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This article was originally published in May 2025 and has been updated in 2026 to reflect the latest legal developments and regulatory changes regarding nominee shareholders in Thailand.
Nominee shareholders in Thailand are commonly encountered by foreign investors seeking to set up a business in the country. A nominee mechanism involves a Thai citizen who holds assets, shares, or ownership rights in their own name on behalf of another party, typically a foreigner, without exercising actual control or bearing economic risk or receiving benefit from those assets. In the context of nominee shareholders in Thailand, such arrangements are specifically designed to bypass foreign ownership restrictions. However, Thai law strictly prohibits this practice.
Foreign business activities in Thailand are governed by Foreign Business Act B.E. 2542.
The use of nominee shareholders in Thailand to circumvent these regulations is a clear violation of the law and may result in civil, administrative, and criminal penalties for both the foreign investor and the nominee. This practice is a direct offence that can jeopardize the company’s operations, potentially leading to its forced closure and other serious consequences.
In recent years, Thai authorities have significantly intensified enforcement against nominee shareholders in Thailand. In January 2026, approximately 170 officers raided 25 sites on Koh Phangan, including restaurants and hotels, where foreign companies were using Thai nationals as nominees. Companies caught engaging in such practices face heavy fines, corporate dissolution, and asset seizure.
Furthermore, order 1/2569 issued by the Department of Business Development and effective as of April 1, 2026, requires partnerships and limited companies to submit a Written Confirmation of Investment in the prescribed form for any amendments involving foreign participation. This measure ensures that the entry of a foreigner into an existing company is supported by legitimate, documented financial trails, effectively closing the previous loophole where companies could be incorporated with 100% Thai ownership and subsequently amended to introduce foreign involvement without adequate scrutiny.
At Benoit & Partners, we advise foreign investors on the legal risks associated with nominee shareholder arrangements in Thailand. Our team provides guidance on compliance with the Foreign Business Act, lawful ownership structures, and legal alternatives to prohibited nominee practices. We assist clients in mitigating civil, administrative, and criminal exposure.
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Table of Contents
What is a nominee shareholder in Thailand?
A nominee shareholder in Thailand refers to an individual or legal entity that holds shares in name only on behalf of another party, without actual ownership or voting rights. Parties commonly use such arrangements to illegally bypass Thai regulations. These regulations mandate that Thai nationals hold at least 51% of a Thai company’s shares.
Under Section 36 of the Foreign Business Act B.E. 2542 (1999), any Thai individual or entity acting as a nominee shareholder to enable foreign ownership in a restricted sector faces criminal liability. This liability extends to both the Thai nominee and the foreign party involved.
Why do foreign investors use nominee shareholders in Thailand?
The nominee structure is frequently used by investors as an unlawful means to circumvent the restrictions imposed by the Foreign Business Act.
This legislation limits foreign ownership in several sectors, including retail, agriculture, and various service industries. Article 4 classifies a company as foreign if non-Thai nationals hold more than 49% of its shares. To avoid the requirement to obtain a Foreign Business License (FBL) or BOI promotion, some investors resort to using nominee shareholders in Thailand, whereby Thai nationals hold shares on behalf of foreign investors without genuine ownership or control.
What are the sanctions for using nominee shareholders in Thailand?
The use of nominee shareholders in Thailand to conceal foreign ownership is strictly prohibited under the Foreign Business Act. Section 36 specifically targets arrangements where Thai individuals or entities hold shares on behalf of foreign investors to bypass legal restrictions.
Under this provision, both the foreign investor and the Thai nominee may be held criminally liable if the arrangement enables a foreigner to operate a restricted business, falsely present the business as Thai-owned, or otherwise circumvent the Act. Penalties include imprisonment of up to three years, fines ranging from 100,000 to 1,000,000 Baht, or both.
In addition, the court may order the termination of the nominee arrangement, cessation of the business operation, or cancellation of the relevant shareholding or partnership. These measures are intended to ensure transparency and prevent the deliberate evasion of Thailand’s foreign ownership restrictions. Beyond criminal penalties, authorities may invalidate commercial structures established under nominee arrangements, which can lead to the dissolution of the company, its removal from official registers, and administrative sanctions against the responsible parties. Affected companies may be stripped of their legal registration, rendering their operations unlawful and exposing them to the seizure or confiscation of assets.
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How do the authorities detect nominee structures in Thailand?
For companies suspected of using nominee shareholders in Thailand, the Department of Business Development and the Ministry of Commerce actively investigate by examining the financial capacity of Thai shareholders, the origin of funds, and the contracts signed.
What are the legal options for foreign shareholders?
It is possible to obtain a foreign business licence (FBL), although the procedure is lengthy and strict. The FBL is an official authorisation granted by the Department of Business Development under the Foreign Business Act B.E. 2542. It allows a majority foreign-owned company to operate in sectors listed as restricted (lists 2 and 3), provided that it can demonstrate that the proposed operation will not adversely affect the national economy and that it will even bring benefits.
Another legal route is the Board of Investment (BOI). This government entity encourages foreign investment by granting 100% ownership, tax benefits and easier access to work permits. BOI companies are exempt from the Foreign Business Act. BOI promotion is particularly advantageous for companies in sectors such as high-tech, digital, and manufacturing.
A third option is to structure a transparent joint venture with a legitimate Thai partner who genuinely shares in the responsibilities, investments, and profits. In such a structure, the Thai partner is truly involved in the company’s operations, ensuring compliance with local laws while allowing the foreign investor clear and legitimate control over commercial operations.
Finally, investors may also use legal governance mechanisms such as preferred shares or shareholder agreements. These instruments allow the precise definition of each shareholder’s rights and powers, ensuring balanced control while fully respecting Thai regulations.
How can you protect yourself against the illegal use of a nominee shareholder in Thailand?
It is essential to ensure that the funds held by each Thai shareholder are of legal origin and to document everything transparently. Avoid any secret clauses or private documents that could be interpreted as evidence of a hidden agreement.
First, conduct regular audits of existing corporate structures. This involves verifying the actual ownership of companies by examining registration documents, contracts, and management agreements. Such audits help detect irregularities, such as shares held by nominees without real control or non-transparent parallel arrangements.
Second, maintain reliable and up-to-date ownership registers. The company’s legal documents must clearly indicate who actually holds the shares and what each shareholder’s rights are. These registers must be readily accessible to the competent authorities in the event of an inspection. A lack of transparency in the registers may attract regulatory attention and lead to sanctions.
Third, proactively verify the provenance of funds of local shareholders. Thai authorities require clear traceability of invested funds to ensure that no share manipulation is taking place through nominees. Investors must therefore ensure that their Thai partners are not merely intermediaries used to conceal the true ownership of the company
What is the role of law firms?
Navigating the complexities of Thai corporate law requires experienced legal counsel. At Benoit & Partners, we offer tailored legal solutions to foreign investors, including the drafting of essential contracts and verification of compliance with the Foreign Business Act B.E. 2542 (1999). Our team manages applications for Foreign Business Licences and BOI promotion, prepares the necessary files, and communicates directly with the relevant authorities to secure your projects.
Conclusion
In conclusion, Sections 35 to 37 of the Foreign Business Act impose strict penalties for any attempt to establish a front company. The Act explicitly prohibits the concealment of beneficial ownership, with Section 36 specifically addressing the use of nominee structures. Operating through companies with nominee structure in Thailand is both illegal and highly risky, as the law prescribes severe consequences for such violations.
It is therefore strongly recommended to pursue lawful options such as obtaining a Foreign Business License (FBL), securing BOI promotion, or forming transparent and compliant partnerships. Ensuring the legal security of your investment with the guidance of an experienced law firm is essential. At Benoit & Partners, we assist our clients throughout every step of their establishment in Thailand.
If you need further information, you may schedule an appointment with one of our lawyers.
A nominee shareholder in Thailand is a Thai individual or legal entity that holds shares in name only on behalf of a foreign investor, without having genuine economic interest, decision-making power, or exposure to risk. The arrangement is designed to conceal foreign ownership and is strictly prohibited under Thai law.
No. Nominee shareholder structures are explicitly illegal under the Foreign Business Act B.E. 2542 (1999). They are not tolerated as a legal workaround or grey area and constitute a direct violation of Thai law.
Some foreign investors use nominees to unlawfully bypass foreign ownership restrictions under the Foreign Business Act, which generally limits foreign shareholding to 49% in restricted business sectors unless an exemption applies (e.g. Foreign Business License or BOI promotion).
Section 36 of the Foreign Business Act expressly prohibits Thai nationals or juristic persons from acting as nominees for foreigners to enable circumvention of foreign ownership restrictions. The provision applies to both the Thai nominee and the foreign investor.
Both the foreign investor and the Thai nominee face:
Imprisonment of up to three years
Fines ranging from THB 100,000 to THB 1,000,000
Additional daily fines for ongoing violations
Courts may also order the cessation of business operations, forced divestment, or dissolution of the company.
Yes. Authorities have the power to order the closure or dissolution of companies found to be operating through nominee structures, in addition to criminal penalties.
Authorities such as the Department of Business Development (DBD) examine:
The financial capacity of Thai shareholders
The source of funds used to acquire shares
Shareholder loan agreements
Blank or pre-signed share transfer documents
Control over management and bank accounts
If Thai shareholders cannot justify their investment, they may be deemed nominees.
IBAS is a new enforcement system launched by the Ministry of Commerce that integrates data from multiple government agencies to detect nominee businesses more efficiently. Thousands of high-risk companies have already been flagged, significantly increasing enforcement risk.
Thai courts take a substance-over-form approach. If evidence shows that a Thai shareholder has no real investment or control, courts will disregard the formal shareholding and classify the company as foreign. Nominee structures are routinely declared null and void.
Foreign investors may face:
Criminal liability
Heavy fines
Forced divestment
Deportation
Blacklisting or long-term immigration consequences
Using nominees also exposes investors to loss of control, fraud, and unenforceable agreements.