You are new to Thailand. You want to start a business. You ask around, get a referral from a friend, or find a firm online. The price is reasonable. They speak English. They make it sound simple.

"We will handle everything. In two weeks, you will have a company."

And they deliver. Two weeks later, you own a Thai limited company. 2 million baht registered capital. You are listed as a director. You hold 49% of the shares. The other 51% is held by Thai shareholders. Your Thai business partner, people the firm connected you with, or a friend of a friend.

Paperwork done. Company registered. Business started.

Here is the thing. You might already have compliance gaps. Not six months from now. Not when you try to buy property. Right now, from day one.

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The 10-Day Director

You were added as a director about 10 days after the company was incorporated. That is normal. Companies need Thai directors at first to get registered, then you get added.

But when you became a director, you also became a 49% shareholder. That means you now own shares worth 980,000 baht.

Did you pay for them?

When shares change hands, there should be a transaction. Money moves. Documents show where the funds came from. The company records the share transfer properly.

What actually happened with your shares? Were they transferred to you? Issued to you? Did you sign share transfer documents? Did anyone ask you to show where your 980,000 baht came from?

If you are not sure, that is your first gap.

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The 2 Million Baht Capital

Your company has 2 million baht registered capital. That is the standard amount most firms use. It meets the minimum for a work permit and looks reasonable on paper.

But registered capital and paid-up capital are different things.

Registered capital is what your company says it is worth. Paid-up capital is what shareholders actually put in. Thai law allows companies to start with as little as 25% paid up. Some companies register 2 million but only pay up 500,000. Some pay up even less.

Did your company actually receive 2 million baht from its shareholders? Is there a record of each shareholder transferring their portion into the company bank account?

The law firm handled the paperwork. But did real money actually move? If you do not know, that is another gap.

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The 51% Shareholders

Your company needs to be majority Thai-owned. So 51% of the shares are held by Thai nationals.

Who are these people? What do they do? Why would they invest over a million baht in your company?

If the honest answer is "the law firm arranged it" or "I do not know them well," then you have the same structure Thai authorities are actively investigating.

The DBD reviewed over 26,000 foreign-linked companies in 2024. They are asking these exact questions. They want to know if Thai shareholders are genuine investors or names on paper.

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Why This Matters

Thai authorities have specific patterns they look for when identifying problematic structures. Companies that fit those patterns attract scrutiny. Even if your company is entirely legitimate, regulatory attention costs money and time. It puts your entire operation at risk.

The gaps covered here are not the only ones. There are compliance issues that most lawyers and firms do not mention when they set up your company. They get the registration done, hand you the documents, and move on.

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What To Do About It

If this sounds like your company, you are not alone. This is how most foreign-owned companies in Thailand get set up. Fast, cheap, and without much explanation of what was actually happening.

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The Department of Business Development (DBD) and the Department of Special Investigation (DSI) have a clear process for reviewing foreign-linked companies. They are not guessing. They have a checklist. And it is more detailed than most business owners expect.

In 2024, the DBD reviewed over 26,000 companies with foreign involvement. That number is going up. If your company is on the list, here is what they will look at.

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Shareholder Structure

This is the first thing they check. They want to confirm that you and your Thai business partners each have a genuine stake in the company.

They look at the income and financial capacity of each partner. If someone on a 30,000 baht salary holds shares worth 1.5 million baht, that raises questions. They want to see that everyone involved had the financial means to make their investment.

They also look at patterns. If the same individuals appear as partners in multiple foreign-linked companies, that stands out. If the shareholding is exactly 51/49, that stands out too. These are common structures, and regulators know it.

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Capital and Funding

Registered capital is a number on paper. Authorities want to see that the money actually moved.

They check bank statements. They check whether each shareholder transferred their portion of the capital into the company account. They look for the source of funds and whether the amounts match the shareholding percentages.

Many companies have registered capital of 2 million baht but no clear trail showing how it was paid in. If you cannot produce bank records and transfer documents, you have a problem.

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Business Operations

They look at whether the company has real operations. Revenue, employees, a physical office, clients. A company with 2 million baht in capital and no revenue after two years raises questions.

They also check whether one partner is running everything alone. If the foreign partner makes all the decisions, signs all the contracts, and controls the bank account while the Thai partners have no involvement, that raises serious compliance concerns.

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Documentation

This is where most companies fall short. Authorities check for shareholders agreements, board meeting minutes, capital contribution records, and director appointment documents.

Most companies set up through registration firms do not have these. They have articles of association and a registration certificate. That is it. Everything else is missing.

When regulators ask for documentation and you have nothing to show, the assumption is not in your favour.

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What Happens Next

If your company flags multiple items on their checklist, the case gets escalated. It goes from the DBD to the DSI. The DSI has enforcement power. They investigate nominee structures and refer cases for prosecution under the Foreign Business Act.

Penalties range from fines to imprisonment. More commonly, the business gets shut down or forced into an expensive restructuring under pressure.

The time to fix these issues is before anyone comes looking. Once you are in the system, the process is slow, expensive, and unpredictable.

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