Hong Kong Company Thailand Property Structures: What Section 98 Actually Tests

Definition: A Hong Kong company Thailand property structure is one in which a Hong Kong incorporated entity holds shares in a Thai limited company that owns Thai land or buildings. The purpose is usually to keep the foreign investor at one remove from the title.

Hong Kong Company Thailand Property: What the Law Actually Tests

Any Hong Kong company Thailand property plan has to start from a point that is easy to overlook. Thai law never asks whether a foreigner owns land. It asks whether the registered owner is a foreigner, and it defines that term twice over. A Hong Kong company Thailand property chain therefore has to clear the Land Code definition, not the commercial logic of the group. Section 86 of the Land Code Act B.E. 2497 bars aliens from acquiring land except under a treaty. Sections 97 and 98 then extend the word alien to juristic persons. Consequently the question is arithmetic rather than intention.

Two Thresholds Under Section 97, Not One

Section 97 deems a limited company foreign on either of two grounds. The first is that aliens hold more than 49% of its registered capital. The second is that aliens make up more than half of its shareholders. Most advisers quote the capital threshold and stop there. However, the headcount limb operates independently, and it catches structures that the 51/49 split appears to protect.

Consider a Thai company with two shareholders: one Thai national holding 51% and one Hong Kong company holding 49%. The capital test passes. Exactly half the shareholders are alien, which is not more than half. Now add a second foreign shareholder holding a single share. The capital position barely moves. Yet two of three shareholders are alien, so the company is foreign for land purposes. Furthermore, that outcome does not depend on control, funding or intention.

Section 98: Why a Hong Kong Company Thailand Property Chain Collapses

Section 98 is the provision that defeats offshore layering. Where a juristic person within Section 97 holds shares in another juristic person, that second entity is itself deemed an alien. The same applies to a capital investment. In other words, foreignness is inherited down the chain rather than filtered out by it. A Hong Kong company is wholly foreign by definition, so its shareholding in the Thai company is counted as alien shareholding at the upper layer too.

That inheritance rule is the reason a Hong Kong company Thailand property chain rarely survives inspection. It produces a result that surprises many investors. Inserting a Hong Kong holding company between the individual and the Thai company does not dilute the foreign percentage; it fixes it. The Hong Kong entity cannot become partly Thai by taking Thai shareholders of its own. The Land Code looks at the Thai company and asks how much of its capital aliens hold. Additionally, a Hong Kong parent makes the foreign interest visible on the shareholder register. That register is precisely what registrars and land officers now examine.

Where the Land Code and the Foreign Business Act Diverge

Investors frequently assume that a company which is Thai for trading purposes is also Thai for land purposes. That assumption is wrong, and the gap between the two statutes is where expensive mistakes are made. Section 4 of the Foreign Business Act B.E. 2542 sets a single test. A Thai registered juristic person is a foreigner where foreigners hold at least one half of its capital shares. The Land Code uses a different threshold. It also adds a headcount limb and a look-through rule that the Foreign Business Act does not contain.

The final row is not a drafting curiosity. A company sitting at 49.5% foreign capital may trade without a Foreign Business Licence. That same company is disqualified from holding land. Worse, a single share transfer can move a group across one line without moving it across the other. Therefore the two tests must be run separately, on the same cap table, every time the register changes.

What Changed in 2026: DBD Order No. 1/2569 and the Land Department Circulars

Two enforcement developments in 2026 have made a Hong Kong company Thailand property arrangement materially harder to maintain. Neither creates a new prohibition; both create new evidence.

The Department of Business Development issued Order No. 1/2569, dated 16 March 2026 and in force from 1 April 2026. Under the Order, one event triggers the new duty. Registering a change that increases the number or the powers of foreign partners or foreign directors now requires an Investment Confirmation Letter on the DBD template. Bank evidence must support it. Each Thai shareholder confirms the origin of the funds used to acquire the shares. Meanwhile the Department of Lands circulated urgent directives to provincial land offices during May 2026. Officers must now verify source of funds, income, occupation and financial standing under Section 74 of the Land Code before registering a transfer. Both agencies publish their own guidance, at the Department of Business Development and the Department of Lands respectively.

Reporting has treated these as two separate crackdowns. In practice they interlock, and the combination produces a consequence that is easy to miss.

Hong Kong Company Thailand Property Exposure: Penalties and Forced Sale

The exposure sits on three separate tracks, and only one of them requires a criminal conviction.

1. Administrative forced disposal. Sections 94 and 96 of the Land Code cover land acquired unlawfully by an alien, or held by a person on an alien’s behalf. Such land must be disposed of within a period fixed by the Director-General of the Department of Lands. That period is at least 180 days and no more than one year. If the owner does not sell, the Director-General may dispose of the land. No conviction is needed to start this process, and the seller controls neither timing nor price.
2. Land Code penalties. Section 113 covers a person who acquires land as agent for an alien, or for a juristic person within Sections 97 or 98. The penalty is a fine of up to THB 20,000, imprisonment of up to two years, or both.
3. Foreign Business Act penalties. Section 36 targets a Thai national or juristic person who holds shares on behalf of a foreigner to enable a restricted business. The penalty is imprisonment of up to three years, a fine of THB 100,000 to THB 1,000,000, or both. In addition, the court may order the shareholding to be terminated.

False statements to a registrar or land officer raise separate exposure under the Criminal Code. For the foreign principal, moreover, the practical consequence often arrives through immigration rather than the courts. Our note on nominee land ownership and confiscation risk sets out how the administrative track runs ahead of the criminal one.

Structures That Do Work for Foreign Buyers

None of the above means foreign capital cannot hold Thai real estate, and a Hong Kong company Thailand property investment is not by itself unlawful. It means the holding must be built on a permitted right rather than on a disguised one. Three routes carry genuine legal foundations.

Registered leasehold with a superficies right

A lease registered at the Land Office runs for up to 30 years under Section 540 of the Civil and Commercial Code. Pair it with a right of superficies over the building under Section 1410. Together they separate ownership of the structure from ownership of the land. The foreign party owns the building outright and holds a registered real right in the land. Renewal promises, however, bind only the original landowner. Drafting therefore matters more than the headline term. We examine the renewal problem in detail in our analysis of the 51/49 shareholding structure and its alternatives.

Condominium freehold within the foreign quota

The Condominium Act permits foreigners to hold freehold units up to 49% of a registered building’s total saleable area. Funds must arrive from abroad in foreign currency, evidenced by the bank. This is the only clean freehold route. A Hong Kong company may hold the unit, provided the quota and the remittance evidence are in order.

BOI promotion and treaty routes

A company promoted by the Board of Investment may be permitted to own land for a promoted activity. The Treaty of Amity confers national treatment on qualifying United States interests, but not in respect of land. Both routes are activity-specific. Neither converts a passive holding vehicle into a permitted landowner.

Tax consequences run alongside the structuring question. A Hong Kong parent does not remove the Thai company from Thai corporate tax. Separately, an individual who spends 180 days or more in Thailand in a calendar year becomes a Thai tax resident in their own right. Our guide to Thailand income tax for foreigners sets out the thresholds.

Frequently Asked Questions About Hong Kong Company Thailand Property Structures

Conclusion

A Hong Kong company Thailand property structure does not answer the Thai land question; it restates it in a form that is easier for a registrar to read. The Land Code and the Foreign Business Act apply different foreignness tests to the same cap table. Section 98 traces shareholdings through the parent. Moreover, the 2026 enforcement instruments have turned every amendment filing and every transfer registration into a documented checkpoint. Hong Kong company Thailand property structures built before 2024 were rarely designed with that scrutiny in mind. Reviewing one now costs a fraction of a forced sale.