Is Nominee Shareholding Illegal in Thailand? Legal Risks, Penalties and Lawful Alternatives

In short

In Thailand, a Thai national (or a juristic person that is not a foreigner) who acts as a foreigner's nominee in holding shares to help the foreigner circumvent the Foreign Business Act is committing an offence that the law expressly prohibits (Section 36): the penalty is imprisonment for a term not exceeding three years, or a fine of 100,000 to 1,000,000 Baht, or both, and the Court will order the cessation of the shareholding; the foreigner who allows the nominee arrangement is equally liable. Use a lawful route instead (BOI promotion / a foreign business licence / a treaty) — our firm can help you assess the options.

1. What nominee shareholding is, and why it is illegal

The Foreign Business Act treats a company registered in Thailand as a "foreigner" too when at least one half of its capital shares are held by foreigners (Section 4). To keep a company looking like a "Thai company" on paper — and so operate businesses that are restricted for foreigners (List One / Two / Three, Section 8) — some arrangements put a Thai national forward as the registered shareholder while the foreigner actually funds and controls the business. That is nominee shareholding. The law directly prohibits this "circumvention through a lent name," whether or not the parties privately sign a separate nominee agreement.

2. What the law expressly prohibits, and the penalties (Section 36)

Under Section 36, each of the following acts is an offence and carries the same liability:

a Thai national or a juristic person that is not a foreigner who assists in, aids and abets or participates in a foreigner's operation of a business the foreigner is not permitted to operate;
operating a business jointly with a foreigner but holding it out as the Thai national's own sole business;
acting as a foreigner's nominee in holding shares in a partnership, a limited company or any juristic person, so as to enable the foreigner to circumvent or violate this Act;
the foreigner who lends the name — that is, who allows such an act to be committed by a Thai national or a juristic person that is not a foreigner.

Penalties (Section 36): imprisonment for a term not exceeding three years, or a fine of 100,000 to 1,000,000 Baht, or both; and the Court will, as the case may be, order the cessation of the assistance, the cessation of the joint operation, or the cessation of the shareholding or partnership. If the Court's order is violated, there is a further fine at the daily rate of 10,000 to 50,000 Baht throughout the period of the violation.

3. The foreigner's own liability for a restricted business (Section 37)

As for the foreigner itself, any foreigner who operates a restricted business in violation of this Act is likewise liable. Under Section 37, a foreigner who operates a business in violation of Sections 6, 7 or 8 is liable to imprisonment for a term not exceeding three years, or a fine of 100,000 to 1,000,000 Baht, or both, and the Court will order the cessation of the business operation or the cessation of the shareholding or partnership; a party who violates the Court's order faces a further fine at the daily rate of 10,000 to 50,000 Baht throughout the period of the violation. So in a nominee structure, both ends — the foreigner and the Thai front — are within reach of punishment.

4. Joint criminal liability of company directors and responsible persons (Section 41)

A nominee arrangement is usually run through a company, so the risk reaches management directly. Under Section 41, where a juristic person commits an offence under Sections 34, 35, 36 or 37, the directors, partners or persons with the authority to represent the juristic person who connive at the offence or fail to take reasonable action to prevent it are each liable to imprisonment for a term not exceeding three years, or a fine of 100,000 to 1,000,000 Baht, or both. In other words, a director cannot simply escape liability by saying "I was only a nominee and did not know."

5. Lawful alternatives (do not use a nominee)

BOI investment promotion Promotion

For businesses approved by Thailand's Board of Investment (BOI), foreign investors may, on the promotion conditions granted, hold a higher proportion of — or even the full amount of — the foreign equity, and obtain the corresponding foreign-operation privileges. The specific industries, shareholding proportions and conditions are subject to the official rules (we can help confirm).

Foreign business licence Licence

For businesses in List Two / Three, a foreigner may apply for a licence under the law (Section 8, Section 17): List Two requires approval by the Minister with the approval of the Council of Ministers, and List Three requires permission from the Director-General of the Department of Business Development with the approval of the Foreign Business Commission; the business may be operated only once the licence is obtained.

Treaty exemption Treaty

A foreigner who operates a listed business by virtue of a treaty to which Thailand is a party or by which Thailand is bound (such as the Treaty of Amity between Thailand and the United States) is governed by the provisions of and conditions set forth in that treaty, and notifies the Director-General to obtain a certificate (Section 10, Section 11).

⚠️ Note

A privately signed "nominee agreement" or "borrowed-name agreement" cannot make a nominee arrangement lawful — on the contrary, it is exactly what Section 36 prohibits, and individual directors may bear criminal liability (Section 41). Whether a business is restricted, and which lawful route — BOI, a licence, or a treaty — to take, must be confirmed case by case according to the industry and the shareholding structure — our firm can help you assess and handle it.

FAQ

What penalty does a Thai national face for holding shares as a foreigner's nominee?

Under Section 36 of the Foreign Business Act, acting as a foreigner's nominee in order to circumvent the Act is an offence, punishable by imprisonment for a term not exceeding three years, or a fine of 100,000 to 1,000,000 Baht, or both; the Court will also order the cessation of the shareholding, and if that order is violated, there is a further fine at the daily rate of 10,000 to 50,000 Baht throughout the period of the violation.

If I am only a nominee on paper and don't actually run the business, is that still illegal?

Yes. Section 36 expressly lists "acting as a foreigner's nominee in holding shares so as to enable the foreigner to circumvent or violate this Act" as a separate offence, and it does not depend on whether you actually take part in running the business; the foreigner who lends the name is equally liable.

Can a company's directors be held liable?

Possibly. Under Section 41, where a juristic person commits an offence such as those under Sections 36 and 37, the directors, partners or persons with the authority to represent the juristic person who connive at the offence or fail to take reasonable action to prevent it are liable to imprisonment for a term not exceeding three years, or a fine of 100,000 to 1,000,000 Baht, or both.

What are the legitimate ways for a foreigner to hold a higher proportion of shares in Thailand?

There are three main routes: apply for BOI investment promotion (the shareholding proportion and conditions are subject to the official rules); apply for a foreign business licence for List Two / Three businesses (Section 8, Section 17); or operate by virtue of a treaty to which Thailand is a party (such as the Treaty of Amity between Thailand and the United States) and obtain a certificate (Section 10, Section 11). Each should be assessed case by case.