For many years, foreign investors in Thailand were told a very simple story. Put 51% of the shares in Thai names, keep 49% in foreign hands, and the company will be safe. That approach was never legally sound, and in 2025 and 2026 it has become even more dangerous. The Department of Business Development, working with police and other agencies, has moved from general warnings to targeted enforcement, enhanced registration scrutiny, and public statements that nominee structures will be pursued more aggressively. The issue is no longer what the shareholder list says on paper. The issue is who actually paid, who actually controls, and who actually benefits from the company.
Thailand’s nominee crackdown is no longer theoretical
Recent enforcement has changed the risk calculation
The nominee issue is not just a theoretical compliance topic anymore. In late 2025 and early 2026, the DBD publicly escalated enforcement by coordinating with the Central Investigation Bureau, warning accounting-sector intermediaries not to help foreigners source Thai nominees or open so-called corporate mule accounts, and announcing deeper scrutiny of sectors long associated with nominee risk, especially tourism, real estate, and agricultural trading. In March 2026 alone, the DBD publicized a coconut-sector probe that found six entities suspected of nominee conduct, a Pattaya operation that reportedly identified more than 100 companies for deeper investigation, and a further tightening of anti-nominee measures announced on 24 March 2026.
Why this matters for foreign investors and mixed Thai-foreign companies
The practical message is straightforward. The Registrar and the enforcement agencies are looking beyond nominal share percentages. They are examining the source of funds, the actual authority structure, the office location, the credibility of Thai shareholders, and the commercial reality of who is running the business. A company can look “Thai” on paper and still be treated as a problematic foreign-controlled structure if the facts show that the Thai shareholders are only fronts.
The legal framework behind 51% Thai ownership and nominee prohibition
The Foreign Business Act is the starting point, but not the whole story
The Foreign Business Act B.E. 2542 is the statute that most foreign investors think of first. Under section 4, a “foreigner” is not limited to a foreign individual or a company incorporated abroad. It also includes Thai-incorporated entities that are foreign-held or foreign-invested at 50% or more, including through indirect holding structures. The Act then divides restricted businesses into three lists. List 1 contains businesses foreigners are prohibited from operating because of special reasons. List 2 contains businesses connected to national safety, culture, natural resources, or crafts, and approval is more tightly controlled. List 3 contains businesses in which Thai nationals are considered not yet ready to compete, and foreigners generally need permission before operating them.
That framework is important, but it also creates a common mistake. Some investors assume that staying just below 50% foreign shareholding automatically solves the problem. It does not. The FBA’s formal definition of “foreigner” is only one part of the analysis. When nominee conduct is alleged, the courts and the DBD look at the substance of the arrangement, not only the share register.
Nominee conduct creates criminal and civil risk
The DBD’s own recent warnings repeatedly describe the prohibited conduct in practical terms. Thai persons who help, support, or hold shares on behalf of foreigners so that foreigners can carry on restricted business may face liability under section 36 of the Foreign Business Act. Foreigners who operate restricted businesses without the required permission may face liability under section 37. In the DBD’s recent public statements, the agency again stressed the exposure to imprisonment of up to three years and fines ranging from THB 100,000 to THB 1,000,000, with possible daily fines continuing while the violation persists.
The Civil and Commercial Code matters because sham structures can be void
This is where many “private arrangements” fail. Even if the company paperwork looks neat, side agreements can collapse if their purpose is unlawful. Section 150 of the Civil and Commercial Code provides that an act is void if its object is prohibited by law, impossible, or contrary to public order or good morals. Section 155 also becomes relevant where one document is only a simulated act concealing the true transaction. In nominee disputes, courts do not stop at the label on the paper. They test whether the paper reflects reality.
The Land Code becomes critical when land is involved
When a company is used as a front to hold land for foreigners, the risk becomes even more severe. Section 86 of the Land Code restricts foreign land ownership, and the Supreme Court has shown that it will unwind land transactions where a Thai company is only a nominee vehicle for foreign control. In those cases, the land transaction itself can be declared void and the title can be cancelled.
The orders and court decisions that are shaping the current crackdown
Central Partnership and Company Registration Office Order No. 205/2555
Order No. 205/2555 was the older, long-standing registration control. In substance, it required evidence of the financial standing of Thai shareholders when a company had foreign participation below 50% or where a foreigner had signing authority, so that the Registrar could examine whether the Thai shareholding was real and adequately funded. DBD registration manuals and guidance materials continued to reference this order for years as the baseline anti-nominee screening tool at the incorporation stage.
The problem with the old framework was not that it was meaningless. It was that it was easier to satisfy formally than to test substance deeply. It focused on proof of financial standing, but it did not yet impose the more specific three-month bank statement tracing that the DBD has now moved to.
Central Partnership and Company Registration Office Order No. 1/2567
Order No. 1/2567, signed on 23 May 2024 and effective from 1 July 2024, tightened the evidentiary regime for incorporations, capital increases, and mergers involving registered capital above THB 5 million. The order requires bank evidence showing receipt of share payments and, after registration, follow-up evidence within 15 days confirming that the partnership or company actually received the money collected by the managing partner or director. Where non-cash consideration is used, supporting ownership and transfer documents must also be supplied. If the additional evidence is not filed in time, the Registrar may place a cautionary notation on the company’s record that proof of actual share payment was not submitted.
The legal significance of this order is that it shifts the inquiry from a mere statement that capital exists to documentary proof that share capital was actually paid and reached the company. That matters in nominee cases because fake Thai majority structures often break down when regulators ask not who owns the shares in theory, but who actually sent the money and when.
Central Partnership and Company Registration Office Order No. 2/2568
Order No. 2/2568 is currently the most important verified anti-nominee registration order. It expressly repealed Order No. 205/2555, was signed on 9 December 2025, and took effect on 1 January 2026. It requires an applicant to submit supporting evidence for every Thai shareholder in relevant cases, together with bank statementsย้อนหลัง three months from the account used to pay for the shares. The statement must show a withdrawal or transfer corresponding to the amount invested or the share value, and corresponding to the timing of that payment.
In practical terms, this is a major tightening. A one-day transfer, a round-trip transfer, or an unexplained influx of funds shortly before incorporation is now much easier for the Registrar to question. Order No. 2/2568 is the clearest official sign that the DBD is moving from “show some money” to “show the real source and movement of the money.”
Recent DBD announcements in 2025 and 2026
The administrative orders are only one half of the picture. The other half is enforcement posture. In December 2025, the DBD publicly warned accounting intermediaries not to assist nominee structures. In January 2026, it announced intensified coordination with the Central Investigation Bureau. In March 2026, it publicized enforcement in the coconut-trading sector, tourism and real estate in Pattaya, and then announced additional new anti-nominee measures on 24 March 2026. For anyone still treating nominee compliance as a low-probability issue, that sequence of announcements should end the debate.
Supreme Court Decision No. 17923/2557
The problem in Supreme Court Decision No. 17923/2557 was simple in appearance and serious in consequence. Foreign buyers used a Thai company to acquire land, with Thai nationals holding the majority on paper. The court examined the funding and control and concluded that the Thai shareholders were merely nominees and that the foreigners were the real acquirers. Under section 86 of the Land Code and section 150 of the Civil and Commercial Code, the arrangement was treated as an illegal circumvention. The result was drastic: the transaction was voided and the land titles were cancelled.
The reasoning matters because it confirms the substance-over-form approach. A Thai majority on paper did not save the structure. The court asked who supplied the capital and who controlled the venture in reality. That remains one of the clearest judicial warnings for land-holding companies and property structures in Thailand.
Supreme Court Decision No. 5457/2560
Supreme Court Decision No. 5457/2560 is especially important because it shows how nominee structures often hide behind private contracts. The dispute involved a purported loan, but the evidence showed that the “loan” was actually a simulated arrangement concealing the foreign acquisition of a Thai company, with Thai nationals holding shares only in name. The Supreme Court held that the arrangement was designed to evade the Foreign Business Act, treated it as unlawful, and applied section 150 of the Civil and Commercial Code. The court therefore refused to enforce the supposed loan and treated the underlying arrangement as void.
The syllogism is direct. If the true objective of the contract is to evade a law that restricts foreign business ownership, the court will not rescue the structure by enforcing a side agreement drafted to disguise it. In other words, a nominee structure is not made safer because it is hidden behind a shareholder loan, share pledge, or separate purchase arrangement. Often, that just creates more documents that can later be used against the parties.
Supreme Court Decision No. 2252/2560
Supreme Court Decision No. 2252/2560 is frequently cited for the same core principle, even though the facts are different. According to the available case summaries, an offshore investor funded a Thai vehicle that acquired land for a commercial project while appearing to hold only a minority stake on paper. The court looked past the formal share percentage and focused on who funded the project, who controlled the business, and who was entitled to the economic benefit. The company was treated as a de facto foreign entity, and the land transaction was voided.
That is why the real legal question is never only “Do the Thai shareholders hold 51%?” It is also “Do they hold real ownership, real risk, real economic benefit, and real participation?” If the answer is no, the paper percentage becomes much less persuasive.
Practical ways to stay out of trouble
1. Start by checking whether the business really needs a Thai-majority structure at all
One of the best ways to reduce nominee risk is not to build a nominee-risk structure in the first place. Many investors fall into trouble because they assume every business in Thailand must be set up as 51% Thai and 49% foreign. That is wrong. Some business models fall outside the restricted lists. DBD consultation summaries show, for example, that pure export can fall outside the annexed restricted business lists, and DBD materials also show that manufacturing activities may fall outside the annexed lists depending on the actual business. In addition, the DBD now publishes approval guidelines for certain intra-group services and related support activities.
That means the first legal question should not be “Who can hold the Thai 51%?” The first legal question should be “What is the business, exactly, and does it truly require a Thai-majority structure under the FBA?” If the activity is lawful for a fully foreign-owned company, or can be conducted through a lawful foreign business license, BOI route, treaty route, or properly limited group-service structure, then the safest solution is usually to structure it honestly from the beginning.
2. Use a real office and a real operational footprint
A company that exists only on paper is easier to attack. Registration materials already require headquarters details, maps, and in many cases supporting premises documents. From a risk-management perspective, the company should use a real operating location, and ideally a location that is genuinely connected to the company’s activities. A registered address that exists only to process paperwork, with no real business footprint and no coherent explanation of operations, can become part of the larger nominee picture.
3. Do not strip the Thai majority of real rights
A common error is to assume that as long as Thai names appear on 51% of the shares, the rest can be engineered away through governance mechanics. That is dangerous. The safer approach is to avoid shareholder and articles structures that deprive the Thai majority of real voting rights, real dividend rights, or real participation in the appointment and removal of directors. The courts consistently look to real funding, real control, and real economic benefit. A structure designed so that the Thai 51% is only decorative is exactly the kind of structure that attracts scrutiny.
4. Make sure the Thai shareholders can prove real financial capacity
Under Order No. 2/2568, Thai shareholders in the relevant mixed-ownership cases now need bank statements covering the prior three months from the account used to pay for the shares, with transactions matching the investment amount and timing. That makes it essential that the Thai shareholder has a real, explainable financial profile. In practice, that means lawful income, tax filings where applicable, savings or assets consistent with the investment, and a documentary trail that does not look borrowed, circular, or staged for registration day.
For that reason, it is prudent to ensure that a Thai shareholder is not just theoretically able to invest, but can actually explain the investment. Can the shareholder show salary, business income, dividends, savings, asset disposals, or other legitimate sources of funds? Can the shareholder explain why they invested, what rights they have, and how the company operates? Those questions matter much more now than they did a few years ago.
5. The Thai shareholders must be reachable, informed, and involved
A Thai shareholder should not be a ghost. They should be reachable, know the business, understand their role, and be able to answer basic questions about what the company does, who the customers are, and why they invested. With the DBD now openly talking about stricter anti-nominee measures and closer verification, it is increasingly risky to use Thai shareholders who cannot be found, do not understand the business, or are only present when signatures are needed.
6. Keep signed minutes, attendance records, and proper internal governance
Good governance is not cosmetic. It is evidence. Annual general meetings and extraordinary general meetings should be properly convened, attendance lists should be signed, minutes should accurately reflect the decisions made, and the Thai shareholders should actually participate in those decisions. If the structure is ever challenged, these records help demonstrate that the Thai shareholders were genuine owners taking part in the company’s affairs rather than nominal holders used to fill a legal gap.
7. Let the economics match the paper
If Thai shareholders really own 51%, the economics should normally look like it. Where dividends are declared, they should be paid consistently with the actual shareholding unless there is a lawful and commercially defensible reason otherwise. The same principle applies to board influence, access to information, and exposure to risk. A company in which the Thai shareholders “own” 51% but never receive returns, never attend meetings, never influence decisions, and never know what the company is doing is structurally vulnerable.
8. Keep proof that the Thai shareholders actually paid for their shares
This point is now critical. The director should retain proof that the Thai shareholder’s capital contribution was really made, that it was funded by the Thai shareholder, and that it reached the company or the authorized recipient for the company. The transfer or deposit record should match the subscribed amount and the timing. The supporting bank statement should be the Thai shareholder’s statement, not merely the company’s statement. Under Order No. 1/2567 and Order No. 2/2568, the paper trail around share payment is no longer a secondary issue. It is central.
What foreign investors should take away from all this
The central lesson is that 51% Thai ownership is not a legal safe harbor. It is only a number. If the Thai shareholder is real, funded, informed, involved, and economically genuine, the structure may be defensible. If the Thai shareholder is merely lending a name, signing where told, and holding rights for someone else, the structure can collapse under both regulatory scrutiny and court review. The DBD’s recent orders and announcements show that Thailand is moving toward deeper verification of that distinction, not away from it.
For that reason, the best legal solution is usually not to ask how to hide a foreign-controlled business behind Thai names. The best solution is to identify the real business activity, determine whether it is restricted, and then choose a lawful structure that matches commercial reality, whether that means full foreign ownership, a foreign business license, BOI promotion, treaty-based certification, or a genuinely Thai-majority company with real Thai investors.
At Juslaws, this is the difference between template company registration and actual legal structuring. A serious review should test the business activity, the ownership reality, the evidentiary trail, the internal governance, and the sector-specific risks before the company is formed or amended. That approach is far cheaper than trying to defend a weak nominee structure after a complaint, a DBD review, a police referral, or a court dispute.
Frequently asked questions
Q: Is 51% Thai shareholding automatically enough to make a company safe?
A: No. The share percentage alone is not enough. Thai regulators and courts can look at who funded the shares, who controls the company, and who receives the real benefit. The recent DBD registration orders and Supreme Court decisions show a consistent substance-over-form approach.
Q: Are nominee shareholders illegal in Thailand?
A: Where Thai persons hold shares for foreigners in order to let foreigners carry on restricted business, the structure can create liability under the Foreign Business Act. The DBD’s recent public statements expressly frame helping, supporting, or holding shares on behalf of foreigners as nominee-type misconduct, with criminal exposure for both Thai participants and foreign operators.
Q: Can a side loan agreement protect a foreign investor who uses Thai nominees?
A: Usually, that makes the position worse, not better. In Supreme Court Decision No. 5457/2560, the court treated the supposed loan as part of a simulated arrangement designed to evade the law and refused to enforce it.
Q: Can a Thai company holding land for foreigners lose the land?
A: Yes. That is one of the clearest risks. In Supreme Court Decision No. 17923/2557, the court treated the Thai company as a nominee vehicle for foreign land ownership, declared the transaction void, and ordered cancellation of the title.
Q: Do Thai shareholders now need bank statements when a mixed Thai-foreign company is incorporated?
A: In the situations covered by Order No. 2/2568, yes. The order requires three months of bank statements from the Thai shareholder account used to pay for the shares, with transactions matching the investment amount and timing. In higher-capital cases, Order No. 1/2567 also requires stronger bank evidence of actual share payment into the company structure.
Q: Can a foreigner still own 100% of a Thai company?
A: Sometimes, yes. The answer depends on the actual business. Some business activities fall outside the FBA’s restricted lists, some can be licensed, some may be approved under BOI or treaty routes, and some intra-group service models can be structured lawfully if they fit the DBD’s published approval approach.
Q: Is export a safer business model for a foreign-owned company?
A: It can be. DBD consultation summaries indicate that pure export may fall outside the annexed restricted business lists, whereas domestic sale of the same products may trigger different analysis. The structure has to be checked carefully against the real activity, not just the company objectives.
Q: What records should a company keep to reduce nominee risk?
A: At minimum, the company should keep clear proof of who funded the shares, bank transfer records, shareholder identification and financial support documents, signed minutes and attendance lists, proper corporate records, premises documents, and evidence showing that any dividends or economic rights are handled consistently with the actual shareholding. That evidence becomes crucial if the structure is questioned.
Q: What happens if the DBD believes a company is using nominees?
A: The result can range from refusal or warning flags at registration stage, to deeper investigation, referral to enforcement agencies, criminal exposure under the Foreign Business Act, business closure in serious cases, and in land cases even cancellation of title. Recent DBD announcements and recent reported enforcement actions show that the risk is real and immediate.
