Transcript of the above video: 

As we have discussed in a number of videos recently, the issue of nominees as it pertains to corporate structures here in Thailand is something that is of deep concern now to the establishment, to policy makers. As I've discussed in recent videos, it has now risen to a top-level national security issue in conjunction with matters pertaining to Immigration. That said, I thought of making this video after reading a recent article from the Pattaya Mail, that is pattayamail.com, the article is titled: The Wake-up call from Koh Phangan: A paradigm shift in Thailand's regulatory enforcement. Quoting directly: "The tranquil shores of Koh Phangan, traditionally known for its vibrant tourism and "Full Moon" festivities, have recently become the epicenter of a seismic shift in Thailand's legal landscape. The recent stringent scrutiny and subsequent actions against foreign-owned businesses on the island are not merely isolated incidents of local law enforcement; they represent a systemic dismantling of the long-standing "Nominee Culture" that has permeated the Thai economy for decades. For the expatriate community and the international investors in Pattaya and beyond, Phangan is a stark wake-up call. The message from the authorities is clear. The era of "Gray Area" operations is reaching its terminal point." 

Now I've discussed this in other videos; gone into some detail about that. But here's really where the rubber hits the road for this particular video. Quoting further: "Did the Thai shareholders have the documented wealth to fund their capital contribution? Operational Control - Who holds the ultimate power to sign contracts, higher staff, or manage bank accounts? Preference Shares - Are the voting rights and dividend distribution structured to effectively strip the Thai majority of any real control? When the economic substance of a company does not match its legal facade, the consequences are no longer just administrative fines; they are existential." 

Yeah, and basically to sort of sum all that up and encapsulate it into one phrase, “it has got to pass the smell test”. I have talked about this with clients in the past. It's generally not our habit to set up companies for our clients that have these Preference Share sort of set-ups and there are varying ways to do it, and by the way, there are legitimate Preference Share Corporations, and they can be set up for legitimate purposes. And by the way, it is a bit of a misnomer in that citation that it's all about control. You could have a situation where you know the reason for Preference Shares is often because somebody doesn't want control. They want a fixed return usually - in terms of a dividend - it's sort of like a Premium Bond or something of this nature, Preferred Shares of corporations can result in somebody saying, "look, you run the company; I'm putting this money into it but I want a fixed return." Where we really see problems with Preference Shares is where everything is stripped off the Thai majority. They don't have control; they don't even have any type of fixed return associated with their investment. So again, the idea of it passing the smell test, ‘why would somebody set up that corporation?’ is oftentimes the question that must be asked. A 49/51 set up, there's myriad ways in which there are legitimate circumstances for setting that up especially in light of the Foreign Business Act; we have assisted folks with that over the years. And I think it is important to point out that when we are looking at all this - and I have gotten into this with regard to citations from the Pattaya Mail - this notion that it's "oh the legal structure is not as important". No, it absolutely is, that's the point of the legal compliance. So yes, there are perfectly legitimate 49/51 setups, but yeah, the point about Preference Shares, much like land holding companies, this is where you are going to see some real problems here in Thailand, because if there is no reason for that shareholder to be on there - they have no control, they have no returns, they are just sitting on a piece of paper involved with the company nominally as the 51% owner, but unable to do anything with their shares or gain anything from having their shares - doesn't really pass the smell test. So again, Preference Shares, these are something I have talked about. I’ve dealt with clients in the past. They didn't like it when I said, "hey that may not be the most optimal thing" - some of them even went to other places. But these chickens come home to roost eventually, and that's what we are seeing with respect to the enforcement on this. 

It remains to be seen how all this plays out, so we'll certainly be keeping folks updated on this channel as the situation evolves.