What is a nominee shareholder in Thailand? Is it illegal?

In Thailand, a nominee shareholder refers to an individual or entity who holds shares in a company on behalf of another person or entity. The nominee shareholder’s name appears on the company’s share register and the shares are legally owned by the nominee. However, the arrangement is typically structured in a way that the nominee shareholder holds the shares as a trustee or nominee for the true beneficial owner.

in reality nominee shareholders lacks any real financial stake or interest in the company. Under Thailand business law, the practice of nominee shareholders is illegal. The prohibition is found in the Foreign Business Act 1999 , and the Land Act . Foreign companies with Thai nominee shareholders are coming under an increased amount of scrutiny.

However, the use of nominee shareholders is a common practice in various jurisdictions, including Thailand. It can be employed for legitimate reasons such as protecting the privacy of the beneficial owner, facilitating business transactions, or complying with specific legal requirements. Nominee arrangements may also be used for tax planning or to circumvent legal restrictions, which can raise concerns about transparency and regulatory compliance.

While the use of nominee shareholders itself is not illegal in Thailand, it is important to ensure that the arrangement is conducted within the bounds of the law. Thai authorities have regulations and measures in place to prevent the misuse of nominee arrangements for illegal activities such as money laundering or tax evasion.

It’s crucial to note that Thailand has regulations and reporting requirements in place to promote transparency and prevent the misuse of nominee arrangements. The Department of Business Development (DBD) and other relevant authorities have the power to investigate and take legal action if they suspect any misuse or non-compliance with the law.

If you are considering using a nominee shareholder structure in Thailand, it is advisable to seek legal advice from professionals who specialize in Thai corporate law and compliance. They can guide you on the proper and legal implementation of nominee arrangements, ensuring that you remain compliant with relevant regulations and maintain transparency in your business operations.

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