In recent months, concern has grown among foreign investors and business owners in Thailand following reports of investigations into companies suspected of using Thai nominee shareholders.

Foreign-Linked Companies in Thailand: Awareness, Not Panic

In recent months, concern has grown among foreign investors and business owners in Thailand following reports of investigations into companies suspected of using Thai nominee shareholders.

The enforcement activity is real and deserves attention. However, an inspection or investigation is not the same as a finding of wrongdoing, and neither automatically means that every company with foreign participation is at risk of closure.

What Thailand’s international business community needs now is accurate information, responsible compliance reviews and a balanced discussion based on the facts of each case.

The issue is real, but it is not new

Thailand’s Foreign Business Act B.E. 2542 (1999) restricts foreign participation in certain business activities and prohibits arrangements in which Thai nationals hold shares or otherwise assist a foreigner in circumventing those restrictions.

Section 36 is particularly relevant to nominee arrangements. It applies to Thai nationals or juristic persons that assist, participate in or hold shares on behalf of foreigners to enable them to operate a restricted business in circumvention or violation of the Act. It also applies to foreigners who allow such arrangements to be made.

For many years, some companies were established with a nominal 51% Thai shareholding, often intended to keep the company outside the definition of a “foreigner” under the Foreign Business Act.

However, the applicable ownership requirements depend on the nature of the business, the relevant legislation and any licence, certificate, treaty protection or investment promotion available to the company. The often-mentioned 51/49 structure is therefore not a universal requirement for every business activity or every foreign investment in Thailand.

In potentially problematic cases, the Thai shareholding may not reflect genuine economic investment, participation or ownership. It may instead exist primarily to satisfy a formal ownership threshold while the real commercial arrangement remains under foreign control.

That problem should neither be denied nor exaggerated.

The legal question is not simply whether a company has Thai shareholders. It is whether its ownership, funding, voting rights, management and economic benefits reflect a genuine arrangement, and whether the company complies with the laws and permissions applicable to its business activities.

What appears to be changing

The underlying Foreign Business Act is not new. What appears to have changed is the intensity of enforcement, the methods used to identify potentially problematic companies and the level of public attention surrounding the issue.

In April 2025, the Department of Business Development was reported to have revised its screening criteria to cover 46,918 business entities in sectors considered particularly exposed to nominee-related risks.

This figure must be understood accurately.

It did not mean that all 46,918 companies had been accused of wrongdoing, found to be unlawful or selected for the same level of investigation. The figure described the scope of the screening and enforcement framework, not the number of companies already determined to have violated the law.

A company included in an initial screening exercise is not necessarily an illegal company.

Authorities may examine different aspects of a company’s position, including the source of share capital, the financial capacity of Thai shareholders, voting arrangements, management control, bank transactions, beneficial interests, accounting records, actual business activities and compliance with licensing requirements.

The legal and practical assessment therefore depends on the facts and documents of each individual company.

Social media can amplify uncertainty

Investigations, police operations and company closures naturally attract attention online. However, social-media posts frequently fail to distinguish between a preliminary inspection, an investigation, an administrative measure, a prosecution and a final court decision.

These are materially different stages.

Presenting them as interchangeable can create the impression that all foreign-linked companies are being treated as illegal, even when the available information may concern only a limited number of businesses or a specific type of conduct.

Company closures and enforcement operations become news. The many businesses that continue to operate normally, employ staff, pay taxes and comply with their obligations rarely receive the same public attention.

This can create a distorted perception in which problematic cases appear to represent the entire Thai business environment.

They do not.

The opposite mistake should also be avoided. A company is not necessarily compliant simply because it has operated for many years or because a similar structure was commonly used or recommended in the past.

Historical practice is not, by itself, evidence of present legal compliance. The correct response is a documented and independent review—not speculation, denial or panic.

Not every company is in the same position

A deliberately artificial nominee arrangement, a company operating without a required Foreign Business Licence or certificate, a business with incomplete corporate documentation and a genuine compliant enterprise are not legally identical situations.

Some foreign investors have built legitimate businesses in Thailand, invested substantial capital, employed Thai workers, paid taxes and contributed to the country’s economy.

Others may have relied on structures that were widely marketed or recommended without fully understanding the associated risks. These circumstances may be relevant to understanding how a particular arrangement was created, but they do not eliminate the need to examine the company’s actual ownership, activities and conduct.

At the same time, having a foreign shareholder, director, manager or source of investment does not, by itself, prove that a nominee arrangement exists.

The appropriate approach is an individual assessment based on evidence.

Relevant questions may include:

• Did the Thai shareholders genuinely invest their own capital?
• Can the source of their investment be documented?
• Do they bear the economic risks and receive the economic benefits associated with ownership?
• Do voting and management rights correspond with the corporate documents and actual conduct of the company?
• Are there private agreements, loans, powers of attorney or pre-signed transfer documents that change the practical effect of the registered shareholding?
• Does the company conduct an activity restricted under the Foreign Business Act or another law?
• Has the company obtained every licence, certificate or permission required for that activity?
• Do its accounting, tax, employment and corporate records accurately reflect its real operations?

The answers will not be identical for every company. The consequences should not be assumed before the relevant facts have been examined.

Thailand is not closing its doors to legitimate foreign investment

Stricter enforcement should not be interpreted, without further evidence, as a general policy of hostility towards foreign investors.

Thailand continues to promote investment, employment, technology, innovation and international business. According to the Thailand Board of Investment, applications for investment promotion in the first half of 2025 reached THB 1.06 trillion, an increase of 139% year on year. Foreign direct investment applications accounted for approximately 70% of the total value.

These figures do not resolve the legal risks faced by individual companies. Applications for BOI investment promotion are also not equivalent to the entire volume of foreign investment in Thailand.

They do, however, provide relevant context.

Enforcement against unlawful structures and the attraction of legitimate foreign investment can exist at the same time.

The apparent policy direction is towards greater transparency and more effective enforcement, rather than the elimination of international investment as such. That distinction matters both for investors and for the credibility of Thailand’s business environment.

Turning the present situation into a general confrontation between Thailand and foreigners helps no one. It creates uncertainty, encourages uncontrolled rumours and may lead investors to make important decisions under unnecessary pressure.

Review the situation, but do not panic

Business owners should not ignore the present enforcement climate. At the same time, they should not close a company, sell an investment or leave Thailand solely because of an unverified social-media post or forwarded message.

A sensible first step is an independent corporate review conducted by qualified Thai legal and accounting professionals.

The review should consider, where relevant:

• the company’s shareholding history;
• capital contributions and supporting payment records;
• the source of shareholder funding;
• voting rights and shareholders’ agreements;
• directorships and management control;
• beneficial interests;
• private agreements connected to the shares;
• business licences and certificates;
• tax and accounting records;
• employment arrangements;
• land or property ownership;
• and material commercial contracts.

Requesting a corporate review is not an admission of wrongdoing. It is a responsible way to understand the company’s position, identify weaknesses and evaluate lawful options.

If problems are identified, they should be addressed professionally and without unnecessary delay. If the corporate structure is genuine and compliant, the supporting evidence should be maintained clearly, accurately and consistently.

Any restructuring must also be carefully designed and properly implemented.

Simply transferring shares, replacing shareholders or preparing new documents without appropriate professional advice may create additional risks rather than resolve the original problem. A compliance review should not be used to disguise an existing arrangement. Its purpose should be to establish whether the company can continue to operate on a genuine, transparent and lawful basis.

More responsibility, less fear

The current inspections are an important signal that corporate transparency and compliance deserve serious attention. They are not, by themselves, evidence that foreign investment in Thailand is ending.

It is appropriate to discuss nominee structures honestly and encourage investors to examine their arrangements. It is not helpful to treat every foreign business owner as automatically guilty or every company with Thai shareholders as unlawful before the facts have been assessed.

Thailand remains a market with significant economic opportunities.

As enforcement develops, companies should respond with better records, genuine ownership, accurate disclosures and qualified professional advice.

Investors should be informed, review their position and correct what needs to be corrected. But they should not allow unverified reports or generalised social-media commentary to create a climate of fear.

Greater transparency does not weaken responsible foreign investment. It protects legitimate businesses and contributes to a more stable and credible business environment for everyone.

Awareness, not panic. Responsibility, not fear.