DBD to tighten foreign business registration rules to curb nominee arrangements

Poonpong Naiyanapakorn, Director-General of the Department of Business Development (DBD) under the Commerce Ministry, said the department had held consultations and gathered feedback from more than 17 leading law firms to exchange views and brainstorm measures to strengthen the prevention and suppression of the use of Thai nationals as nominees for foreign investors conducting business in Thailand.

The department will compile opinions on possible approaches and their potential impact to support the drafting of the “Office of the Central Company and Partnership Registration Order No. …/2026 on the rules and procedures for registration in cases involving amendments to designate foreigners as partners in partnerships or as authorised signatories in limited companies”.

The aim is to ensure the new rules are appropriate and effective, and to further strengthen efforts to prevent and address nominee arrangements across various businesses.

Poonpong said nominee arrangements were a major issue affecting the country’s business competition structure, making it necessary to strengthen supervisory mechanisms and enhance cooperation among relevant public and private-sector agencies. He said the department was treating the problem of nominee businesses with utmost seriousness.

At present, there are 782,542 active companies. Of these, 118,016 are still classified as Thai companies despite having foreign shareholding of between 0.01% and 49.99%. The department estimates that more than 80% of them may involve Thai shareholders holding shares on behalf of foreigners in the form of nominee arrangements.

The department previously issued Order No. 2/2025 on the rules and supporting documents required for applications to register partnerships and limited companies in cases where foreigners invest in, or have signing authority for, partnerships and limited companies. That order took effect on January 1, 2026.

Under the order, applicants are required to submit financial evidence, including bank statements. Poonpong said this had helped reduce the registration of nominee companies by more than 65%, though attempts to circumvent the rules still remained. 

The department is therefore preparing additional measures to further tighten scrutiny and prevent the registration of juristic persons using Thai nationals as nominees for foreigners in violation of the law.

He said the recent consultation with leading law firms had provided highly useful information on nominee-style business operations.

The department will gather the data, opinions and recommendations received and use them to refine the details of the measures and operational guidelines so they are clearer and can be enforced effectively before the order is issued in line with legal procedures. 

He added that enforcement would be designed not to obstruct genuine investment or place an excessive burden on the business sector. The new order is expected to be issued in mid-March 2026 and to take effect from April 1, 2026.

Poonpong said the new measures would improve the effectiveness of efforts to prevent nominee arrangements, reduce loopholes in the regulatory system, and create fairer business competition for Thai entrepreneurs.

If nominee activity is detected, offenders will face penalties under the Foreign Business Act BE 2542 (1999). Section 36 applies to Thai nationals who assist or support foreigners in committing an offence, while Section 37 applies to foreigners operating a business without permission.

The penalties include imprisonment of up to three years, a fine of between 100,000 and 1 million baht, or both. Failure to comply with a court order may also result in a daily fine of 10,000 to 50,000 baht until the violation ceases.