Report Thailand Targets High-Risk Sectors in Nominee Business Crackdown

[snoop1130]

Photo courtesy of Bangkok Post

 

The Commerce Ministry of Thailand has intensified its strategy to clamp down on nominee-based businesses within the country. This updated inspection approach, led by Auramon Supthaweethum, Director General of the Department of Business Development (DBD), zeroes in on six high-risk sectors, focusing on foreign entities using Thai nationals as nominees to mask their ownership.

 

This initiative aims to bolster investor confidence and safeguard the national economy by tackling foreign-controlled businesses operating under the guise of Thai ownership. The revised plan targets sectors where such practices are most prevalent, including tourism-related businesses (such as restaurants, souvenir shops, and entertainment venues), real estate and land trading, e-commerce, logistics, warehouses, hotels and resorts, agriculture-related businesses, and general construction.

 

The DBD plans an ambitious investigation covering 46,918 business entities, concentrating primarily on those with foreign shares ranging from 0.09% to 49.9%. These inspections will be conducted in coordination with relevant enforcement agencies. From September 1, 2024, to March 31, 2025, authorities handled 852 cases, revealing damages totalling 15.1 billion baht.

 

Investigations are driven by whistleblower tips and patterns indicating potential nominee activities. Notable hotspots include construction and real estate in areas like Rama IX and Krungthep Kreetha, and restaurants in Huai Khwang, Rama IX, and Ratchadaphisek. Additionally, landholding for agricultural purposes in regions such as Rayong and Chanthaburi is under scrutiny.

 

 

 

In collaboration with the Anti-Money Laundering Office (AMLO), the DBD has drafted amendments to the Anti-Money Laundering Act. These changes propose penalties for Thai citizens who aid or act as nominees for foreigners operating businesses illegitimately under the 1999 Foreign Business Act. Violations relating to nominee activities (Section 36) and unauthorised foreign business operations (Section 37) can lead to asset seizure and freezing for both Thai and foreign parties involved.

 

The draft amendments are currently open for public consultation until April 25, inviting feedback to refine the law aimed at strengthening Thai enterprises, fostering fair competition, and encouraging lawful foreign business operations in Thailand.

 

Following the consultation, the draft will be submitted to the Cabinet for approval, and subsequently brought before the House of Representatives and the Senate for further deliberation. Upon passage, the Commerce Ministry, in concert with the Council of State, plans to amend the Foreign Business Act, with a focus on adjusting shareholding ratios and defining business types that could impede operations. Auramon underscored the importance of gathering insights from the private sector throughout this legislative process.

 

 

  Adapted by ASEAN Now from The Thaiger 2025-04-24

 

 

 

[flyingtlger]

I had a good friends' wife that was a majority owner, only on paper, in Phuket for a Canadian realtor.

She had done this for over 20 years.

She had no say in the company nor any voting right and was paid very minimally with the promise that she would become part owner and receive a percentage of the company profits.

After years of whispering sweet nothings, she said she wanted out.

The owner did everything possible to keep her but in the end a Thai lawyer stepped in.

She ended up getting paid very well and the company ended up leaving Thailand.

 

 

[Dr B]

I wonder what they are supposed to be looking for in these inspections?

My experience with a Thai company was over 30 years ago, but we were reequired to have a minimum of 7 shareholders. The > 50% of the shares had to be owned by Thais.

If we take China Railway Company No 10 (THailand) as an example, as reported the three Thais had 51% of the shares, so met the law.

Shareholders do not run companies, and have no say in the running of a company, other than by kicking out the Board of Directors and installing another. They are run by the Boards of Directors, who don't need to be shareholders. Shareholders get a dividend/share of the profits, but that can be arranged to be very small, e.g. by paying the Directors a lot.

[Yagoda]

And the crackdown on China continues in the inimitable Thai way. Genius in many ways.

[hotchilli]

19 hours ago, snoop1130 said:

Director General of the Department of Business Development (DBD), zeroes in on six high-risk sectors, focusing on foreign entities using Thai nationals as nominees to mask their ownership.

Getting serious after the embarrassing government building collapse.