Thailand's Crackdown on Nominee Companies: What Foreign Investors Must Do Now in 2026

Thailand's Ministry of Commerce is preparing the first major overhaul of the Foreign Business Act (FBA 1999) in more than 25 years. The target is clear: nominee structures that foreigners have used for decades to bypass restrictions on business and land ownership. For international investors holding Thai property through proxy structures, this is a signal to act immediately.

The Department of Business Development (DBD) is already reviewing the law and its regulations. As of August 1, 2026, Order No. 2/2026 has expanded scrutiny to cover post-registration changes in ownership and management, not just initial filings. If a foreigner invests in or holds signing authority in a company, that company must now submit a written investment explanation plus three months of bank statements. The DBD is auditing more than 46,000 companies with foreign participation nationwide, with Phuket, Pattaya and other resort provinces flagged as high-risk zones. On Koh Samui, Koh Phangan and elsewhere, more than 850 firms have already faced enforcement action, with estimated damage to state revenue exceeding 15 billion THB.

Quick Answer

• The Foreign Business Act (FBA 1999) is undergoing its first major revision in over 25 years

• The primary target is nominee structures and complex cross-holdings that disguise real foreign control

• New criminal penalties apply for operating without proper licenses, including asset confiscation, fines up to 1 million THB, and up to 3 years imprisonment

• The DBD is auditing over 46,000 companies with foreign participation; more than 850 firms have already faced enforcement, with damages exceeding 15 billion THB

• The three-tier protected sector system (9 + 13 + 21 industries) remains unchanged

• Foreign-linked companies must now report management and beneficiary changes as of August 1, 2026 under Order No. 2/2026

• Investors holding assets through Thai companies should commission an immediate legal audit

Scenarios and Options

Scenario 1: You own a condo unit in the foreign freehold quota. This is the safest position. The law allows foreigners to own up to 49% of a condominium project's total floor area directly, as freehold. The FBA reform does not touch this ownership route. No intermediary company, no exposure to the crackdown.

Scenario 2: You hold land or a villa through a Thai company. This is the highest-risk zone. The classic setup, a Thai LLC with nominee Thai shareholders while a foreigner actually controls the business, is exactly what the reform targets. Options include converting to a long-term lease (30+30+30 years), restructuring with a genuine Thai partner, or selling before the amendments take effect.

Scenario 3: You run an active business with foreign participation. If the company operates in one of the 43 protected sectors, confirm you hold a Foreign Business License (FBL) or BOI certification. Without it, consequences range from fines to criminal prosecution. Engage a Thai lawyer for a structural audit.

Scenario 4: You are still planning your investment. This is the ideal moment to choose a legal route from the start: a freehold condo unit, a leasehold villa, or an investment through a BOI-licensed company. Schedule a consultation with a lawyer early in your due diligence trip.

Comparison Table

Main Risks and Mistakes

Risk 1: Delaying a structural audit. The Ministry of Commerce may pass amendments faster than expected. Start your audit now, don't wait for the final text of the law.

Risk 2: Assuming an 'old' scheme is safe. The fact that a nominee company has operated for 10 years offers no protection. Asset confiscation applies retroactively to existing structures.

Risk 3: Relying on unlicensed intermediaries. Some brokers still offer nominee arrangements. Post-reform, this is a direct path to criminal liability for both parties.

Risk 4: Misreading the three-tier sector system. Even a legitimate business can fall under Tier 2 or Tier 3 restrictions. Check whether your activity requires an FBL.

Risk 5: Losing control during restructuring. Moving from a nominee company to a genuine Thai partner requires legally precise agreements. Without a solid contract, you risk losing the asset.

Risk 6: Ignoring mandatory reporting. Under Order No. 2/2026, companies must notify the DBD of management changes and, in some cases, submit bank statements covering three months. Non-compliance is a separate ground for fines.

FAQ

What is a nominee structure in Thailand?

It's a Thai company where the formal Thai shareholders hold no real control. A foreigner manages the business and owns the assets through that company. This has long been illegal, but enforcement mechanisms were weak. The 2026 FBA reform changes that.

Can my condo unit be confiscated?

If the unit was purchased under the freehold foreign quota in your own name, no. The reform targets nominee structures and illegal foreign business ownership, not legitimate condo purchases.

How do I check if my company is at risk?

Commission a legal audit with a licensed Thai attorney. They will review shareholder structure, actual management control, whether you hold an FBL or BOI license, and whether your business activity complies with the FBA.

Can I convert a villa held via a nominee company into a leasehold?

Yes, but the process requires the company to sell the asset and a new lease agreement to be signed. This triggers transfer taxes of roughly 6-7% of the appraised value and requires the consent of all shareholders.

What are the penalties for violating the new rules?

Preliminary reports point to asset confiscation, fines up to 1 million THB, and up to 3 years imprisonment. Exact figures will be confirmed in the final amendments.

When will the new rules take effect?

An exact date has not been announced. The Department of Business Development is finalizing its review, after which the amendments move to the Cabinet and Parliament. Market estimates suggest 6 to 18 months.

Does the reform apply directly to real estate?

The FBA regulates business ownership, not real estate directly. But since foreigners have long used Thai companies to bypass the Land Code, the reform hits precisely this workaround.

Should I sell a villa held through a Thai company?

It depends on your situation. If the company has genuine business activity and a legitimate structure, risk is lower. If it's a pure nominee arrangement, selling or restructuring now is wiser than waiting for enforcement.

The FBA reform is not a threat, it's an opportunity to put your Thai investments in order. Investors operating through legitimate structures stand to benefit as the market becomes more transparent and prices for 'clean' assets rise. The first step is a professional audit of your current position in Thailand.

Source: TCIJ (Thai Civic Rights and Investigative Journalism Center)

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