Foreigners having business in Thailand should beware of Thai nominee shareholders stealing from the company. Many want to set up their business in the Kingdom, but cannot own their company 100% because Thailand Foreign Business Law does not allow foreigners to do so. It allows only a few activities, like exporting products from Thailand, having a manufacturing plant to produce goods to export or sell them in Thailand, etc. Most businesses need to have Thai majority ownership and many unethical lawyers would provide some Thai names to hold the 51% shares for the foreigner. Or the foreigner may have a Thai employee to hold shares on their behalf. Thai nominee shareholders stealing from the company is not the only risk you have. Using nominee shareholders is breaking the Foreign Business Law. Penalty can be a big fine and a jail term.
Here are some cases we see from Thai nominee shareholders stealing from the company. Thai employees who hold majority shares for the foreigner will demand millions from you in order for them to give back the ownership later. Many of them are also authorized directors of the company and they sign checks to themselves. One of our clients is a property developer and bought a lot of land in Chiang Mai. The Thai director (who is also the nominee shareholder) told them that the Land Department needed the company to have only Thai shareholders and Thai directors. So the company took of the foreign director who is the real owner of the company and the money. Later our client learned that the Thai director actually bought the land in her own name and refused to transfer the land to the company. She even sold some land and did not return all the proceeds to the company. We hope that these cases of Thai nominee shareholders stealing from the company will open the investors’ eyes. Do not practice nominee shareholding. Talk to us, we have solutions for you. If you need to have Thai shareholders, you need to protect your investment. Use good lawyers who will provide your protection so you do not have Thai nominee shareholders stealing from the company later.
MSNA Group of companies have helped foreigners setting up their business in Thailand for 25 years. We have seen it all. You may be eligible to have Board of Investment promotion (see List of Business Activities Eligible for Thailand BOI Promotion). You may be able to obtain a Foreign Business License to operate your business as a foreign company, or to get the protection of the Treaty of Amity if you are American. Save yourself from Thai nominee shareholders stealing from the company. Talk to us now for all your business needs in Thailand. We are a one stop shop who can help you from setting up your new company, payroll outsourcing, accounting, tax filing, auditing, or even due diligence for your next merger and acquisition.