In light of recent developments, it is important to revisit the issue of Thai shareholders. Although the events of May–June 2024 may have faded from attention, that period marked the beginning of active inspections of companies in Phuket, later extending to Samui and Phangan. Regulatory focus may now shift to Pattaya, where properties in the Thai quota are typically registered in the name of Thai individuals or Thai companies, and leasehold structures are generally not used.
What is the core issue?
Most companies are unable to obtain a Foreign Business License (FBL) and are therefore required to qualify as Thai companies — meaning that more than 50% of shares must be held by Thai nationals.
However, in many cases, these Thai shareholders may be recognized as nominees.
Who are nominee shareholders?
A nominee shareholder is a Thai citizen who formally holds shares in a company but does not exercise real control. In reality, the business is controlled by a foreigner, and the structure is used to bypass restrictions on foreign ownership.
This constitutes a violation under Section 37 of the Foreign Business Act. Both parties — the foreigner and the Thai shareholder — bear responsibility.
Penalties include:
- a fine from 100,000 to 1,000,000 THB
- and/or imprisonment for up to 3 years
How to prove that a Thai shareholder is not a nominee?
There is no single “test” to prove genuine ownership, but certain documents significantly strengthen the position:
- Proof of source of funds of the Thai shareholder (income, family funds, loan)
- Memorandum of Association and shareholder agreements
- Evidence of share capital payment (bank transfers, receipts)
- In case of shareholder changes — share purchase agreement, bank transfer, payment receipt
- If share capital is not used in business operations and is not held in the company account — a loan agreement with the director (common among SMEs)
Conclusion
Using nominee shareholders is a high-risk structure that may lead to serious legal consequences.
Proper documentation and a transparent ownership structure are critical to demonstrating compliance with Thai law.
Author: Alexandra Agapitova.
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