How Can You Tell Whether a Thai Shareholder Is Genuine or a Nominee?
The main indicator of whether a Thai shareholder is a genuine shareholder today is their payment of the company’s registered capital:
- from their own bank account;
- using funds with a confirmed source — such as salary income, proceeds from the sale of real estate, dividends, etc.
For many years, the registration procedure was relatively straightforward for companies with registered capital of up to THB 5 million. At the time of registration, the director would verbally confirm that the founders had paid the registered capital — and that was it. No bank payment receipts were required.
Now, companies that were registered without the registered capital being paid from the founders’ bank accounts may come under suspicion of using nominee Thai shareholders.
Can It Be Proven That All Shareholders Are Genuine Even Without a Bank Transaction Showing Payment of the Capital?
In theory, yes.
The registered capital may have been paid in cash. However, in such a case, supporting documents are required.
What Could Happen If This Cannot Be Proven and the Court Finds That the Company Was Registered Using Nominee Shareholders?
For each identified violation of the Foreign Business Act, fines and/or imprisonment may apply.
This may include, in particular, providing inaccurate information about the payment of registered capital by the director, as well as subsequent changes to the shareholder structure.
At the same time, liability may be imposed on each party according to their respective role: shareholders, the director, and the company.
If the Company Is Unlikely to Pass a Nominee Shareholder Check
It will most likely not be possible to fix the company retroactively.
The company was originally structured the way it is.
The company can be closed, but even this does not provide a 100% guarantee that the documents will not be reviewed in the future.
If the Company Has Already Come Under Review
Check whether you have documents confirming a genuine partnership with the Thai shareholders.
You should contact lawyers and all shareholders — both current and former, if applicable.
It is important to collect and review documents that can confirm the genuine nature of the relationship between the shareholders and the actual participation of the Thai partners in the company.
What Documents Can Confirm a Genuine Shareholder Partnership?
A separate question arises when a company was initially registered as 100% Thai-owned without the registered capital being paid by bank transfer, and one of the Thai shareholders subsequently sold their shares to a foreigner.
In such a case, it is necessary to determine which documents can confirm the genuine nature of the original partnership and the subsequent share transaction.
The exact list of documents must be developed individually for each case. It is possible that you already have the necessary documents and that everything is in order with the company.
Therefore, the absence of a bank transfer at the time the registered capital was initially paid does not, by itself, mean that the company used nominee shareholders. It is important to consider the company’s entire history and all available supporting documents.
The Fight Against Nominee Shareholders Continues
If your company already exists and you understand that its structure may raise questions during an inspection, it is better to review the documents and the history of your relationships with the Thai shareholders in advance.
It is particularly important to understand which documents confirm the genuine participation of each shareholder and the source of the funds used to pay for their shares.
Author: Aleksandra Agapitova.
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