Thinking of putting your shares in a Thai friend’s name to get around ownership rules?
It’s one of the most common questions we hear. And the answer is always the same: don’t do it.
Not because it’s complicated. Because it’s illegal. And Thai authorities are now cracking down on it harder than ever before. Here’s everything you need to know.
What Is the Foreign Business Act?
The Foreign Business Act B.E. 2542 (1999), known as the FBA, is the law that controls how much of a Thai company a foreigner can own.
The rule is straightforward: as soon as foreign shareholders hold 50% or more of a company’s shares, that company is classified as “foreign” under Thai law. And that classification comes with restrictions.
The FBA organises restricted business activities into three lists:
- List 1: completely off-limits to foreigners. No exceptions. This includes land trading, newspaper publishing, and rice farming.
- List 2: restricted sectors where Cabinet approval is required.
- List 3: a broader category of commercial and service businesses where foreign participation is allowed, but only with a proper licence.
Most of the businesses foreign investors want to open in Thailand (restaurants, retail, tourism, logistics, real estate services) fall somewhere on these lists. That’s exactly why the nominee structure became so common. It looks like a shortcut.
It isn’t. It’s a trap.
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What Is a Nominee Shareholder and Why Is It Illegal?
A nominee shareholder is a Thai national who holds shares in a company on behalf of a foreign investor. On paper, the company looks Thai-owned. In reality, the foreigner controls it.
The goal is to fake compliance with the FBA’s 49% ownership limit.
Section 36 of the FBA makes this a criminal offence. The law is explicit: Thai nationals cannot lend their name to a foreigner to hold shares. Foreigners cannot use this kind of arrangement to bypass ownership restrictions. Both sides are liable.
The penalties are serious:
- Up to 3 years in prison
- Fines between THB 100,000 and THB 1,000,000
- Daily fines of THB 10,000 to THB 50,000 if the arrangement continues after a court order
- Forced dissolution of the company
- Deportation for the foreign national involved
These aren’t theoretical consequences. Thai courts have handed down all of them, including prison sentences and business shutdowns, in real cases.
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2026: The Crackdown Is Real and It’s Accelerating
For years, enforcement of the FBA’s anti-nominee rules was patchy. That era is over.
Since 2024, the Department of Business Development (DBD), the Department of Special Investigation (DSI), the Anti-Money Laundering Office (AMLO), and the Royal Thai Police have been working together to identify and prosecute nominee arrangements across the country.
The numbers are striking:
- 46,918 companies flagged for investigation across seven provinces
- 860+ cases formally prosecuted between September 2024 and May 2025
- THB 15 billion in estimated economic damages from those cases alone
On 1 January 2026, DBD Order No. 2/2568 came into force. Under this rule, Thai shareholders in companies where foreigners hold less than 50%, or where a foreigner is an authorised signatory, must now provide bank statements showing genuine funds from a traceable source. The DBD says this single measure cut nominee registration attempts by around 65%.
And it’s not stopping there. In early 2026, the DBD convened a meeting with 17 law firms to finalise new rules aimed at tightening oversight. The direction is clear: Thailand is moving from checking paperwork to verifying real ownership, real money flows, and who actually runs the company.
To help identify suspicious structures, the DBD has deployed the Intelligence Business Analytics System (IBAS), an automated tool that flags patterns like:
- The same Thai person appearing as a shareholder in dozens of unrelated companies
- Nominees whose jobs have nothing to do with the industry they supposedly invested in
- Shareholders who never attend meetings or receive dividends
If your company fits one of these patterns, it’s likely already on a list.
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It’s Not Just New Companies at Risk
Here’s something many existing business owners don’t realise: the new rules apply to companies that are already operating, not just ones being set up today.
Changing a director. Updating your authorised signatory. Modifying who can sign on the bank account.
All of these routine administrative steps can now trigger a review. If a Thai shareholder can’t prove their investment is genuine, the DBD may refuse to process the change and refer the case for investigation.
In other words: every interaction with the DBD is now a potential risk for companies using nominee structures. Not just audits. Every single filing.
So How Can Foreigners Legally Own a Business in Thailand?
Thailand absolutely wants foreign investment. There are several well-established, fully legal pathways to own or operate a business here without nominees, without shortcuts, and often with significant benefits attached.
Find a genuine Thai partner, and take your time doing it
For most small and mid-sized businesses, this is the most straightforward path, and arguably the most important advice. A real Thai partner brings more than legal compliance: they bring local knowledge, networks, and credibility. The key word here is genuine. This isn’t about finding a nominee to tick a box, it’s about building a real business relationship with someone who is truly invested in the project. It takes time, but it’s worth it.
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BOI Promotion
The Board of Investment (BOI) is a government agency that promotes investment in priority sectors. BOI-approved companies can be 100% foreign-owned, and the benefits go well beyond ownership:
- Corporate income tax exemptions of up to 13 years
- Import duty relief on machinery and raw materials
- The right to own land
- Faster work permit processing
BOI promotion isn’t just for tech companies or factories. It covers digital services, business outsourcing, agri-tech, green energy, and regional headquarters. For many foreign businesses, this is the strongest route to full ownership.
Foreign Business Licence (FBL)
If your business falls under List 3 of the FBA and doesn’t qualify for BOI promotion, a Foreign Business Licence lets you operate legally with majority or full foreign ownership.
The application goes through the Ministry of Commerce’s Foreign Business Committee and typically takes three to six months. Approval isn’t guaranteed, but for businesses that can demonstrate genuine economic value (job creation, technology transfer, investment) it’s a clean, legally solid path.
Representative Office
Not ready to commit to full operations? A Representative Office lets a foreign company establish a local presence in Thailand for non-commercial purposes: market research, sourcing, support for the parent company abroad.
It can’t generate revenue in Thailand, but it can be 100% foreign-owned. It’s a practical way to test the market before going all-in.
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Eastern Economic Corridor (EEC)
The Eastern Economic Corridor is a special investment zone covering Chonburi, Rayong, and Chachoengsao. Companies in targeted industries investing in the EEC can access enhanced BOI incentives on top of the standard package. A strong option for manufacturing, logistics, and tech projects.
US-Thailand Treaty of Amity
American investors have an additional card to play. The Treaty of Amity (1966) allows US citizens and US-majority-owned companies to operate in Thailand almost like a Thai company, with the right to own up to 100% of their business in most sectors. A few areas are excluded (media, land transport, agriculture), but most service businesses qualify.
Which Structure Is Right for You?
There’s no universal answer. It depends on your industry, your nationality, how much you’re investing, and your long-term plans.
A manufacturer exporting goods abroad plays by different rules than a restaurant owner in Bangkok or a software company in Chiang Mai. An American entrepreneur has options that a French or German investor doesn’t.
What’s always true: get proper legal advice before you register, not after. The rules are specific. They’re changing fast. And a structural mistake made at incorporation is far more expensive to fix three years down the line than it is to avoid at the start.
The Bottom Line
Nominee shareholder structures are no longer just risky. They are actively prosecuted, with tools, resources, and inter-agency coordination that didn’t exist five years ago.
Both the Thai nominee and the foreign investor face real consequences. Prison time. Heavy fines. Company closure.
The legal routes exist. They work. And in many cases, especially with BOI promotion, they come with advantages that a nominee structure could never offer.
At Gorioux Siam, we help foreign investors set up in Thailand the right way. No shortcuts. No risky workarounds. Just clean, compliant structures that protect your investment from day one. Whether you’re starting fresh, reconsidering an existing setup, or just trying to understand your options, we’re here to help.
This article is for general information only and does not constitute legal advice. Foreign investment rules in Thailand can change. We recommend speaking with a qualified professional before making any decisions about your company structure.
