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ResourcesCorporate and Tax AdvisoryThailand Corporate LawThai Authorities Take Steps to Monitor and Deter Corporate Nominees

Thai Authorities Take Steps to Monitor and Deter Corporate Nominees

Transcript of the above video:

As the title of this video suggests we are going to be discussing Corporate Law in the Kingdom specifically nominees.

There has been some recent news with respect to this which I will get to in a moment but for those who are unaware the Foreign Business Act here in Thailand does restrict foreign business activity or the business activity of foreigners in a corporate context. In the past nominees could be utilized and I am talking  the distant past, decades ago, nominees could be utilized to sort of circumvent the regulations with respect to foreign business ownership here in the Kingdom. In more recent years there are specific tax acts in Thailand which restrict usage of nominee shareholders and this issue has come to the forefront. Every once in a while it sort of pops up but it recently came to the forefront with respect to, there was a recent rather tragic crash in Phuket which unfortunately resulted in the loss of life of a significant number of tourists and apparently the corporate structure under which that business was operating apparently may have been utilizing a nominee structure in order to basically get around the rules with respect to foreign ownership of certain types of companies. Transport in particular is viewed as, as well as tourism and I will get into more detail on that in a minute, are viewed as considered more important for maintenance of Thai ownership rather than foreigners being able to operate in those business spheres for various reasons but the powers-that-be have designated the restriction of foreign activity in those particular areas as a priority.

In a recent article in the Bangkok Post, bangkokpost.com, headline is “Commerce Vows Stricter Inspections”. Quoting directly, "the Commerce Ministry has vowed to step up inspections of business owners particularly in tourism, property, and farming to root out foreign operators using Thai nominees. Kulanee Issadisai,  Director general of the Business Development Department said since 2015, authorities have investigated 2,136 juristic persons whose ownership is less than 50%  held by foreigners, finding 1,783 to have properly registered with Thai Authorities.  21 firms were found to have unclear office locations, with 34 using nominees to operate the business mostly in tourism and property located in tourism hotspots though no lawsuits have been filed by authorities. Miss Kulanee said over the past four years the department has filed lawsuits against 298 firms who were found to violate the Foreign Business Act by using Thai proxy owners.

The thing that I think is important to take from this article and there is quite a bit more, this article goes on it gets into further detail. For those watching this video I strongly urge you to check out bangkokpost.com, again the headline, “Commerce Vows Stricter Inspections”, but the thing I think to take away from this is the emphasis on what kind of businesses they are looking at; Tourism, property, and farming. As we have discussed in another video on this channel specifically on the topic of Tourism, the Prime Minister of Thailand took special note of the tourism industry in wishing to protect that and sort of preserve those jobs for Thai Nationals. Again farming is something that is very close to the hearts of Thai citizens. Thai Nationals take protection of the farming sector very seriously and they want to go ahead and reserve that for Thais so again that is probably something to steer clear of in any sort of corporate structure for foreign nationals and finally as stated property. I have said pretty well at length. Thai Law is very clear. The ownership of real estate by and large with the exception of certain exceptions under the Thai Condominium Act, which for more information on that there is further information in other videos on this channel, but notwithstanding those specific exceptions, Thai real property, land ownership especially, is very much restricted to Thai Nationals and I don't think that policy is going to change anytime soon. In fact I think as technology improves, these laws are on the books, the regulations that go about enforcing these laws are also on the books. It has just being a technological issue of having the enforcement ability catch up to the regulatory structure. I think that is going to happen more and more. I think you are going to see Enforcement Officers being able to monitor companies, being able to monitor business activities in order to ensure that the individuals involved are not essentially engaging in kind of chicanery to go ahead and subvert the anti-nominee provisions, subvert the Foreign Business Act and subvert the laws regarding restriction of land ownership to Thai Nationals. 

So the things to take away from this video is, legal assistance is a good idea if a foreign national wishes to engage usually in conjunction with a Thai National in something like property or tourism or farming; farming I would say would be very difficult in many circumstances. But the thing to wait to take away from this video is although it may be possible, proceed with caution and be very aware and have very good legal advice and assistance when undertaking these types of activities.