Government issues stern caution to prospective candidates
In a move to uphold fair competition and transparency in the business sector, the Thai government has intensified its scrutiny of nominee practices, particularly in the tourism industry. This crackdown targets foreign investors who use Thai nationals as nominal shareholders or operators to bypass legal restrictions on foreign ownership.
Under the Foreign Business Act of 1999, foreign ownership in certain sectors is prohibited unless permitted by law. Individuals acting as nominees risk up to three years in prison and fines ranging from 100,000 to 1,000,000 baht, with an additional daily fine of 10,000 to 50,000 baht for continued non-compliance with court orders.
The violation of this rule is widespread, with nominee arrangements found in various business sectors such as restaurants, hotels, resorts, real estate, and logistic services. The Department of Business Development has reported that nominee arrangements are most commonly found in tourism-heavy provinces like Phuket, Chon Buri, Bangkok, and Chiang Mai.
Deputy Government Spokesman Anukul Pruksanusak stated that many people have been used as fronts (nominees) by foreigners to illegally operate businesses in Thailand. These disguised business operations are set up to bypass legal restrictions, undermining fair competition and transparency in the market.
The use of nominee arrangements in business leads to unfair competition, a lack of transparency, and the potential for Thailand to be used as a hub for money laundering, damaging the country's business reputation. Companies found using nominees may have their business licenses revoked, making them ineligible to operate in Thailand.
The government's stance is clear: it will not tolerate nominee arrangements designed to bypass foreign ownership laws. This was evident in a recent ruling by the Criminal Court in Phuket, where 23 individuals and entities were convicted for engaging in nominee practices. Each received a fine of 200,000 baht, a two-year suspended jail sentence, and a one-year probation. The courts also ordered the dissolution of the companies involved.
Authorities have urged Thai citizens to avoid becoming nominees to prevent serious legal repercussions. The government's intensified enforcement serves as a reminder that acting as a nominee for foreign investors in tourism-related or other restricted sectors in Thailand exposes individuals to criminal prosecution, financial penalties, and significant financial and legal risks under current Thai law.
Foreign investors in tourism and other restricted sectors, using Thai nationals as nominees to bypass foreign ownership laws, face penalties under the Foreign Business Act of 1999, including imprisonment and fines, with additional daily fines for continued non-compliance.
Participating in nominee arrangements in business, directed towards bypassing legal restrictions, can lead to consequences such as revocation of business licenses, criminal prosecution, financial penalties, and significant financial and legal risks under current Thai law.
