certificate linked to investment promotion or another statutory route, treaty-based eligibility, or a business model that does not involve restricted activity.

Good Advice Starts Before the Company Is Registered

At Formichella & Sritawat Attorneys at Law, our advice on this has not changed. We were writing about the crackdown on illegal nominee structures in 2025, and the principle long predates it. Where a joint venture makes commercial sense, we encourage genuine Thai–foreign partnerships, with Thai partners who invest real money and take a real part in the business. Where it does not, we look for a lawful route for foreign participation, whether a Foreign Business Licence, a Foreign Business Certificate under BOI promotion, a treaty-based route or a restructured business model.

That conversation can take longer at the outset. It is still far easier than defending a structure after an enquiry has begun.

Where a genuine joint venture is commercially viable, Thai partners should invest real capital and exercise their rights. The appropriate route depends on the activity, ownership and approvals—not on a standard percentage split.

Thailand Remains Open for Foreign Investment

None of this suggests that Thailand is turning away foreign investors. The figures point the other way.

According to the Board of Investment (BOI), investment promotion applications reached THB 1.47 trillion in the first half of 2026, up 37% on the same period of 2025. The BOI approved 1,300 projects worth THB 1.31 trillion. Foreign direct investment applications accounted for THB 1.37 trillion, an increase of 80%, led by digital infrastructure and data centres, with electronics, energy and advanced manufacturing also contributing.

The government is enforcing against nominee structures while actively promoting investment through lawful channels. The two go together.

Every country sets its own terms for foreign participation in its economy. China, for example, restricts foreign ownership in a range of sectors and requires licences in others, and companies investing there accept those rules as a condition of access. Thailand is entitled to the same. Where Thai law requires a licence, BOI promotion or a particular ownership structure, the answer is to find a lawful route into the market rather than to work around the requirement.

Businesses that invest properly, build real local partnerships and meet their obligations stand on firmer ground than those depending on a structure that may not survive examination.

If you have an existing Thai company and are unsure whether its ownership arrangements are compliant, start with our nominee structure assessment or contact our team.

ABOUT THIS ARTICLE   This article is general information, not legal advice. Thai law and administrative practice may change; obtain advice on the facts of any specific business or landholding.

Author

Dr. Paul Crosio
Paul is a practising lawyer and brings over 25 years of hands-on experience in commercial and civil law jurisdictions, including property law, mergers and acquisitions, bankruptcy, and general commercial law. He has worked across the Asia-Pacific region, serving Fortune 50 corporations as Country Head, Corporate Counsel and Chief Financial Officer, and has been appointed Board Member and Executive Chairman of listed companies in Australia, Singapore, and USA. This combination of legal, financial, and boardroom experience gives Paul a well-rounded perspective on transactions—one that extends beyond process and documentation. Paul has held positions on both sides of the table, whether the matter involves property, business acquisition, insolvency, or commercial affairs.