Thailand's August 2026 Circular Targets Nominee Land Ownership: What Foreign Buyers Must Know

A villa owner on Koh Samui, holding property through a Thai company with two local shareholders, may this season receive a letter not from a lawyer but from the provincial land office. The question inside is simple: where did the Thai shareholders, who hold 51% of the company, get the funds to pay for their share capital.

The key document is an urgent circular from Thailand's Ministry of Interior, No. MorTor 0515.2/Wor 19097, dated August 25, 2026. It instructs land offices to stop waiting for complaints or tip-offs and instead proactively screen legal entities for signs of nominee land ownership on behalf of foreigners.

If the scheme is confirmed, a fact-finding committee reclassifies the company as a foreigner under the Land Code. The provincial governor then sets a deadline for forced divestment of the land, and the case is referred for criminal prosecution.

An important detail for anyone who feels confident about their structure: the shareholder register is no longer the primary evidence. Investigators now review tax filings, sources of funding, bank account histories, and the residency status of all parties involved.

Key Facts

• Interior Ministry circular No. MorTor 0515.2/Wor 19097 was signed on August 25, 2026, and sent to provincial land offices nationwide, building on a prior 2023 circular.

• The fact-finding and investigation committee has been expanded to include law enforcement agencies, with new interagency data sharing covering tax records, shareholder audits, and asset tracing.

• Land offices must now conduct proactive screening of legal entities and forward preliminary findings to the committee, which determines foreign status under the Land Code.

• If a violation is confirmed, the provincial governor sets a deadline for mandatory land divestment, while a criminal complaint is filed in parallel.

• In Surat Thani province, authorities under Deputy Interior Minister Worasit Liangprasert flagged 112 entities on Koh Phangan for foreign shareholding above legal thresholds, involving 86 rai 3 ngan 42.4 square wah of land.

• In Phuket, a broader nationwide crackdown has identified over 300 legal entities illegally holding land under foreign control, with more than 30 companies already forced to sell land following BOI-exemption checks.

• The direct ban on foreign land ownership has been in force since the Land Code of 1954; a narrow investment exception requiring at least 40 million THB for 1 rai of residential land needs Interior Ministry approval and is almost never used in practice.

• Condominiums are unaffected: foreigners can legally hold freehold title to up to 49% of the total unit area in any given building.

Story and Context

The Thai company structure was not born as fraud. It emerged in the 1990s as a working compromise. The Land Code barred foreigners from owning land outright, while the villa markets of Phuket and Koh Samui demanded a legal vehicle to make deals happen. The answer came from company law: a foreigner takes 49% of the shares, two or three Thai nationals hold the rest, management and bank signing authority stay with the foreigner, and a package of share pledge agreements and powers of attorney binds everyone together.

The first serious warning came in 2006, when the Ministry of Interior instructed land offices to verify whether Thai shareholders had genuinely paid for their shares with their own money. Back then, it ended with a wave of re-registrations and paper increases to registered capital. For nearly twenty years afterward, the market operated quietly: deals were registered, taxes were paid, and no one asked too many questions.

What changed in 2026 is not the letter of the law, but the method of proof.

Previously, an investigator needed a confession or a direct complaint, usually from a disgruntled Thai shareholder or a former business partner. Now the land office pulls the data itself: did the Thai shareholders file tax returns, does their declared income match the size of their paid-in share, who actually transferred the money into the company account, and does the foreigner actually live at the address of that same villa. None of these facts alone proves anything. Together, they build exactly the picture the committee needs to classify a structure as nominee ownership.

This is precisely where tactics once sold as clever workarounds stop working. Preferred shares with multiplied voting rights, designed to give a foreigner control while holding only 49% of the capital, now read less like a clever hedge and more like a written confession that the real owner is a foreigner. Loan agreements from the foreigner to the Thai shareholders reveal exactly where their money came from. And a Thai shareholder with a declared income of 15,000 to 20,000 THB a month, who supposedly paid for 51% of a company with 25 million THB in capital, will not survive the first cross-check against the tax database.

Companies with genuine operating businesses deserve a separate mention. A Thai legal entity holding land for a functioning hotel or restaurant, one that pays salaries, files proper accounts, and has Thai partners with traceable personal funds, sits in a fundamentally different position than an empty structure holding a single asset with zero turnover. The circular targets the second category, but both will have to pass scrutiny, and it is far better to gather supporting documents now than after a letter arrives from the land office.

The consequences of a confirmed violation come in two layers. The first is forced sale of the land within the deadline set by the governor; a sale made under pressure and on a tight timeline almost always closes at a discount to market value. The second is criminal: holding land through a nominee under the Land Code carries imprisonment and fines, while violating the ban on nominee participation under the Foreign Business Act B.E. 2542 carries up to three years in prison and fines ranging from 100,000 to 1 million THB. Thai shareholders, who often do not fully understand what they signed, carry real risk too.

A practical point that non-resident owners tend to underestimate: restructuring cannot be handled by email. Converting to a registered lease, setting up a usufruct, or selling a shareholding all require in-person appearances at the land office and the bank, so a trip to Thailand needs to be planned well in advance and coordinated with your lawyer and the land office, not booked as an afterthought.

Here is a clear way to think about it. If you are buying a home in Thailand for personal use and the deal value is under 15-20 million THB, a company structure is not worth the risk or the ongoing maintenance cost: buy a freehold condominium instead, where a foreigner's right is written directly into the law. If you specifically need land and a house, work with a registered 30-year lease combined with a usufruct or superficies right over the structure, understanding that Thai courts do not guarantee automatic renewal of the lease. A company structure only makes sense where there is a genuine operating business with real turnover and real Thai partners. The one exception is large-scale projects under BOI promotion or formal investment exemptions, where the structure is cleared with the authorities in advance rather than invented after the fact.

Source: Mondaq

FAQ

What exactly did the August 25, 2026 circular change?

It shifted enforcement against nominee structures from reactive to proactive. Land offices must now identify suspicious legal entities on their own and refer the findings to an expanded fact-finding committee that now includes law enforcement officials.

My villa was put into a company ten years ago. Is there a statute of limitations?

Under Thai land law, illegal ownership is not legalized by the passage of time: once the committee classifies a company as foreign, the divestment obligation applies regardless of the purchase date. Older structures are often more vulnerable because they were set up under standards nobody checked at the time.

Is the structure legal if I hold exactly 49% of the shares?

No. A 49% stake is legal on its own, but enforcement now examines the source of the Thai shareholders' funds, their tax records, and actual control. A technically clean shareholder register paired with empty declarations from your partners now works against the owner.

Does this affect condominium owners?

No. A foreigner's right to hold freehold title to a unit, within the 49% cap on total unit area in a building, is protected under the Condominium Act and falls outside the scope of this circular. This is strictly about land.

What should I do if a letter from the land office has already arrived?

Do not respond on your own or submit documents in a hurry. You need a Thai lawyer experienced with the Land Code, a full record of payment history for the registered capital, and an evaluation of your options: selling to a Thai buyer, converting to a registered lease, or selling your shareholding before the governor's deadline expires.

Are a usufruct and a 30-year lease safe?

Safer than a company structure, but not risk-free. A registered lease of up to 30 years and a usufruct are recorded on the chanote title and protected by law, but the promise of automatic renewal for a second 30-year term is not consistently supported by court precedent. Evaluate the deal based on the first 30 years alone.

Are Thai shareholders at risk too?

Yes. A Thai national acting as a nominee owner faces imprisonment and fines under the Land Code, and under the Foreign Business Act, nominee participation carries up to three years in prison plus fines of 100,000 to 1 million THB.

Will this affect villa prices in Phuket and Koh Samui?

The impact will likely be targeted rather than market-wide: pressure falls mainly on the secondary market for villas sold through company structures, where some owners will want to exit quickly. New projects structured from the start around long-term leases or licensed hotel operations are more likely to benefit.

Ready to invest in Thailand? Our experts will help you find the perfect property.