Koh Samui Nominee Case 2026: Italian Restaurateur Sentenced Under Thailand's Foreign Business Act

In February 2026, the Provincial Court of Surat Thani handed down a landmark ruling against an Italian restaurateur from Koh Phangan who ran his business for two and a half years through nominee Thai shareholders. The verdict: a suspended one-year prison sentence, a fine exceeding 130,000 baht, and a full ban on conducting business in Thailand. The case has become one of the most cited precedents for enforcement of the Foreign Business Act (FBA) in recent years, and it matters to every foreign investor who has ever considered nominee arrangements a 'safe' workaround for Thailand's foreign ownership restrictions.

Quick Answer

• The Surat Thani court convicted the Italian national and three Thai nominee shareholders under the Foreign Business Act B.E. 2542

• The Italian defendant received 1 year in prison (suspended for 2 years) and a fine of 130,000 baht (110,000 plus an additional 20,000)

• Each of the three Thai nominees received 6 months suspended and a 50,000 baht fine

• The company was ordered to cease operations entirely, and the nominees had to exit their shareholder positions

• Non-compliance triggers a penalty of 10,000 baht per day of continued violation

• The business fell under List 3 (item 19) of the FBA, covering food and beverage services restricted from foreign control without a license

This is not an isolated incident. A parallel crackdown on Koh Samui has opened 60 cases against 59 companies and 88 suspects (26 Thai nationals and 62 foreigners), with 14 foreigners arrested, covering 37 plots of land and properties worth roughly 1.2 billion baht, according to Nation Thailand.

Scenarios and Options

Scenario 1: Legal Foreign Business License (FBL). A foreigner applies to the Department of Business Development (DBD) for a license under FBA List 3. The process takes 3-6 months and requires justification, such as an investment of at least 3 million baht and job creation for Thai staff. Advantage: full legality, no criminal exposure. Trade-off: a lengthy process, possible rejection, and annual reporting obligations.

Scenario 2: Genuine joint venture with a Thai partner. The foreigner holds up to 49% of shares, while a Thai partner, a real investor with verifiable capital, holds 51%. The key difference from a nominee scheme is that the Thai co-owner actually participates in management and contributes their own money. Advantage: a lawful structure. Trade-off: dependency on the partner and the risk of corporate disputes.

Scenario 3: BOI promotion or the Treaty of Amity. US citizens can use the Treaty of Amity for 100% business ownership. Nationals of other countries can pursue Board of Investment (BOI) promotion if the business falls into a priority category. Advantage: maximum protection and tax incentives. Trade-off: only applicable to certain types of activity.

Scenario 4: Nominee structure (the scheme in this case). Thai citizens hold shares 'on paper' while actual control and capital rest with the foreigner. Advantage: fast setup and low upfront cost. Trade-off: criminal prosecution, prison sentences, fines, loss of the business, and deportation.

Comparison Table

Main Risks and Mistakes

Risk 1: Criminal prosecution under the FBA. The maximum penalty under the relevant section is up to 3 years in prison and a fine of up to 1,000,000 baht. The Italian defendant received a relatively lenient sentence thanks to a guilty plea. Mitigation: operate only through legal ownership structures.

Risk 2: Thai nominees face prosecution too. Many assume only the foreigner is at risk. In this case, each of the three Thai 'shareholders' received a 6-month suspended sentence and a 50,000 baht fine. Finding people willing to take part in such schemes is becoming harder. Mitigation: never offer Thai acquaintances a role in a nominee arrangement.

Risk 3: Total loss of the business. The court ordered the company to cease operations. Years of work, equipment investment, and a built-up client base can be wiped out by a single ruling. Mitigation: budget for legal structuring from day one of the business plan.

Risk 4: Daily fines for non-compliance. 10,000 baht per day accrues for every day a court-ordered ban is violated, which adds up to 300,000 baht a month. Mitigation: comply with any court order immediately upon issuance.

Risk 5: Deportation and blacklisting. A criminal record in Thailand can lead to visa cancellation and an entry ban. Mitigation: consult a licensed Thai lawyer before starting any commercial activity.

Risk 6: A false sense of safety. 'Everyone does it' is the most dangerous argument of all. The Department of Special Investigation (DSI) and DBD have been ramping up enforcement since 2024, particularly in tourist provinces. A related Phuket and Samui probe, the 'Villa Andaman' case, sent 31 suspects to prosecutors in May 2026 after investigators traced networks of law firms and consultancies using Thai nominees to mask foreign land ownership, according to TPN National. Mitigation: follow current enforcement trends rather than relying on outdated anecdotes from other expats.

FAQ

What is a nominee shareholder in Thailand?

A Thai national who formally holds company shares but has not contributed real capital and does not participate in management. Actual control and money belong to the foreigner. This structure directly violates the Foreign Business Act B.E. 2542 (1999).

What is the maximum penalty for using nominees?

Up to 3 years in prison and a fine of up to 1,000,000 baht for the foreigner. Thai nominees also face criminal liability, up to 3 years and up to 1,000,000 baht in fines.

Can a foreigner legally own a restaurant in Thailand?

Yes, with a Foreign Business License, or through a genuine joint venture where the Thai partner truly invests and manages the business. Restaurants fall under FBA List 3.

How does the DBD detect nominee structures?

The department analyzes the sources of shareholder capital, reviews the tax filings of Thai 'owners', examines bank transfers, and checks actual management authority. Tips from competitors and former employees are also a common trigger for investigations.

Does this apply to real estate as well?

Yes. Nominee shareholder schemes used to hold land through a Thai company are reviewed under the same FBA provisions. The Land Department actively cooperates with the DBD, and a related crackdown identified five company networks linked to nominee arrangements used to obtain work visas and conduct unregistered business on Samui.

Does a suspended sentence mean someone can stay in Thailand?

In this case, the court imposed a suspended sentence with a 2-year probation period, meaning the convicted person does not go to prison. However, the criminal record remains, which can affect visa renewals and future work permit applications.

How much does legal business setup through an FBL cost?

Legal support for obtaining a Foreign Business License typically costs 150,000 to 400,000 baht, depending on complexity, far cheaper than the fines and business losses that follow exposure of a nominee scheme.

Source: Nation Thailand

The case of the Italian restaurateur from Koh Phangan is not an isolated incident but part of a systemic trend. Thai authorities are consistently tightening oversight of foreign-run businesses, especially in tourist zones. The only workable strategy is full legal compliance from day one. Cutting corners on legal structuring ultimately costs far more than doing it right the first time.

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