Legal
The Risks of Using Nominee Shareholders in 2025
TL;DR: Shareholders in Thailand face restrictions under the Foreign Business Act. Using nominee shareholders is illegal and risky, but legal options like BOI, IEAT, EEC, Treaty of Amity, and genuine local partners provide safe pathways for foreign ownership.
Thailand continues to be an attractive destination for foreign investors, offering a wide range of business opportunities. However, the ability of foreigners to operate a business with 100% or majority foreign ownership is often restricted by the Foreign Business Act.
While the BOI, IEAT, and EEC offer the possibility for 100% foreign ownership, these options may not be available for every business or activity. If such a promotion is not possible, foreign ownership is generally capped at 49%. To bypass these restrictions, some foreign investors may attempt to use a nominee shareholder. However, this practice is illegal.
In this blog post, we will explore what a nominee shareholder is, why it is illegal, and alternative options to consider.
Key Points
- Foreign businesses in Thailand are restricted by the Foreign Business Act, which caps foreign ownership at <50% for approximately 50 types of business activities.
- Using nominee shareholders to bypass foreign ownership restrictions is illegal and actively investigated, with over 26,000 businesses suspected of nominee activity in 2024 and violators facing fines and imprisonment.
- Manufacturing and export companies can be 100% foreign-owned, with export businesses required to sell exclusively to international markets.
- Legal pathways for 100% foreign ownership include BOI promotion, IEAT, EEC, and the Treaty of Amity (for U.S. citizens only), though Foreign Business Licenses are rarely granted.
- Representative Offices allow 100% foreign ownership but cannot generate revenue or engage in profit-making activities, serving only as liaison offices for foreign headquarters.
Can Businesses be 100% Foreign Owned in Thailand?
There is often a misconception among foreign investors that a Thai partner is always required when operating a business. However, under the Thai Civil and Commercial Code, companies can be 100% foreign-owned and are not required to have a Thai Partner.
However, the ability for a company to operate as a foreign owned business depends on the business activities the company plans to undertake.
In Thailand foreign businesses are subject to the Foreign Business Act of 1999 (FBA). The FBA specifies which business activities foreign investors can participate in and the conditions under which foreign businesses can operate in Thailand.
The FBA restricts foreign companies from undertaking about 50 types of businesses, including some of the more popular options for foreign investors, such as hotels, service activities, real estate, restaurants and coffee shops etc. For these 50 restricted business activities established under the FBA, foreign ownership of a limited company is capped at a maximum of 49.99% (unless a Foreign Business Licence or a BOI promotion has been obtained). Therefore, a Thai partner will be required to hold the majority share.
Business Activities that allow 100% Foreign Ownership
Potential options for 100% ownership as foreigner includes:
Export Companies
One of the easiest options for 100% ownership is an export business. Thai law actively encourages exports, and companies who only export products outside Thailand are eligible for full foreign ownership. Export companies must ensure their operations and revenue are strictly international, and they can’t sell directly to the Thai domestic market.
Manufacturing Companies
Manufacturing companies can generally be 100% foreign-owned in Thailand. Unlike many other business activities, manufacturing is not on Thailand’s “restricted” list for foreign ownership under the Foreign Business Act (FBA). This allows foreign investors to own and operate manufacturing businesses without needing a Thai partner.
Another advantage for manufacturing companies is their eligibility for a BOI promotion. BOI promotions offer many advantages including different types of tax exemptions including Corporate Income Tax exemptions and tax exemptions on import of machinery. BOI promotions can also allow full foreign ownership and the ability to own land which can be used for their factory etc.
Read more:
What is Considered A Foreign Owned Business in Thailand?
The FBA restricts foreigners or foreign owned companies from undertaking over 50 categories of business activities in Thailand. But what does the FBA consider a ‘foreigner’ or ‘foreign owned company’?
Section 4 of the FBA states the following:
1) A natural person who is not of Thai nationality;
2) A juristic person not registered in Thailand;
3) A juristic person registered in Thailand, being of the following descriptions:
Being a juristic person at least one-half of capital shares of which are held by persons under (1) and (2) or a juristic person in which over 50% of the total capital investment has been placed by the persons under (1) or (2); and
Being a limited partnership or a registered ordinary partnership, the managing partner or the manager, of which is the person under (1).
4) A juristic person registered in Thailand with at least one-half of the capital shares of which are held by persons under (1), (2) or (3) or a juristic person in which investment has been placed by the persons under (1), (2) or (3) in the amount at least equivalent to one half of the total capital thereof.
What are Nominee Shareholders?
A nominee shareholder is a Thai person or company that is registered as a shareholder in a company but does not actually have any real financial stake or interest in the company. Essentially, the nominee shareholder holds the shares on behalf of a foreigner who is the actual owner. The use of nominee shareholders by foreigners is strictly prohibited under Thailand’s Foreign Business Act (FBA) as it allows foreigners to avoid the restrictions on foreign ownership and control of businesses.
A nominee shareholder can be described as follows:
– Registered as a shareholder but does not invest any money or have the means to pay for the shares
– Has no beneficial interest in the company and no real control
– Merely facilitates the registration of the company as a Thai company to avoid foreign business restrictions
– Holds shares on behalf of a foreigner who is the actual owner, making the company majority foreign-owned in reality
The FBA imposes significant penalties, including fines and imprisonment, for both the nominee shareholder and the foreign investor.
Foreign investors often consider using nominee shareholders in Thailand to circumvent restrictions under the Foreign Business Act (FBA), which limits foreign ownership in many business sectors to less than 50%. By using a Thai nominee shareholder, a foreign investor can create the appearance of local majority ownership while still maintaining full control over the business through hidden agreements or side contracts.
Be cautious when using preference share structures that give foreign shareholders extra voting or dividend rights. Thai authorities often view these arrangements as a sign of a nominee structure. In case of investigation, they are likely to challenge why a Thai shareholder would hold a majority stake while receiving fewer dividends or having little to no control over the company.
Is Using a Nominee Shareholder Legal?
The short answer is NO. There are also more and more efforts being made by the Thai Government to crackdown on the use of nominee shareholders in Thailand. In 2024 alone, over 26,000 businesses were suspected of engaging in potential nominee activity (source).
A good example of this crackdown was seen in September 2024, where the Department of Special Investigation opened an investigation against a company that provided corporate registration and accounting services that enabled foreigners to illegally operate businesses and own real estate through Thai nominee shareholders, violating the Foreign Business Act.
The Criminal Court sentenced 23 defendants, including both Thai and foreign individuals and companies, to 5 years in prison (suspended for 2 years) following guilty pleas.
Each defendant was fined 200,000 baht and placed under a one-year probation. The court also ordered the dissolution of the implicated companies. Non-compliance with the court’s orders would result in additional daily fines of 10,000 baht for the duration of the violation.
In the second half of 2025, the Thai Ministry of Commerce has been conducting deeper investigations, cross-checking data between the company registration database and the Revenue Department to identify companies potentially using nominees. The main targets used to be companies owning real estate, but recently the scope has been extended to those engaged in commercial activities as well.
What are Some Alternate Options to using Nominee Shareholders?
While a lot of business activities are restricted for foreign ownership, there are some options available for investors.
Foreign Business License (FBL)
A Foreign Business License (FBL) is a licence awarded to foreign companies or investors who wish to engage in business activities typically restricted to Thai companies under the Foreign Business Act. The FBL allows foreign owned businesses to operate legally in Thailand and participate in certain industries or sectors otherwise limited to Thai citizens.
However, it is important to be aware that in practice it is very difficult to obtain a FBL and in practice, very few FBLs are awarded.
Read more:
BOI Promotion
Thailand’s Board of Investment is a special government agency that focuses on promoting foreign investment within Thailand.
Furthermore, the BOI also provides the following incentives for qualifying projects:
- 100% foreign ownership of a company.
- Reduced requirements for supporting work permits, i.e., no quotas for hiring foreigners.
- The ability to own land.
- Tax benefits such as income tax exemptions for a fixed period. Please note that tax incentives depend on specific promotions and are unavailable to all.
IEAT & EEC
The Industrial Estate Authority of Thailand (IEAT) and the Eastern Economic Corridor (EEC) both provide the possibility for foreign ownership and tax incentives. However, their scope is much more limited than that of the BOI.
IEAT
The Industrial Estate Authority of Thailand (IEAT) is a government organisation that oversees, plans and promotes industrial estates throughout the country. The IEAT provides a range of services and benefits, including:
- 100% foreign ownership
- Helping identify suitable locations based on a company’s needs.
- Streamlining the process of acquiring land (purchase or lease) within the estates.
- Streamlining the process of acquiring visas and work permits.
- Assistance opening a bank account
- Offering tax and non-tax incentives for businesses operating within the estates.
EEC
The Eastern Economic Corridor initiative covers three provinces along the Eastern Seaboard, Rayong, Chonburi, and Chachoengsao. The EEC plans to make these provinces a hub for innovation and industry and promote the following goals:
- Become a centre for high-tech industries and services.
- Improve connections throughout the region by land, sea, and air.
- Attract foreign businesses with special benefits and incentives.
- Develop “smart cities” with advanced infrastructure.
Companies who are eligible to launch a business within the EEC can get advantages like 100% foreign ownership, tax breaks, reduced requirements for obtaining visas and work permit, and the chance to own land outright (which is usually restricted for foreign businesses in Thailand).
Treaty of Amity
U.S. citizens can operate 100% foreign-owned businesses under the Treaty of Amity. The Thai-U.S. Treaty of Amity and Economic Relations, commonly referred to as the Treaty of Amity, is a special economic bond between the United States and Thailand. This treaty allows U.S. citizens and businesses incorporated in the U.S., or those majority-owned by U.S. citizens, to enjoy certain privileges when operating in Thailand.
The treaty grants national treatment, enabling American companies to engage in business activities on similar terms as Thai companies and exempting them from most restrictions on foreign investment imposed by the Foreign Business Act of 1999.
Read more:
Representative Office
Representative Offices offer the significant advantages of 100% foreign ownership, however, they are limited in scope in the activities that they can perform. One of the major drawbacks of a Representative Office is that they cannot generate any revenue, and the head office in another country is required to fully fund their expenses. The Representative Office in Thailand cannot engage in profit-making activities, such as:
- negotiating sales,
- Issuing invoices,
- receiving payment for services or;
- signing business agreements.
Here are some of the functions that a Representative Office can undertake on behalf of its head office:
- Sourcing local goods or services in Thailand
- Inspecting and regulating the quality and quantity of items purchased by the head office in Thailand
- Disseminating information regarding the head office’s new products and services
- Reporting on local company development and activities to the corporate office
- Guiding distributors and consumers on a variety of topics related to items distributed by the head office
- Signing contracts that are necessary for the company’s activities, such as a lease
- Exporting products that are ordered by the company’s headquarters or related companies.
Why Restructuring with a Real Local Partner Is Safer Than Using Nominee Shareholders in Thailand
If your Thai company was initially set up using nominee shareholders, you may now be exposed to significant legal and financial risk. Thai authorities are actively cracking down on nominee structures that do not comply with the Foreign Business Act (FBA), especially where the local shareholder has not invested or received any genuine financial return from the company.
To reduce your potential risk and exposure, it is strongly recommended to restructure your shareholding arrangement and bring in a real local partner. When bringing in a genuine local partner, it is highly recommended to make sure the following conditions are met:
- The Thai shareholder makes an actual financial investment in the company.
- Share transfers are properly documented and backed by traceable payments.
- The local shareholder receives a fair share of dividends or other financial returns.
- The partnership is structured to reflect real participation and commercial intent.
By working with a real Thai partner, companies not only avoid any risks under the new crackdowns but may also be eligible for certain government incentives particularly if your business falls within key sectors targeted for foreign investment and market entry.
Restructuring must be carried out correctly to ensure adequate legal protection. With the right guidance, you can restructure your company to achieve compliance and continue operating your business with confidence.
If you have concerns about your current shareholding structure or are considering a restructuring with a legitimate local partner, we encourage you to get in touch.
How can Belaws help?
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FAQ
Can foreigners own 100% of a business in Thailand?
Yes, foreigners can own 100% of certain businesses in Thailand. While there’s a common misconception that a Thai partner is always required, the Thai Civil and Commercial Code allows companies to be fully foreign-owned. However, whether you can operate with 100% foreign ownership depends entirely on your business activities. Manufacturing companies and export businesses, for example, can typically be 100% foreign-owned without restrictions.
What is the Foreign Business Act and how does it affect foreign investors?
The Foreign Business Act of 1999 is the main legislation that governs foreign business operations in Thailand. It restricts foreign companies from undertaking approximately 50 types of business activities, including popular sectors like hotels, restaurants, coffee shops, real estate, and various service activities. For these restricted businesses, foreign ownership is capped at a maximum of 49.99% unless you obtain special permissions like a Foreign Business License or BOI promotion.
What types of businesses can be 100% foreign-owned in Thailand?
Several business types allow full foreign ownership. Export companies that sell exclusively to international markets and don’t engage in domestic sales are eligible for 100% foreign ownership. Manufacturing companies can generally be fully foreign-owned as manufacturing isn’t on the restricted list. Additionally, businesses that qualify for BOI promotion, IEAT, or EEC incentives can operate with 100% foreign ownership. U.S. citizens can also use the Treaty of Amity to run fully foreign-owned businesses in most sectors.
What exactly is a nominee shareholder in Thailand?
A nominee shareholder is a Thai person or company registered as a shareholder but who doesn’t actually have any real financial stake in the company. They hold shares on behalf of a foreigner who is the true owner, essentially acting as a front to make the company appear Thai-owned. The nominee typically doesn’t invest any money, has no beneficial interest in the company, and merely facilitates registration to avoid foreign business restrictions.
Is using nominee shareholders legal in Thailand?
No, using nominee shareholders is strictly illegal in Thailand. The Foreign Business Act explicitly prohibits this practice, and Thai authorities are actively cracking down on nominee arrangements. In 2024 alone, over 26,000 businesses were suspected of engaging in nominee activity. The penalties are severe—both the nominee shareholder and the foreign investor can face fines and imprisonment. In September 2024, 23 defendants received 5-year prison sentences and 200,000 baht fines for facilitating nominee arrangements.
What are the risks of using nominee shareholders?
The risks are substantial and increasing. Thai authorities have intensified investigations, with the Ministry of Commerce cross-checking company registration databases against Revenue Department records to identify potential nominees. Violators face imprisonment, significant fines, dissolution of their companies, and additional daily penalties for non-compliance. Beyond legal consequences, nominee structures leave you vulnerable to disputes with the nominee shareholder who legally owns the majority shares and could potentially take control of your business.
What is a BOI promotion and how can it help foreign investors?
Thailand’s Board of Investment (BOI) is a government agency that promotes foreign investment by offering substantial incentives to qualifying projects. BOI promotion allows 100% foreign ownership, reduced work permit requirements with no quotas for hiring foreigners, the ability to own land, and tax benefits such as income tax exemptions for fixed periods. It’s one of the most attractive legal pathways for foreign investors looking to operate with full ownership and significant operational advantages.
Can U.S. citizens operate businesses differently in Thailand?
Yes, U.S. citizens have a unique advantage through the Thai-U.S. Treaty of Amity and Economic Relations. This treaty allows U.S. citizens and businesses incorporated in the U.S. to operate with 100% foreign ownership in most business sectors. The treaty grants national treatment, enabling American companies to engage in business activities on similar terms as Thai companies and exempting them from most Foreign Business Act restrictions. This is exclusively available to U.S. citizens and businesses.
What is a Foreign Business License and how difficult is it to obtain?
A Foreign Business License (FBL) is a permit that allows foreign-owned businesses to legally operate in sectors typically restricted under the Foreign Business Act. However, FBLs are extremely difficult to obtain in practice, and very few are actually granted. While technically an option, most foreign investors need to pursue alternative pathways like BOI promotion, IEAT, EEC, or the Treaty of Amity for more realistic chances of approval.
What are IEAT and EEC and how do they support foreign businesses?
The Industrial Estate Authority of Thailand (IEAT) oversees industrial estates throughout the country and offers 100% foreign ownership, assistance with land acquisition, streamlined visa and work permit processes, and tax incentives for businesses operating within designated estates. The Eastern Economic Corridor (EEC) covers three eastern provinces and aims to create a hub for high-tech industries. EEC-eligible companies can access 100% foreign ownership, tax breaks, reduced visa requirements, and land ownership rights. Both programs have more limited scope than BOI but provide valuable opportunities.
What is a Representative Office and what are its limitations?
A Representative Office allows 100% foreign ownership but is severely limited in its activities. The major drawback is that Representative Offices cannot generate any revenue or engage in profit-making activities like negotiating sales, issuing invoices, receiving payments, or signing business agreements. They must be fully funded by their foreign head office. Representative Offices can only perform liaison functions such as sourcing goods, inspecting quality, disseminating product information, and reporting to the corporate office.
How can preference share structures be problematic in Thailand?
Thai authorities often view preference share structures—where foreign shareholders receive extra voting rights or dividends—as indicators of nominee arrangements. If Thai shareholders hold a majority stake but receive fewer dividends or have minimal control, authorities will likely question why a genuine Thai investor would accept such unfavorable terms. During investigations, these arrangements are typically challenged and may be deemed illegal attempts to circumvent foreign ownership restrictions.
What should I do if my company currently uses nominee shareholders in Thailand?
If your company was set up using nominee shareholders, you’re exposed to significant legal and financial risk. The safest approach is to restructure your shareholding arrangement by bringing in a genuine local partner. This restructuring should ensure the Thai shareholder makes an actual financial investment, share transfers are properly documented with traceable payments, the local shareholder receives fair dividends, and the partnership reflects real participation and commercial intent. Proper restructuring can help you achieve compliance and continue operating legally.
What makes a Thai shareholder "genuine" versus a "nominee"?
A genuine Thai shareholder makes an actual financial investment in the company, receives a fair share of profits and dividends, has real control or participation in business decisions, and enters the partnership with legitimate commercial intent. In contrast, a nominee shareholder invests no money, has no beneficial interest, receives no genuine financial returns, and simply holds shares as a front for a foreign owner. The difference is substance over form—authorities look for evidence of real economic participation.
Can export businesses really be 100% foreign-owned in Thailand?
Yes, export businesses are one of the easiest pathways to 100% foreign ownership because Thai law actively encourages exports. However, there’s an important condition: your company must ensure operations and revenue are strictly international. You cannot sell directly to the Thai domestic market. As long as you’re exclusively exporting products outside Thailand, you’re eligible for full foreign ownership without needing a Thai partner or special licenses.
Why are Thai authorities cracking down on nominee shareholders now?
Thai authorities have significantly intensified enforcement efforts in recent years. In the second half of 2025, the Ministry of Commerce began conducting deeper investigations by cross-checking company registration databases with Revenue Department records to identify potential nominee arrangements. While investigations initially focused on companies owning real estate, the scope has expanded to include those engaged in commercial activities as well. This reflects the government’s commitment to enforcing the Foreign Business Act and ensuring compliance across all sectors.
What happens to my company if I’m caught using nominee shareholders?
The consequences are severe and multi-faceted. Both you and your nominee shareholders can face criminal penalties including fines of 200,000 baht or more and imprisonment of up to 5 years. Courts can order the dissolution of your company, and you may face additional daily fines of 10,000 baht for continued violations. Beyond legal penalties, you lose your business investment and face potential deportation and blacklisting from future business activities in Thailand.
Is it worth restructuring my company with a real Thai partner?
Yes, restructuring with a genuine local partner is strongly recommended if you’re currently using nominees. Beyond eliminating legal risks, working with a real Thai partner can provide business advantages like local market knowledge, networks, and potential eligibility for government incentives. However, restructuring must be done correctly to ensure legal protection. The partnership should involve genuine investment, proper documentation, fair profit-sharing, and reflect real commercial intent rather than simply replacing one compliant structure with another.
What documentation proves a shareholder arrangement is legitimate?
Legitimate shareholding arrangements require comprehensive documentation including traceable payment records showing the Thai shareholder’s actual financial investment, properly executed share transfer documents, dividend payment records demonstrating fair profit distribution, shareholder meeting minutes showing real participation in decisions, and bank statements or financial records proving the Thai shareholder has the means to make the investment. This documentation trail is critical during any investigation to prove the arrangement is genuine rather than a nominee structure.
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