The Ministry of Commerce is stepping up its efforts to tackle the use of Thai nominees in businesses where foreign ownership is legally restricted, calling the issue a “national priority.”
Deputy Commerce Minister Naphinthorn Srisangpang announced that the ministry is collaborating with relevant agencies to develop comprehensive guidelines to eliminate nominee arrangements. These proposals will be submitted to Commerce Minister Phichai Naripthaphan for approval before being presented to the Cabinet.
The initiative follows a recent subcommittee meeting on preventing and suppressing nominee practices, which was attended by representatives from various agencies. Discussions focused on short-, medium-, and long-term strategies to combat proxy transactions in which Thai nationals hold shares on behalf of foreign investors in violation of the Foreign Business Act (FBA) of 1999.
Immediate measures
In the short term, authorities have been instructed to investigate suspected cases and take legal action against violators using current legal provisions.
Violations of the FBA carry severe penalties, including up to three years’ imprisonment and fines of up to 2 million baht. Nominee arrangements are widely viewed as detrimental to Thai businesses and the economy, enabling foreign investors to bypass ownership limits in sectors such as tourism, real estate, and logistics.
Medium- and long-term plans
Part of the government’s medium-term strategy is the development of an Intelligence Business Analytic System (IBAS) by the Department of Business Development. Scheduled to be operational within six months, the system will analyse trends and behaviours of legal entities, helping authorities more effectively identify potential nominee arrangements.
Long-term reforms include amending anti-money laundering laws to prevent high-risk individuals, such as transnational criminals, from registering companies in Thailand. Under the current regulations, company registrations can only be denied in cases involving bankrupt individuals or those deemed legally incompetent. The amendments, which could take a year to implement, are designed to tighten restrictions and increase penalties for nominee activities.
Additionally, revisions to the FBA are under consideration to strengthen enforcement and deter violations.
Government’s stance
“The government places great importance on resolving the nominee issue, as it allows foreigners to dominate Thai businesses, causing harm to Thai enterprises and the economy,” said Naphinthorn.
He urged Thai nationals acting as nominees to cease such activities and cooperate with authorities, adding that those who come forward voluntarily may be treated as witnesses, potentially reducing penalties.
The crackdown on nominee arrangements has also been addressed at the regional level. In July, officials from Prachuap Khiri Khan, Phuket, Surat Thani, Krabi, and Phang Nga participated in a teleconference led by Ombudsman Songsak Saicheua. The discussion centred on foreign land ownership facilitated by nominees, a practice prohibited under the FBA. Provincial authorities and agencies, including the Internal Security Operations Command and the Revenue Department, have been instructed to investigate and report on actions taken against disguised agents of foreign nationals.
A follow-up meeting to review the progress of these efforts is scheduled for late November 2024. The findings will be presented to the Committee on the Management of Issues Related to Illegal Foreign Goods and Businesses before being submitted to the Cabinet.
Naphinthorn also warned individuals considering becoming nominees to reconsider. “The financial gain is not worth the legal consequences,” he said.