The nominee structure is not a legal gray area in Thailand. It is a crime. Both the Thai person acting as a nominee and the foreigner benefiting from the arrangement face criminal prosecution, imprisonment, and substantial fines. The 2025-2026 enforcement wave has made this abundantly clear, with over 850 companies prosecuted and 29,000+ legal cases initiated.
This guide explains exactly what nominee structures are, why they are illegal under Thai law, who gets prosecuted, and what investigation methods authorities use to detect them. If you are currently using a nominee structure or considering one, this information may help you understand the significant legal risks involved.
What Is a Nominee Structure?
A "nominee structure" refers to any arrangement where Thai nationals hold shares in a Thai company on behalf of a foreigner who is the actual beneficial owner. The purpose is to circumvent Thailand's Foreign Business Act (FBA), which restricts foreign ownership of businesses in certain sectors to 49.99% or less.
Common Nominee Arrangements
- Passive Thai shareholders: Thai individuals who hold 51%+ of shares on paper but have no actual investment, involvement, or genuine ownership interest in the company
- Thai nominee companies: Shell companies with Thai shareholders that hold shares in the target operating company
- Management fee arrangements: Structures where "Thai shareholders" receive nominal payments while all actual profits flow to the foreign beneficial owner through consulting fees, management fees, or other mechanisms
- Preference share structures: Arrangements giving foreigners de facto control through voting preference shares while Thais hold ordinary shares with limited rights
Key Distinction: Legal vs. Illegal Structures
Not every company with Thai and foreign shareholders is illegal. The difference lies in substance:
- Legal: Thai shareholders genuinely invested their own money, participate in decisions, and receive profits proportionate to their ownership
- Illegal: Thai shareholders are paper owners with no real investment, no genuine involvement, and no proportionate benefit - they exist solely to circumvent FBA restrictions
Why Nominee Structures Are Illegal (Not Just "Risky")
Many foreigners mistakenly believe nominee structures are in a legal gray area or merely "risky." This is incorrect. The Foreign Business Act explicitly criminalizes both the Thai nominees and the foreigners who use them.
The Foreign Business Act Framework
The FBA (B.E. 2542 / 1999) restricts foreign participation in certain business activities. Businesses are categorized into three lists:
- List 1: Absolutely prohibited for foreigners (e.g., newspaper business, radio, television, rice farming, land trading)
- List 2: Restricted for national security and cultural reasons - requires Cabinet approval
- List 3: Restricted because Thai businesses are not ready to compete - requires Director-General approval
The FBA explicitly prohibits any arrangement designed to circumvent these restrictions. This is not a matter of interpretation - the law specifically addresses nominee arrangements.
FBA Section 36: Criminal Penalties for Thai Nominees
Foreign Business Act, Section 36 (Anti-Avoidance Provision)
Any Thai national or Thai juristic person that assists a foreigner in operating a business in violation of this Act, including by:
- Holding shares on behalf of a foreigner
- Acting as a nominee shareholder or director
- Providing their name for company registration to circumvent foreign ownership restrictions
Shall be guilty of a criminal offense.
Up to 3 years imprisonment + Fine up to THB 1,000,000 + Daily penalties up to THB 50,000What Section 36 Covers
- Passive shareholding: Thai nationals holding shares without genuine investment or participation
- Name lending: Allowing one's name to be used in corporate registration documents
- Facilitating circumvention: Any assistance that helps foreigners evade FBA restrictions
Critically, Section 36 applies to the Thai person - meaning taxi drivers, housekeepers, friends, or family members who agree to be "silent shareholders" face criminal prosecution themselves.
FBA Section 37: Penalties for Foreigners
Foreign Business Act, Section 37 (Illegal Business Operation)
Any foreigner who operates a business in violation of Sections 6, 7, or 8 (the three restricted lists) without proper license or certificate shall be subject to:
- Criminal prosecution
- Court-ordered business cessation
- Mandatory company dissolution
Section 41: Director and Partner Liability
FBA Section 41 extends personal criminal liability to directors, partners, and authorized representatives of companies found in violation. This means the foreign "minority shareholder" who is actually running the business cannot hide behind the corporate structure.
Both Property AND Business Nominees Are Criminal
Many people mistakenly believe that only business nominees are prosecuted. This is false. Using Thai nominees to hold property (through a company structure) is equally illegal under both the FBA and the Land Code.
Land Code Sections 111-113 impose up to 2 years imprisonment and fines up to THB 20,000 for foreigners who acquire land through Thai nominees, and the same penalties apply to the Thai nationals who assist them.
DSI Investigation Methods
The Department of Special Investigation (DSI), working with the Department of Business Development (DBD), Revenue Department, Anti-Money Laundering Office (AMLO), and Immigration Bureau, uses sophisticated methods to detect nominee structures. Understanding these methods reveals why nominee structures inevitably fail.
The Four Investigation Streams
| Investigation Stream | What Authorities Examine |
|---|---|
| 1. Funding Trail | Whether Thai shareholders can prove independent sources of funds for their share subscriptions. Bank records, income verification, tax filings. |
| 2. Control Signals | Who actually authorizes payments, signs contracts, sets policy. Email trails, board minutes, bank signatory records, management decisions. |
| 3. Benefit Flow | Whether profits are distributed to Thai shareholders proportionate to equity, or whether money "leaks back" to foreigners through fees, consulting payments, or other arrangements. |
| 4. Filing Consistency | Cross-referencing DBD records with tax returns, payroll data, immigration/work-permit files, and beneficial ownership disclosures. |
AI-Powered Detection
Thai authorities now use automated algorithms to flag high-risk patterns. According to Nation Thailand, the Intelligence Business Analytics System (IBAS) became fully operational in August 2025:
- Same Thai individuals appearing as shareholders in multiple unrelated companies
- Thai shareholders with occupations inconsistent with company investment (e.g., taxi driver holding shares in luxury villa company)
- "Dormant" Thai shareholders who never attend meetings or receive dividends
- Rapid increases in company registrations in tourist provinces
2025-2026 Enforcement Wave: Real Cases
The current enforcement wave is unprecedented in scale. As of December 2025, Thai authorities have prosecuted 857-875 cases with estimated damages of THB 15.1-15.3 billion (~$450-468 million USD). Over 46,918 companies have been flagged for investigation, with 26,830 targeted for inspection in 2025. Here are documented examples:
2025 Enforcement Operations
October 2025 Koh Phangan & Koh Samui Crackdown (Bangkok Post)
Location: Koh Phangan and Koh Samui, Surat Thani Province
Agencies: Immigration Police, Tourist Police, DSI, AMLO, DBD
Over 7,000 suspected nominee businesses identified. Simultaneous sunrise raids on boutique resorts, beachfront cafes, and tour offices resulted in at least 8 foreigners arrested on Koh Phangan alone (Khaosod English). Specific arrests (October 16-19): Two German nationals arrested at Shogun Ramen Restaurant operating with only Myanmar staff. Three Israeli nationals arrested at unlicensed hotels. Evidence seized from 89 companies suspected of evading THB 152 million in taxes.
October 2025 Phuket Region 8 Operations (Thai Examiner)
Location: Phuket, Krabi, Phang Nga provinces
Agencies: Region 8 Police, Economic Crime Suppression Division
February 2025 raid: 23 arrests including 2 Chinese nationals, operations valued over THB 1 billion, businesses included hotels, car rentals, and an international school. October 2025 raid: 4 Israeli-linked foreigners arrested, five firms raided including restaurants and tour outlets.
May 2025 CIB Nominee Sweep EP.3 - Rayong Chinese Condo Case
Location: Rayong Province
Agencies: Central Investigation Bureau (CIB), Economic Crime Division
4 companies targeted (1 Hong Kong-registered, 1 Thai). Project value: THB 2 billion ($60M USD). 72 rai of land across Chonburi and Rayong for 10 eight-story buildings with 1,821 units marketed to Chinese nationals. 5 company directors/shareholders prosecuted. Multiple Chinese nationals found working illegally. Seizures: 7 land deeds, 48 bank accounts totaling THB 72 million, 500 million baht in Hong Kong company transactions. Being considered as transnational crime.
2024 Enforcement Operations
May 2024 Operation Nominee Sweep - Phuket (Bangkok Post)
The largest single operation to date. Central Investigation Bureau (CIB) and Economic Crime Suppression Division (ECSD) arrested 231 individuals (98 foreigners, mostly Russians; 37 Thai nationals). Seized assets worth THB 1.5 billion (~$40.75 million USD), including 225 bank accounts, 245 land documents (~10,500 sqm), 800 company registration documents, and 1,601 company stamps (Khaosod English).
September 2024 Criminal Court Convictions - Phuket Law Firm Case (Phuket News)
23 defendants convicted for operating nominee arrangements through a law and accounting firm (legal analysis). Initial sentence: 10 years imprisonment, reduced to 5 years (suspended for 2 years) plus THB 200,000 fine per defendant. Companies ordered dissolved. This case involved approximately 60 companies.
October 2024 Koh Samui Task Force Formation (Bangkok Post)
Inter-agency task force formed targeting 7,000+ companies flagged as at-risk entities. Focus on real estate, hotels, restaurants, tourism services, and villas. Investigation found 5 Thai shareholders listed in 256 different companies - an obvious nominee pattern (SILQ Law).
2024 Chachoengsao Agricultural Land Seizure (Bangkok Post)
1,500 rai (~593 acres) of forest land seized. Land had been unlawfully sold to a Thai company acting as nominee for Chinese investors. Approximately 450 rai had already been converted to durian plantations. Part of growing enforcement against Chinese agricultural land purchases.
May 2025 Pattaya Chinese Property Brokerage (Thai Examiner)
Location: Pattaya (Chonburi) - Nong Prue Sub-district, Bang Lamung District
Agencies: Regional Police Investigation Division 2
3 Chinese nationals arrested for working illegally at property agency. Officers found 16 Chinese staff members and approximately 30 Chinese customers waiting for service. Agency catered almost exclusively to Chinese clients. Interest in Pattaya real estate surged after March 28 earthquake near Bangkok drove investors to coastal areas.
Enforcement Statistics
| Period | Cases Investigated | Estimated Damages |
|---|---|---|
| 2024 Full Year | 26,019 companies reviewed | N/A |
| Sept 2024 - Jan 2025 | 820 cases | THB 12.5 billion |
| Sept 2024 - May 2025 | 861 cases | THB 15.3 billion |
| 2025 Target | 26,830 companies to inspect | Ongoing |
| Total Flagged | 46,918 entities | Under review |
2025 Legal & Regulatory Developments
- April 22, 2025: Thai Cabinet approved urgent amendments to the Foreign Business Act
- April 25, 2025: AMLA amendment consultation concluded - nominee arrangements to become predicate offense for money laundering
- June 24, 2025: Cabinet reviewed Ombudsman's report directing Ministry of Commerce to collaborate with 13 agencies on nominee enforcement
- Ongoing: "Operation Pithak Samui" - multi-agency operation to suppress nominee landholding in Koh Samui/Koh Phangan
Who Gets Caught: Common Red Flags
Authorities prioritize investigation of structures exhibiting these patterns:
Financial Red Flags
- Thai shareholders cannot prove source of funds for share subscriptions
- No dividend income reported by Thai shareholders despite company profits
- Management or consulting fees paid to foreigners that exceed reasonable market rates
- Bank records showing Thai nominees receiving payments from foreigners
Structural Red Flags
- Same Thai individuals appearing in multiple unrelated companies
- Thai shareholders with occupations inconsistent with their claimed investments
- Shareholders unable to explain basic aspects of the business operations
- Foreigners serving as sole bank signatories or controlling all operational decisions
Lawyers and Accountants Are Also Liable
The September 2024 Phuket case specifically targeted a law and accounting firm that facilitated nominee arrangements. Professionals who set up, maintain, or advise on nominee structures face the same criminal penalties as their clients.
If a lawyer or accountant is suggesting a nominee structure as a "solution," they are advising you to commit a crime - and they can be prosecuted alongside you.
Proposed Legal Reforms
Thai authorities are not stopping at current enforcement - they are strengthening the legal framework:
Anti-Money Laundering Act Amendments
Cabinet approved February 2025, pending parliamentary approval (DFDL analysis):
- Classify nominee arrangements as a predicate offense for money laundering
- Expand AMLO asset seizure powers to cover both direct offenders and facilitators (Formichella & Sritawat)
- Establish a 15-year prescription period, allowing prosecution of older violations
Nominee Transactions Act (Proposed)
- Criminalize indirect control through nominees
- Allow land confiscation without compensation
- Redefine "foreigner" to include those controlling companies through Thai representatives
The Bottom Line
Nominee structures are not a clever workaround - they are a crime with real consequences. The 2025-2026 enforcement wave demonstrates that Thai authorities are serious about prosecution. Both Thai nominees and foreign beneficial owners face:
- Criminal prosecution with potential imprisonment up to 3 years
- Substantial fines up to THB 1,000,000 plus daily penalties
- Company dissolution and loss of business assets
- Land forfeiture for property nominees
- Immigration consequences including deportation and blacklisting
Legal alternatives exist - including BOI promotion, Treaty of Amity (for US citizens), and legitimate joint ventures with genuine Thai partners. These require more effort and investment but do not carry criminal liability.