Thailand DBD Nominee Rules 2026: New Crackdown on Foreign Ownership Structures

Thailand’s Department of Business Development (DBD) is rolling out sweeping new measures to crack down on nominee shareholding arrangements, where Thai nationals serve as front-owners for foreign investors seeking to circumvent the Foreign Business Act (FBA). Set to take effect on April 1, 2026, these regulations introduce mandatory in-person verification, sworn income declarations, and heightened scrutiny of company registration amendments. With the DBD estimating that roughly 80 per cent of the country’s 118,000 mixed-ownership companies — approximately 94,000 entities — may involve nominee structures, these changes represent one of the most significant enforcement shifts in Thailand’s corporate regulatory landscape in recent years. For foreign entrepreneurs, investors, and their legal advisors, understanding how these new rules work and what they mean for ongoing or planned business operations in Thailand is essential.

What Are Nominee Arrangements Under Thai Law?

Under Thailand’s Foreign Business Act B.E. 2542 (1999), certain business activities are restricted for foreign-owned or foreign-controlled companies. To operate in these restricted sectors, foreign investors are required to obtain a foreign business license (FBL) or qualify for specific investment promotion privileges. However, some foreign investors have historically circumvented these requirements by using Thai nationals as “nominees” — individuals who hold shares on behalf of the actual foreign investor, creating the appearance of a Thai-majority company on paper while the foreign party retains effective control behind the scenes.

This practice is explicitly prohibited under Section 36 of the Foreign Business Act, which forbids Thai nationals from providing assistance or support to foreigners through nominee shareholding. Despite these existing prohibitions, enforcement has historically been inconsistent, allowing the practice to become widespread. The DBD’s new rules aim to address this gap by creating procedural checkpoints that make nominee structures significantly more difficult to establish or maintain.

Scope of the Problem: How Widespread Are Nominee Structures?

The scale of nominee shareholding in Thailand is staggering. According to the DBD’s own estimates, there are approximately 118,000 companies in Thailand with mixed Thai-foreign ownership. Of these, roughly 80 per cent — or about 94,000 entities — are believed to utilize some form of nominee arrangement. This means that the vast majority of mixed-ownership companies in the country may not reflect genuine investment from their Thai shareholders, but rather serve as vehicles for foreign interests operating without proper licensing.

The prevalence of these structures has long undermined the intent of the Foreign Business Act and created an uneven playing field where compliant foreign-owned businesses that obtain proper FBLs or BOI promotion compete against entities operating through opaque nominee arrangements. The new rules represent a systematic effort to close this enforcement gap and bring greater transparency to Thailand’s corporate ownership landscape.

The Two Key Amendment Triggers

The draft order from the Central Partnership and Company Registration Office identifies two specific scenarios that will trigger enhanced scrutiny under the new rules. These triggers are designed to catch the most common methods used to establish or modify nominee structures through the company registration process.

Trigger 1 — Partnership Amendments: Any amendment to a registered partnership where foreign partners end up holding less than 50 per cent of total capital will activate the new verification requirements. This applies specifically to partnerships that were previously either entirely Thai-owned or had a foreign-majority capital structure. The rationale is that such changes may indicate the introduction of Thai nominees to dilute apparent foreign ownership below the threshold that triggers FBA restrictions.

Trigger 2 — Limited Company Amendments: For limited companies, the trigger activates when amendments result in a foreigner becoming an authorized signatory in a company where all existing authorized signatories were previously Thai nationals. This scenario raises red flags because it may suggest that a foreign investor is gaining operational control over a company that was structured to appear entirely Thai-managed.

Mandatory In-Person Verification Requirements

One of the most impactful aspects of the new DBD rules is the requirement for mandatory in-person verification. Under the new framework, all relevant Thai parties to a triggered transaction — including Thai shareholders, partners, and directors — must physically appear before a Registrar at the DBD office. This represents a significant departure from the current practice, where company registration amendments can often be handled through authorized representatives using powers of attorney.

Crucially, the new rules specify that a power of attorney alone will no longer be sufficient for these types of amendments. The physical presence of the Thai individuals is required to allow the Registrar to verify their identity, assess the plausibility of their involvement, and obtain sworn declarations directly. Exceptions to the in-person requirement will be granted only in limited circumstances, such as illness or overseas residency, and even these exceptions require written authorization from a senior DBD official at the Director level or above.

The practical impact of this requirement is expected to add approximately one to two weeks to each affected transaction, as scheduling in-person appointments and coordinating the attendance of all Thai parties will inevitably introduce delays. For businesses with legitimate mixed-ownership structures, proactive planning and engagement with experienced corporate secretarial service providers will be essential to minimize disruption.

Sworn Declaration and Income Verification

Beyond physical presence, the new rules introduce a mandatory sworn declaration requirement. Thai partners and directors involved in triggered transactions must sign a formal “Statement Record Form” that includes detailed personal financial information. Specifically, each Thai individual must declare their average monthly income, which the Registrar will then assess for financial plausibility against the level of investment claimed in the company.

This income verification mechanism is designed to expose one of the most common weaknesses in nominee structures — the mismatch between a Thai nominee’s actual financial capacity and the significant capital contributions they purportedly make as shareholders. For example, a Thai individual earning a modest monthly salary whnðo claims to hold millions of baht in company shares would raise obvious questions about the true source of the investment funds.

The Statement Record Form also includes explicit references to the criminal penalties that apply to false declarations. Specifically, signatories are warned about liability under Foreign Business Act Section 36 (prohibiting nominee assistance to foreigners) and Criminal Code Sections 137 and 267 (addressing false statements made to government officials). This combination of financial transparency and criminal liability awareness is intended to deter Thai nationals from participating in nominee arrangements.

Legal Penalties and Criminal Liability

The consequences of violating Thailand’s nominee provisions are severe and extend beyond mere administrative penalties. Under Section 36 of the Foreign Business Act, any Thai national who assists a foreigner* in circumventing the law’s restrictions — including by acting as a nominee shareholder — faces criminal prosecution. The penalties include imprisonment and substantial fines, which apply to both the Thai nominee and the foreign beneficiary whnýarranged the structure.

Additionally, the sworn declaration forms introduced under the new rules explicitly reference Criminal Code Sections 137 and 267, which address the making of false statements to government officials. Section 137 provides that any person who gives false information to an official in the performance of their duties faces imprisonment of up to six months, a fine of up to 1,000 baht, or both. Section 267 deals with the use of forged documents and carries heavier penalties. By requiring signatories to acknowledge these provisions on the Statement Record Form, the DBD is ensuring that every participant in the registration process is fully aware of the criminal exposure they face if the declared information proves false.

For foreign investors whnýa relied on nominee structures, this heightened enforcement environment creates an urgent need to evaluate existing corporate arrangements and explore compliant restructuring options with qualified legal counsel before the April 2026 deadline.

Legitimate Alternatives to Nominee Arrangements

While the DBD’s new rules make nominee arrangements significantly riskier, Thailand offers several legitimate pathways for foreign investors to establish and operate businesses in the country. Understanding these alternatives is critical for any foreign entrepreneur or company considering market entry or restructuring their existing operations.

BOI Promotion: The Thailand Board of Investment offers promotional privileges that can include permission for 100 per cent foreign ownership in promoted business activities, corporate tax holidays, and exemptions from foreign business restrictions. This is often the most attractive option for manufacturing, technology, and innovation-focused businesses.

Treaty of Amity: United States citizens and US-majority companies benefit from the US-Thailand Treaty of Amity, which allows American investors to hold majority or full ownership in most business sectors, subject to certain exceptions. This remains one of the most powerful tools available for US investors operating in Thailand.

IEAT Free Zones: Companies operating within Industrial Estate Authority of Thailand (IEAT) free zones may be eligible for 100 per cent foreign ownership in manufacturing activities, along with additional customs and tax incentives specific to the zone.

Foreign Business License: For businesses that do not qualify for BOI promotion or Treaty of Amity benefits, applying directly for a foreign business license from the DBD remains a legitimate — if sometimes time-consuming — option. The FBL allows foreign-controlled companies to operate in restricted sectors with full regulatory compliance.

Timeline and What Happens Next

The draft order from the Central Partnership and Company Registration Office was published for public consultation, with the comment period having closed on March 13, 2026. The new rules are scheduled to come into force on April 1, 2026, giving businesses a very limited window to prepare for compliance. It is important to note that the draft order remains subject to potential amendments before final publication in the Royal Gazette, though significant changes at this stage are considered unlikely.

Foreign investors and their Thai partners should use the remaining time before the effective date to review their corporate structures with qualified legal and documentation specialists. Companies that genuinely have Thai investment should ensure that their shareholders can demonstrate the financial capacity and legitimate source of funds required to withstand scrutiny under the new verification process. Companies currently relying on nominee arrangements should urgently explore restructuring options, including obtaining proper foreign business licenses, BOI promotion, or other compliant investment pathways.

Impact on Existing Mixed-Ownership Companies

While the new rules primarily target future registration amendments, their impact on existing mixed-ownership companies should not be underestimated. Any company that needs to make changes to its partnership structure, directorship, or authorized signatories after April 1, 2026, will be subject to the new verification requirements if the changes fall within the defined trigger scenarios. This means that even companies with longstanding nominee arrangements may face exposure when routine corporate maintenance — such as changing directors, updating shareholder registers, or amending authorized signatory lists — triggers the enhanced scrutiny process.

Furthermore, the DBD’s increased focus on nominee enforcement is likely to extend beyond these specific procedural triggers. The new rules signal a broader institutional commitment to cracking down on non-compliant foreign ownership structures, and companies should anticipate more rigorous scrutiny during annual filings, tax audits, and other regular interactions with Thai government agencies. Proactive compliance is far more advisable than reactive crisis management when the enforcement environment tightens.

For more information about the original source of this regulatory update, you can read the full analysis from AIM Bankkok.

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