DBD scrutinises 36,277 foreign-linked landholding firms

Department of Business Development (DBD) is preparing to examine 36,277 foreign-linked legal entities found to hold land title deeds nationwide, with particular attention on possible nominee shareholding arrangements.

Poonpong Naiyanapakorn, director-general of the DBD, said the department would place all 36,277 entities in its screening pool.

The designation does not mean that every entity has broken the law.

Some are legally entitled to own land under industrial-estate legislation or investment privileges granted by the Board of Investment.

Many of these entities operate in Chon Buri and Rayong, within the Eastern Economic Corridor.

Review identifies 36,277 foreign-linked entities

The DBD received property-ownership information covering 144,706 legal entities from the Department of Lands.

It cross-checked the information against 125,662 entities under its supervision and found that 123,542 held land title deeds.

Of these, 87,265 were wholly Thai-owned, while 36,277 had some level of foreign participation.

The remaining 2,120 records concerned condominium ownership and will be examined separately.

Among the foreign-linked landholders, 31,516 had foreign shareholding of no more than 49%.

They comprised 146 partnerships, 30,633 limited companies and 737 public limited companies.

A further 4,761 entities were listed in the subsequent breakdown as having foreign ownership above 49%.

They included 11 partnerships, 4,709 limited companies and 41 public limited companies.

Holdings concentrated in 16 provinces

The entities were heavily concentrated in Bangkok and five surrounding provinces: Nonthaburi, Samut Prakan, Pathum Thani, Samut Sakhon and Nakhon Pathom.

Another large concentration was found in 10 important tourism and investment destinations: Chon Buri, Surat Thani, Phuket, Rayong, Chiang Mai, Chiang Rai, Prachuap Khiri Khan, Krabi, Phang Nga and Mae Hong Son.

Altogether, 35,154 entities were located across these 16 provinces, while the remaining 1,123 were distributed elsewhere in Thailand.

The same provinces have featured in the DBD’s broader campaign to examine financial trails and possible nominee companies.

Funding behind Thai shareholdings to be examined

Poonpong said the 31,516 entities with foreign ownership not exceeding 49% warranted particular attention because some could involve Thai shareholders holding shares on behalf of foreigners.

However, a 51:49 or similar Thai-foreign shareholding structure is not, by itself, evidence of an offence.

The investigation must establish whether the Thai shareholders made genuine investments using their own funds.

“If a venture is genuinely jointly funded by foreign and Thai investors and foreigners hold no more than 49%, it is lawful,” Poonpong said.

“But if the entire foreign investment comes from foreign capital and Thais do not genuinely co-invest, or if Thais hold 51% as nominees, the details must be investigated and legal action taken.”

The DBD has also identified cases in which foreigners may have established companies using Thai shareholders to acquire land for residential purposes.

The source of the investment capital will form a central part of the investigation.

Thousands of entities hold multiple land plots

Of the 31,516 entities with foreign shareholding of no more than 49%, the number of land titles held was:

• One title: 20,537 entities
• Two to five titles: 8,068
• Six to 10 titles: 1,511
• At least 11 titles: 1,400

Their total landholding areas were reported as:

• No more than one rai: 21,106 entities
• More than one but no more than two rai: 2,250
• More than two but no more than five rai: 2,490
• More than five but no more than 10 rai: 1,505
• More than 10 rai: 3,865

However, these land-area categories total 31,216 entities—300 fewer than the stated total of 31,516. The figures should therefore be confirmed with the department before publication.

Among the 4,761 entities with foreign ownership above 49%, the number of land titles held was:

• One title: 2,244 entities
• Two to five titles: 1,906
• Six to 10 titles: 378
• At least 11 titles: 233

Their total landholding areas were reported as:

• No more than one rai: 467 entities
• More than one but no more than two rai: 154
• More than two but no more than five rai: 499
• More than five but no more than 10 rai: 783
• More than 10 rai: 2,858

Condominium ownership to be investigated next

The DBD is awaiting further information from the Department of Lands concerning foreign-linked entities holding condominium units.

Under Thailand’s Condominium Act, qualifying foreign individuals and foreign-classified entities may collectively own no more than 49% of the aggregate floor area of all units in a registered condominium.

The quota is calculated by floor area, not simply by counting the number of units.

Poonpong said authorities were concerned that companies using Thai nominee shareholders could be employed to acquire units beyond the foreign quota before renting or reselling them.

Offenders face prison, fines and land disposal

Under Sections 36 and 37 of the Foreign Business Act BE 2542 (1999), nominee arrangements and the unauthorised operation of restricted businesses can carry imprisonment of up to three years, a fine of between THB100,000 and THB1 million, or both.

Land acquired unlawfully can also be subjected to compulsory disposal.

Section 94 of the Land Code allows the director-general of the Department of Lands to set a disposal period of no less than 180 days and no more than one year.

Poonpong said the use of corporate structures to conceal foreign landholding was not a new problem, having persisted for more than two decades.

Relevant agencies had begun working together more intensively during the past one or two years because the scale of the problem meant it could not be addressed by one department alone, he added.