Thailand Tightens Company Registration Checks to Curb Nominee Loopholes

The Thai government has launched a new initiative to prevent the use of Thai nationals as nominees in businesses, effective August 1. The Department of Business Development under the Ministry of Commerce will expand its scrutiny beyond initial company registration to include shareholder and director structures, according to Naewna newspaper. Ms. Lalida Periswiwatana, deputy spokesperson for the Prime Minister’s Office, stated that Order No. 2/2569 on the Central Registry of Partnerships and Companies was issued to close loopholes that allowed businesses to alter shareholder compositions or authorized signatories after initial screening. Under the new measures, cases involving foreign investors or those with signing authority will require the submission of a letter explaining the investment, along with bank statements for the past three months from the Thai investor making the investment and the representative or legal entity receiving it, following established criteria. This aims to verify the source of investment funds and the true investment capacity, thereby increasing transparency in business registration and preventing the misuse of nominee shareholders. The core of this measure is to extend scrutiny to cover the entire lifecycle of a legal entity, not just its inception, but also instances of changes in shareholders, directors, or authorized signatories, which have been exploited to circumvent previous regulations. The government's objective is to foster fair competition and protect businesses that operate honestly, not to restrict foreign investment conducted legally, Ms. Lalida emphasized. Furthermore, the government is progressing with data linkage between the Department of Business Development, the Land Department, and related agencies to enhance inspection efficiency, prevent companies from being used for illegal land ownership, and verify shareholder identities through the civil registration database. Starting immediately, the Department of Business Development will add a disclaimer to copies of shareholder lists, clarifying that these documents are registrar records and not certificates of current shareholder status, which must be determined from the company's legally maintained shareholder register. Thailand currently hosts over one million operating legal entities, with 119,116 companies having foreign shareholders not exceeding 49.99%. This data is for risk assessment and screening purposes only and does not imply that all such companies are nominee entities or engaged in illegal activities. Actions will be considered on a case-by-case basis, based on evidence and facts, Ms. Lalita noted. “The government affirms its commitment to promoting a transparent, fair, and competitive investment climate, ready to facilitate both Thai and foreign investors conducting business legally, while simultaneously preventing the use of Thai nationals as proxies and actions that exploit the country’s economic system, in order to build long-term confidence for businesses and the public,” she concluded.