Thailand’s crackdown on nominee shareholders has now reached Prachuap Khiri Khan and Phetchaburi with officials saying businesses located in both provinces are under investigation.
In an effort to regulate the country’s business sector and curb illegal land ownership practices, Thailand’s Business Development Department continues to widen its probe into nominee shareholders.
For years, some foreigners have exploited loopholes in Thai law by using local nominees to create companies solely for the purpose of owning land and other businesses.
The land is purchased and transferred into the name of said company.
Despite being illegal, the practice has been widespread in the past but is now firmly in the crosshairs of the authorities.
The method of using nominee shareholders aims to allow businesses to function as legal entities by letting Thai individuals hold a 51% share while foreigners hold the remaining 49%. However, this method is now under stringent scrutiny by the authorities.
During this fiscal year, the Business Development Department, under the guidance of its deputy director-general, Jitakorn Wongkhatekorn, has inspected 439 potential nominee businesses in Thailand.
These companies fall primarily into three sectors: tourism, real estate, and hotel & resorts. Preliminary results from these inspections have already unearthed suspicious activities in Chiang Mai and Chon Buri, leading to expanded investigations in other provinces.
Without revealing further details, some of those businesses are located in Prachuap Khiri Khan and Phetchaburi, the Business Development Department has confirmed.
Mr Jitakorn said the investigations are being launched as part of an ongoing collaboration with the Special Investigations Department, the Tourist Police Bureau and the Immigration Bureau.
“Legal action may be taken if Thai nationals are found to have knowingly held shares for foreigners indulging in nominee activities,” Wongkhatekorn warned. He expressed concern over the rise in Thai individuals getting entangled in these activities.
Violators of this law face severe repercussions, including imprisonment for up to three years or fines ranging from 100,000 to 1 million baht. Moreover, daily fines between 10,000 and 50,000 baht could be levied until the infringement ends.
Mr Jitakorn said his department has also identified numerous accounting and law firms that hire Thai nationals to act as nominees in order to hold shares on behalf of foreigners.
Mr Jitakorn also mentioned future preventive measures, revealing plans for annual inspections from 2024 onwards. The goal is to root out the practice of nominee shareholders and ensure businesses strictly adhere to the Foreign Business Act.
Earlier in June, the Department of Special Investigation (DSI) made headlines when it raided a legal accounting firm in Phuket. The firm was suspected of assisting nearly 70 foreigners in illicitly operating companies with an approximate combined worth of B440 million.
DSI Director General Pol Maj Suriya Singhakamol provided further details, stating that 44 of these companies were in the real estate sector, each possessing assets worth B10-20 million.