Mr. Poonpong Naiyanapakorn, Director-General of the Department of Business Development, Ministry of Commerce, revealed that "nominees" are a significant problem undermining confidence and fairness in the country's business environment. Previously, the Department had implemented measures to inspect and screen high-risk legal entities from the company registration stage, checking the investment of Thai investors. This helped reduce the risk of nominee arrangements to some extent. However, close monitoring revealed that criminal groups have developed methods to circumvent these measures. Registered entities often establish themselves in a way that doesn't meet the initial screening criteria, but later submit amendments to allow foreigners to invest, hold shares, or become directors with signing authority, thus systematically evading existing inspection measures.

Mr. Poonpong further stated that, therefore, the Department has issued Order No. 2/2569 to enhance prevention and close loopholes in this problem. The key aspects of this measure include expanding the scope of scrutiny to cover the entire business cycle, from registration to amendment, to prevent subsequent changes in shareholder or board structure. Furthermore, it strengthens the requirements for registration documents. In cases where foreigners are involved in investment or have signing authority, a letter explaining the investment, along with bank statements for the past three months from both the Thai investor making the investment and their representative or legal entity receiving the investment, must be submitted to verify the true investment capability. Currently, there are 1,004,558 existing legal entities, comprising 200,327 partnerships, 802,717 limited companies, and 1,514 public limited companies. Of these, 0.01% to 49.99% of companies have foreign investment, resulting in 119,116 companies still being classified as Thai legal entities (high-risk nominee entities).

This measure is believed to not impose a burden on honest businesses but rather enhances the prevention of company registration using Thai nationals as nominees to conceal foreign ownership, thereby evading or violating the law. In addition to the measures under Order No. 2/2569, which will come into effect from August 1, 2026, the Department will expedite the inspection of high-risk areas with problems of using nominees to undermine the country, namely Chonburi, Rayong, Chiang Mai, Chiang Rai, Surat Thani, Phuket, and Krabi provinces.

“If any irregular registration or actions to evade the law are detected, the Department and related agencies are prepared to prosecute all offenders decisively. Those who violate the Foreign Business Act B.E. 2542 (1999) for nominee-related offenses are subject to both imprisonment and fines according to Section 36, with a maximum sentence of 3 years imprisonment or a fine of 100,000 to 1,000,000 baht, or both. Foreigners who illegally conduct business without permission will be subject to the same penalties under Section 37, including a court order to cease operations. In the past, the Department, in cooperation with the Royal Thai Police, the Department of Special Investigation (DSI), and other related agencies, has arrested and prosecuted offenders, both foreigners and Thais, in many areas throughout the country. At the same time, there has been continued foreign investment in the country.” Or, there are many who are legally conducting business in Thailand, and the Department is ready to facilitate this. We would also like to urge Thais who are assisting or supporting foreigners in committing crimes through nominees to cease such behavior, prioritizing the benefit of the nation," Director-General Poonpong concluded.#SuperDBD #DepartmentofBusinessDevelopment #MinistryofCommerce

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