600 Phuket Companies Under Investigation: The End of Nominee Ownership Schemes

Thai authorities have launched an unprecedented crackdown on one of the property market's longest-running grey zones. More than 600 companies registered in Phuket are now under active scrutiny by regulators for suspected nominee ownership arrangements. For international investors who have spent years acquiring villas and land plots through Thai nominee shareholders, this is a serious warning signal that demands immediate attention.

The scale of the investigation is unlike anything seen before. Thailand's Department of Special Investigations (DSI) and the Ministry of Commerce are jointly auditing corporate ownership structures registered in Phuket Province. Their objective is to identify legal entities where foreigners exercise effective control while Thai nationals appear only as paper shareholders with no real capital contribution.

The Foreign Business Act (1999) prohibits foreigners from holding more than 49% of shares in companies engaged in certain restricted activities, including land ownership. Nominee structures have served as a workaround for decades. That workaround is now being systematically dismantled.

Quick Answer

• 600+ companies in Phuket are under investigation for suspected nominee ownership
• Investigations are jointly led by the DSI and Thailand's Ministry of Commerce
• The primary target: structures where Thai nationals formally hold 51% of shares but contribute no real capital and play no management role
• Maximum penalties under the Foreign Business Act include fines up to 1 million baht and imprisonment for up to 3 years
• Phuket was selected as the first region due to its status as Thailand's largest resort property market for foreign buyers
• The campaign is expected to expand to other popular provinces including Koh Samui, Krabi, Chiang Mai, and Pattaya

Scenarios and Options

Scenario 1: Full Enforcement

Authorities follow through completely. Companies identified as nominee structures receive orders for dissolution. Foreign beneficiaries lose control of their assets, and land plots are transferred to the jurisdiction of the Land Department. Isolated precedents have existed before, but enforcement at this scale would represent something fundamentally new for the Thai property market.

Scenario 2: Managed Correction

The more likely outcome. Regulators grant companies a transition window to restructure and achieve legal compliance. Nominee shareholders are replaced by genuine business partners, or companies are reorganised entirely. Foreign owners convert villa ownership into long-term leasehold agreements (30 years with renewal options), which remain a fully legal and widely used structure.

Scenario 3: Legislative Reform

The government uses this enforcement campaign to build political support for legalising limited foreign land ownership rights. A proposed amendment to increase the foreign freehold quota in condominium projects from 49% to 75% was debated during 2024 and 2025. The current crackdown could accelerate the introduction of new frameworks that offer genuine legal alternatives to nominee arrangements.

What Investors Should Do Right Now

If you already hold property through a Thai-registered company, commission an independent legal audit of your ownership structure without delay. Verify whether the company meets the criteria for a genuine operating business: can the Thai shareholders demonstrate a documented source of funds for their share purchase? Do they actively participate in management decisions? Does the company conduct any commercial activity beyond holding real estate?

Comparison Table

Main Risks and Mistakes

Risk 1: Asset Loss. If a company is classified as a nominee structure, a court may order the compulsory sale of its real estate assets. The foreign beneficiary holds no priority claim over the proceeds from that forced sale.

Risk 2: Criminal Liability. The Foreign Business Act creates criminal exposure not only for the foreign beneficiary but also for the Thai nominee shareholders themselves. As personal legal risk rises, fewer Thai nationals will be willing to serve in that capacity, making these structures increasingly unstable from the inside.

Risk 3: Title Insurance Denial. Banks and insurance providers refuse title coverage for properties held by companies showing indicators of nominee ownership. This directly affects your ability to finance, refinance, or protect the asset.

Risk 4: Transaction Freeze. The Land Department has already introduced stricter vetting of corporate buyers. The registration of property transfers linked to suspect companies can be frozen for months, effectively locking your capital.

Common Mistake 1: Relying on structures that worked smoothly in the 2010s. A significant number of local lawyers continue to recommend nominee arrangements without disclosing the current enforcement environment. Always work with advisors who are actively tracking regulatory developments and recent case outcomes.

Common Mistake 2: Assuming that preferred share arrangements or multi-class corporate structures provide protection against nominee investigations. Even sophisticated share class designs will not shield a structure if regulators determine that Thai shareholders made no genuine capital contribution.

FAQ

What exactly is nominee ownership under Thai law? It is an arrangement where Thai nationals formally hold a controlling stake (51% or more) in a company but contribute no real funds and exercise no genuine management role. Effective control and economic benefit belong to a foreign national who provided the actual capital.

Why did the investigation start in Phuket specifically? Phuket represents the largest concentration of foreign resort property ownership in Thailand. Market estimates suggest that up to 40% of villas on the island are held by foreigners through Thai-registered companies, making it the most logical starting point for a nationwide enforcement campaign.

Can my villa actually be taken away if the company is found non-compliant? Direct confiscation is not the typical outcome, but the company will be ordered to cease operations, which triggers a compulsory liquidation of assets. In practice, the foreign beneficiary risks receiving considerably less than fair market value during a forced sale process.

What legal ownership options exist for foreigners buying a villa? The main compliant structures are: a long-term land lease (leasehold) of 30 years, the purchase of a condominium unit within the foreign freehold quota (up to 49% of total project floor area), or the establishment of a genuine joint venture with a Thai business partner who makes a real capital contribution.

Will the crackdown extend to other regions? Yes. Authorities have already announced the programme will expand to Koh Samui, Krabi, and Pattaya. This is a coordinated national policy, not an isolated local initiative.

How can I tell if my company qualifies as a nominee structure? Key indicators include: Thai shareholders who cannot document their funding source for share purchases, shareholders who have never attended company meetings, shareholders who receive no dividends, and a company that conducts no business activity other than holding real estate.

How much does restructuring from a nominee arrangement cost? A full legal restructuring into a leasehold or compliant ownership structure, with professional legal support, typically costs between 150,000 and 400,000 baht, depending on the complexity of the corporate structure and the value of the underlying property.

Is there a statute of limitations on nominee violations? No. The Foreign Business Act imposes no limitation period for nominee ownership violations. A company established 15 years ago carries exactly the same legal exposure as one registered last year.

The era of nominee ownership structures in Phuket is drawing to a close. Investors planning new acquisitions should build their strategy around compliant frameworks from the outset - leasehold agreements, freehold condominium units, or genuine joint ventures with Thai partners. Those who already hold property through suspect corporate structures need to act now, before the investigation reaches their specific assets.

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