Koh Phangan Land Dispute: 3 Years in Prison for Nominee Ownership Schemes

A plot on the site of a former mine on Koh Phangan has turned out to be state land. According to The Nation Thailand, the Thai company that controlled the site shows a familiar structure behind it: Thai names on the shareholder register, foreign money and decisions behind the scenes. The dispute is public, and it has drawn attention not to the mine itself, but to how land is actually titled across the islands.

For an international buyer, the takeaway is simple and uncomfortable. The 'register it under a Thai company, you control it through a director and pledged shares' arrangement does not give you ownership. It gives you exposure that surfaces not when you expect it, but when the state or a neighbor takes an interest in the parcel.

Koh Phangan was long considered a quiet corner where these stories didn't surface. They have now.

Quick Answer

• Nominee ownership is a criminal offense. Under the Foreign Business Act B.E. 2542 (1999), Section 36: up to 3 years in prison, a fine of 100,000-1,000,000 THB, plus an additional 10,000-50,000 THB per day for a continuing violation. Both the foreigner and the Thai nominee are liable.

• Land acquired through nominees can be forcibly sold. Under the Land Code, such parcels are subject to compulsory disposal; compensation depends on auction results, not your original purchase price.

• Legal structures exist: freehold condominium ownership within the 49% foreign quota of a building's sellable area, a registered lease of up to 30 years, usufruct, and superficies.

• The '30+30+30' promise doesn't work the way it's sold. Only the first 30-year term is registered with the Land Department; any renewal is a contractual promise from the seller and generally does not bind a new owner of the land.

• On the islands, title matters more than price. Some Koh Phangan land is documented only with Por Bor Tor 5 or Sor Kor 1 forms, which are not ownership titles, and plot boundaries frequently overlap forest reserve land.

Key Facts

• Koh Phangan sits in Surat Thani province, with an island area of roughly 125 km²; a significant share falls within Than Sadet-Ko Pha Ngan National Park and forest reserve land, where private ownership is not legally possible.

• The dispute reported by The Nation Thailand concerns state land on the site of a former mine and the ownership structure of the Thai company that controlled it.

• Foreigners cannot own land in Thailand outright. The narrow exception under Section 96 bis of the Land Code (a 40 million THB investment for 1 rai of residential land with Ministry of Interior approval) is rarely used in practice.

• The condominium foreign quota is capped at 49% of a building's total sellable area. Funds must arrive from abroad, and the bank issues a Foreign Exchange Transaction (FET) certificate, mandatory for transfers of 50,000 USD or more.

• Under the Civil and Commercial Code, lease terms are capped at 30 years; any lease agreement longer than 3 years that isn't registered with the Land Department only protects the tenant for the first three years.

• Since 2024, Thailand's Department of Special Investigation (DSI) has worked with the Land Department to audit nominee companies on Phuket; the same method, tracing the source of Thai shareholders' capital, applies to any tourist province.

• Enforcement has since expanded well beyond Phuket. In August 2026, Hua Hin police arrested 13 foreigners during Phase 6 of a 'Crackdown on Foreign Nominee Networks' operation, issuing 45 search warrants and summoning 39 Thai nationals for questioning as alleged nominees, with an earlier phase in May 2026 targeting Koh Phangan directly.

Why the Thai company workaround still gets sold

Because it's convenient for everyone except the buyer. For the seller, it removes the restriction on who can buy: land can be offered to a foreigner at land prices rather than leasehold prices. For the agent, it delivers a transaction. For the lawyer assembling it, there's a fee for incorporating the company, drafting preferential voting share classes, pledging shares, and drawing up a loan agreement from the foreigner to the company.

On paper it looks convincing. The foreigner holds 49% but controls the majority of votes through share classes. Thai shareholders sign blank share transfer forms. The company buys the land.

The problem is that investigators don't care about the articles of association. They care about one question: where did the Thai shareholders get the money for their shares. If there's no banking trail, the structure unravels after a single inquiry.

What breaks down when a plot becomes contested

As long as nobody challenges it, the scheme can run for years. That's exactly what creates a false sense of security: 'everyone does this and nothing happens.' Things change the moment there's a conflict, whether with the state over boundaries, with the previous owner's heirs, or with a neighbor over right of way.

In a dispute, you discover the party of interest is the Thai company, not you. Your control tools, the pledged shares and loan agreement, work against your Thai partners but not against the state. And if the structure turns out to be a nominee arrangement, you go from aggrieved party to violator of the Foreign Business Act.

One more thing: you can only resell such an asset to another foreigner willing to enter the same arrangement. The pool of buyers narrows precisely when the market gets nervous over another high-profile case, and recent enforcement sweeps in Phuket and Hua Hin suggest that moment has arrived.

Our position

Foreigners should not buy land on Koh Phangan through nominee structures, whether via a company, a 'trusted Thai friend,' or a spouse. The gap between a 30-year registered lease and pseudo-ownership through a company isn't worth a criminal charge and the risk of losing the entire asset.

If your budget is up to 8-10 million THB and your goal is rental income, the answer is almost always a freehold condominium unit: it's liquid, resells without legal gymnastics, and can be bought by anyone.

When this advice doesn't apply: if you're building a genuine operating business, a hotel, restaurant, or wellness center, with real Thai partners contributing their own capital and running actual operations. A Thai company in that case isn't a fiction, it's a normal legal tool. The line between a legitimate company and a nominee one isn't about the paperwork, it's about whether the Thai shareholders bring real capital and real participation.

How to vet land on the Surat Thani islands

Steps to take before putting down a deposit:

• Request a copy of the title deed (Chanote / Nor Sor 4 Jor) and verify it at the local Land Department office, not from a photo the seller sends you.

• Commission a physical boundary survey with a licensed surveyor: on Koh Phangan, mismatches between paperwork and the actual fence line are common.

• Check for overlap with forest reserve or national park land.

• Review the chain of title: parcels with a former mining or agricultural designation deserve extra scrutiny.

• Confirm a registered right of way exists, not just a verbal understanding with a neighbor.

Market estimates put the cost of this kind of due diligence at 30,000-80,000 THB per parcel, including a surveyor's visit. Against the price of the land itself, that's a rounding error, and it's practically the only money in the whole deal that reliably pays for itself.

Plan to inspect properties in person, more than once: Koh Phangan is reached by ferry from Samui and Surat Thani, and the trip from the mainland takes half a day, so it makes sense to plan flights to Samui in advance and budget at least three nights on the island for a proper viewing trip.

FAQ

Can a foreigner buy land on Koh Phangan?

No. The Land Code prohibits foreign land ownership, with a narrow exception under Section 96 bis (a 40 million THB investment for 1 rai of residential land, requiring Ministry of Interior approval). This exception has little practical relevance for a retail buyer.

What are the penalties for a nominee scheme?

Under Section 36 of the Foreign Business Act: up to 3 years in prison and a fine of 100,000 to 1,000,000 THB, plus a daily fine of 10,000-50,000 THB for continued violation. Penalties apply to Thai nationals acting as nominees too, and the land itself becomes subject to forced sale.

Is a 30-year lease safe?

A lease registered with the Land Department for up to 30 years is legally protected and survives a change of land ownership. What's not safe is counting on automatic renewal. Only the first term gets registered; a promise to extend remains a personal obligation of the specific seller.

Can a Thai wife buy land with joint funds?

The land can be registered in her name, but before registration the Land Department requires written confirmation that the funds belong to the Thai spouse and that the foreign spouse has no claim on the asset. Legally, you're waiving your rights to the land. This works as a family arrangement, not as an investment tool.

How do you buy a condo safely?

Stick within the 49% foreign quota, transfer funds from abroad in foreign currency, and have the bank issue a Foreign Exchange Transaction (FET) certificate. Without this document, the Land Department won't register a foreign owner. Check the building's remaining quota before signing anything.

Have nominee company crackdowns reached Koh Phangan?

The public dispute over the former mine shows authorities are paying attention to ownership structures on the island. Systematic audits have run on Phuket since 2024, and enforcement has since spread, including a 13-person arrest sweep in Hua Hin in August 2026 and an earlier phase specifically targeting Koh Phangan in May 2026. The methodology is nationwide, not tied to one province.

Which land documents are not ownership titles?

Sor Kor 1, Por Bor Tor 5, and Nor Sor 2 do not confer full ownership. A genuine title is Chanote (Nor Sor 4 Jor); Nor Sor 3 Gor permits transactions but still requires a separate boundary check.

Is buying a villa on Koh Phangan for rental income worth it?

A villa on leased land can work for a short investment horizon with a clearly defined lease term. But short-term rentals in Thailand without a hotel license conflict with the Hotel Act, a separate risk that sellers rarely mention upfront.

Source: The Nation Thailand

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