Nominee Structures in Thailand: Illegal, and Now Enforced

Why exactly is a nominee structure illegal?

Two statutes converge on the same arrangement. The Land Code B.E. 2497 (1954) closes land ownership to foreigners, and it closes the workaround with it: under Land Code, section 96, land acquired by a Thai person or company in place of a foreigner must be disposed of within a window the Director-General of Lands sets — between 180 days and one year, the same window section 94 uses — failing which the Land Department may dispose of it itself. Land Code, section 113 adds a criminal penalty for whoever acquires land as a foreigner's agent: a fine of up to 20,000 baht, imprisonment of up to two years, or both.

The Foreign Business Act B.E. 2542 (1999), section 36 then names the arrangement itself. A Thai national or Thai company that holds shares as a foreigner's nominee so the foreigner can carry on a business the law reserves — and the foreigner who lets them — each face up to three years' imprisonment, a fine of 100,000 to 1,000,000 baht, or both; the court orders the arrangement dissolved, and defying that order costs 10,000 to 50,000 baht for every day the defiance continues. Both sides of the deal are liable — the Thai shareholder who signed, and the foreigner the shares were held for.

Much of what ranks for this question hedges — a "grey area", "commonly done", "tolerated in practice". The statutes do not hedge, and neither does this page: there is no compliant version of a share held for someone else. What exists lawfully is a different thing altogether — a Thai-majority company with genuine Thai shareholders and real substance, covered below.

What makes a Thai company a nominee vehicle in practice?

The law asks one question: for whom are the shares really held? Investigators answer it with evidence, and the same evidence is what a buyer can recognise from the outside when a seller's villa turns out to sit inside a company. These are the risk factors the authorities examine — reading them is how a buyer spots a structure that carries someone else's legal problem.

The indicia enforcement actually looks at:

• Thai shareholders who cannot show the money behind their shares. Since DBD Order No. 2/2569, effective 1 August 2026, every Thai shareholder's capital contribution must be traced through bank statements at registration — the shareholder of convenience now fails at the registrar's counter.
• A company with no business beyond holding one property — no revenue, no staff, no activity the company could point to as its own.
• Control concentrated in the foreign minority: weighted voting rights, pre-signed share transfer forms, the foreigner as sole director and sole source of funds.
• Shares financed by the very foreigner they are supposedly held against — a loan from the beneficiary to the shareholder is the classic tell.
• A registered address shared with dozens of other companies. One office searched in the July 2026 island raids was the registered seat of more than 100 of them.

Is the 2026 crackdown real, or another announcement?

It is real, and it is dated. On 11 May 2026 the Department of Special Investigation and the Department of Business Development launched a joint operation against nominee businesses in tourist areas, starting with Koh Samui and Koh Phangan: 11,426 companies were analysed and risk-classified, and 34 of them — reported in the Thai press as each holding assets above 100 million baht, hotels and villa operations among them — were opened as special investigations. The DSI announced the operation itself, with expansion planned to Phuket, Krabi, Phang Nga, Pattaya and Hua Hin.

In July 2026 the operation searched five locations on the two islands. One office turned out to be the registered address of more than 100 companies, and a law firm was accused of registering shell companies for foreign clients with its own employees as shareholders — reported by the Bangkok Post and The Nation in the days after the raids. This wave of enforcement is one reason independent verification of ownership structures became mainstream.

Upstream of the raids, registration itself tightened: DBD Order No. 2/2569, effective 1 August 2026, requires bank statements tracing every Thai shareholder's capital contribution and an explanation of the flow of funds into the company. A structure that used to pass on paper now has to survive an examination of the economic reality behind it — at incorporation and at every later change of shareholders or directors.

What happens to the property when a nominee structure unwinds?

The land does not quietly stay put. Under Land Code, section 96, land found to be held for a foreigner must be disposed of within the window the Director-General sets — 180 days to one year — and if it is not, the Land Department may dispose of it. A seller forced to sell inside a fixed window sells at the market's mercy; the price a distressed structure realises is not the price the villa was bought at.

The company side unwinds under court order: the Foreign Business Act's section 36 has the court order the shareholding or the business ceased, with the daily fine running against defiance, and the criminal exposure — for the Thai shareholders and the foreigner alike — runs alongside. The foreigner was never the owner of the land; whatever claim exists to the money put in is litigated from the wrong side of an arrangement the law declares illegal.

For a buyer, the sharper scenario is inheriting the problem. Company-held villas are commonly resold as share transfers — buy the company, get the villa. Buying the shares of a company that was built as a nominee vehicle buys its history with it: the shareholders, their financing and the company's substance do not reset because the shares changed hands, and the new foreign owner stands where the old one stood. That is why the ownership structure behind a company-held property is examined before money moves, not after.

What are the legitimate alternatives?

The lawful routes are narrower than a nominee promise, and every one of them is more enforceable. Each is a registered right, not an understanding — and what is registered on the title at the Land Office is what survives a resale, a divorce or a dispute.

The routes that exist in law:

• Condominium freehold — true ownership for a foreign individual under the Condominium Act B.E. 2522 (1979), within the building's 49% foreign quota; the quota headroom is verified, never assumed.
• A registered 30-year lease — the registrable maximum under the Civil and Commercial Code, section 540; renewal promises are generally not enforceable against a future owner.
• Usufruct and superficies — registered rights to use a property, or to own the building on someone else's land; narrower than ownership, and real.
• A genuinely Thai company — Thai-majority, with genuine Thai shareholders and real business substance. This is lawful, and it is precisely what a nominee vehicle pretends to be.
• A company promoted by the Board of Investment — permitted to own the land its promoted activity needs under the Investment Promotion Act B.E. 2520 (1977), section 27. An industrial-policy instrument, not a way to hold a holiday villa.

What does a verification check on a company-held property?

When a dossier involves a company that holds land, the verification examines the structure as evidence, not as a story: the company affidavit and shareholder list from the DBD; who the shareholders are and what stands behind their shares; whether the company has activity of its own; the title and every registered encumbrance at the Land Office; and how the purchase itself is framed — an asset sale or a share transfer. Each finding rests on the evidence ledger — source document, issuing office, reference number, date and reviewer.

Where the documents point to shares held on a foreigner's behalf, nominee risk is named as a red flag — a finding that materially affects the decision. In the contract, red flags become conditions the seller must cure before a payment milestone, and the verdict — proceed, proceed with conditions, or walk away — reflects the findings.

What Suradeed is, and is not

Suradeed is not a law firm and gives no legal advice. Every legal finding and recommendation in a verification certificate is produced and signed by a licensed Thai law firm, which is responsible for it. Suradeed defines the verification protocol, coordinates the work, controls its quality and delivers the result.

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