Integrity Legal

2nd Sep 2009

Apparently the Thai government officials in Phuket are actively investigating companies that might be using Thai nominees in order to conduct otherwise restricted activities in Thailand.  To quote the Nation via

“A fact-finding effort is underway in Phuket to compile information about local businesses in which Thai people are hired by foreigners as their nominees – a practice considered suspicious and possibly illegal.”

The major concern seems centered around use of Thai nominees to own Thai property. Thailand has imposed many legal restrictions on foreign ownership of Thai property. Many are under the mistaken idea that foreigners are completely barred from owning land in the Kingdom of Thailand. This is in fact not true as foreigners can own land, but they need Ministry of Interior approval and this approval is virtually impossible to obtain except in limited cases involving inheritance.

The above quoted article doesn’t really mention anything new regarding the attitude of Thai authorities, but instead seems to mark a change in attitude regarding the use of nominee shareholders. Although nominee shareholders are expressly prohibited under Thai law, it is difficult to ascertain exactly what constitutes a “nominee.” Basically, a passive shareholder could be considered a nominee, but the term would be inaccurate because the supposed nominee has a vested interest in the company and is not holding shares for anyone else. The real poison pill comes down to land. Where a company is being used to own Thai real estate the issue of nominee shareholders is a major one that will likely be heavily scrutinized by Thai authorities. That being said, a Thai company that owns property is not illegal as a Thai company is not barred from owning land in Thailand. This being said, the Thai land department is taking a very tough stand regarding the use of nominees:

“The provincial land office said legal action would be taken against any businesses found to have been operated illegally with a majority of foreign ownership, because Thai land laws imposed strict sanctions on foreigners owning land plots in Thailand.”

For those who wish to own property in Thailand, it may be best to obtain a Foreign Freehold Title to a Thai Condo rather than attempting to circumvent land department regulations. At the present time, it would appear that Thai authorities are stringently enforcing the land laws and foreigners in Thailand should be prepared to deal with increased scrutiny. Strict observance of the law may be the best method of ensuring the least amount of difficulty.

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