On Friday, August 22nd, the Department of Special Investigations (DSI) announced that it received orders to crack-down on Thai Nominee Shareholding Structures. These are structures, where Non-Thai nationals only hold up to 49% of a company active in an area restricted to foreigners by the Foreign Business Act of 1999, but effectively control it (e.g. through preferential shares).
Despite being unlawful, Nominee Shareholding Structures are commonplace and many lawyers throughout Thailand recommend such set-ups. We at Stein Advisors relentlessly warned against such structures, since they constitute a very fragile basis for business and investments. The DSI will begin with the crack-down in Pattaya. Based on past experiences, the DSI will prosecute Nominee Shareholding Structures first in Pattaya, then in other holiday destinations such as Phuket an Koh Samui before eventually prosecuting these set-ups in the capital. The crack-down on Thai Nominee Shareholding Structures comes as no surprise – the military junta has been keen on enforcing legislation directed towards foreigners and has recently also thightened rules for visas and work permits for Non-Thai nationals.
For details please refer to a recent article in Pattaya One.