Search the phrase and you will find a great deal of opinion and little statute. Percentages get quoted. Splits get recommended. Almost none of it arrives with a section number attached, which makes it impossible to check.
This article does the opposite. It sets out what the Foreign Business Act says, what the Land Code says, and what each of them does to people who break it. Every statement is tied to the section it comes from, and the full list is at the foot of the page.
It describes the law and stops there. It reaches no conclusion about any company.
Is a 51/49 Thai-foreign shareholding a nominee arrangement?
No, not by itself. The 49 per cent figure comes from the Act's definition of a foreigner. The nominee offence is about who the shares are held for, and it has no percentage in it.
Start with the definition. A company registered in Thailand is a foreigner under the Act where half or more of its shares are held by people without Thai nationality or by companies registered abroad [Foreign Business Act B.E. 2542, section 4]. Half or more means fifty per cent and up. A company in which foreigners hold 49 per cent sits below that line and is a Thai company for the purposes of the Act.
The nominee offence sits alongside that definition rather than inside it. It does not ask how the shares are divided. It asks who they are held for, and why. A 51/49 company where the Thai shareholders put in their own money and take their own returns is what the Act allows. A 51/49 company where the Thai shareholders hold their shares for the foreigner is what section 36 punishes. Same numbers, opposite answers.
What does the Foreign Business Act say about holding shares for a foreigner?
That it is a crime for a Thai to hold shares as a foreigner's nominee so that the foreigner can run a business the Act restricts, and a crime for the foreigner to let it happen.
Section 36 names three things a Thai person or Thai company must not do. Help a foreigner run a restricted business that the foreigner has no permission for. Run a business jointly with a foreigner while holding it out as the Thai party's own. Or hold shares in a company as the foreigner's nominee so that the foreigner can operate a business in a way that gets around the Act. The same section catches the foreigner who allows any of that to be done [Foreign Business Act B.E. 2542, section 36].
Two things in that drafting matter. The offence has a purpose built into it: the holding has to be aimed at running a restricted business. And it runs in both directions, against the Thai who holds and the foreigner who benefits. Which businesses are restricted is set out in the three lists annexed to the Act, and section 8 says what each list requires. List One is closed to foreigners altogether, and it includes trading in land [section 8 and List One, item (9)].
What penalties does the Act prescribe?
Up to three years in prison, a fine of 100,000 to 1,000,000 baht, or both, for the Thai shareholder and the foreigner alike. The court also orders the shareholding to end, and ignoring that order costs 10,000 to 50,000 baht a day. Directors who looked the other way face the same prison term and fine.
Section 36 sets the penalty for the Thai party and the foreigner who allowed it. Section 37 sets the same penalty for a foreigner who runs a restricted business without permission, and the court likewise orders the business or the shareholding to stop [Foreign Business Act B.E. 2542, sections 36 and 37]. Where the offender is a company, its directors, partners and authorised signatories who connived at the offence, or failed to take reasonable steps to stop it, face the same three years and the same fine personally [section 41].
These are not paper penalties. The Supreme Court has upheld convictions under sections 36 and 37 in which the company and its Thai shareholders were found guilty and ordered to end the business and the Thai shareholding.
How does the law treat a company that owns land?
Differently, and more harshly. The Land Code counts both shares and shareholders, and it lets the Land Department force the sale of land held for a foreigner without waiting for a court case.
The Land Code treats a company as a foreigner for land where foreigners hold more than 49 per cent of its registered capital, or where foreign shareholders make up more than half of the shareholders by headcount [Land Code B.E. 2497, section 97]. Read that second limb again. It counts people as well as shares, so a company can be inside section 97 whatever the percentages are. And the Code closes the chain: where such a company holds shares in another company, that second company is treated as a foreigner too [section 98].
Then the enforcement. Where it appears that someone has acquired land as the owner in place of a foreigner, or in place of a company caught by section 97, the Director-General of the Land Department has the power to dispose of that land [section 96]. The section is addressed to the Director-General and does not wait for a conviction. The timetable is the one for land a foreigner acquired unlawfully: sale within a period the Director-General sets, of at least one hundred and eighty days and at most one year, failing which the Director-General sells it [section 94]. There is a criminal offence as well. Acquiring land as the agent of a foreigner carries a fine of up to 20,000 baht, up to two years in prison, or both [section 113].
| Question | Foreign Business Act | Land Code |
|---|---|---|
| Where the test sits | Section 4, the definition of "foreigner" | Section 97, companies with a foreigner's rights in land |
| Shareholding line | Half or more of the shares held by foreigners | More than 49 per cent of the registered capital held by foreigners |
| Number of shareholders | Not part of the test | Foreign shareholders being more than half by headcount brings the company inside section 97 |
| Holding for a foreigner | Section 36, a crime with no percentage in it | Section 96, forced sale by the Director-General. Section 113, a crime. Section 74, referral to the Minister at the counter |
A company can sit outside the Foreign Business Act definition and still be inside Land Code section 97. The two Acts set different lines and count different things.
What can the Land Office do when a transfer is registered?
Ask questions, call for evidence, and refer a suspected purchase for a foreigner up to the Minister, whose decision is final.
This is written into the Code rather than left to office practice. When registering a transfer, the officer has the power to question the parties and to summon anyone concerned to give evidence or produce documents. Where there is reason to believe the registration is an evasion of the law, or that the buyer is buying on behalf of a foreigner, the officer asks the Minister for instructions, and the Minister's word is final [Land Code B.E. 2497, section 74]. So the question is asked at the counter, on the day, and the escalation ends in a decision the Code itself calls final.
What do the authorities examine?
Whether the Thai shareholders are real investors. Their own money, a real say in the company, and a real return on the shares.
Beyond the statutes, the Department of Special Investigation publishes guidance for foreigners registering a business in Thailand. It is guidance rather than law, but it is a direct statement of what the agency treats as significant. Where a Thai shareholder has no real ability to pay for the shares, or income too small to make the investment, and the investment brings that shareholder no real benefit, the arrangement may be viewed as disguising foreign ownership behind a Thai name in breach of the Foreign Business Act. Where the authorities find the shareholding structure incorrect, the guidance says, the company may face civil and criminal charges and may be ordered by the court to dissolve.
Which documents an officer asks for, in what order, and how a file moves between departments is working practice. It is written in neither Act and it varies between offices. Any account of it, including this one, describes how things are generally done rather than a rule.
- Nominee, under the Foreign Business Act
- Not a defined word in the Act. Section 36 describes the conduct instead: holding shares in a company as a foreigner's nominee so that the foreigner can operate a business in a way that gets around the Act.
- Agent of a foreigner, under the Land Code
- A person who acquires land as the agent of a foreigner, or of a company the Code treats as foreign. Section 113 sets the penalty at a fine of up to 20,000 baht, up to two years in prison, or both.
What this means in practice
Three points follow from the text, and none of them is a conclusion about anybody's company.
Percentage and purpose are separate questions. Nothing in the Foreign Business Act makes a Thai-majority company unlawful in itself. Section 4 says when a company counts as foreign. Section 36 asks something else, about whose behalf the shares are held on and why. Treating the two as one question is the most common error in English-language writing on this subject.
Two statutes are in play wherever land is involved, and they do not line up. The Foreign Business Act turns on half or more of the shares. The Land Code turns on more than 49 per cent of the capital and, separately, on the headcount of shareholders. A structure measured against one has not been measured against the other.
And statute, guidance and practice are three different things. Every section cited above is statute, fixed until Parliament changes it and open for you to read. Departmental guidance says how an agency sees a question and carries no penalty of its own. Office practice is neither. Where a point could not be checked against a statute, it has been left out of this article rather than filled in.
Proviso is a legal and compliance advisory practice for foreign investors and business owners in Thailand. If you have a question about how the Foreign Business Act or the Land Code applies to a structure you are considering, book a consultation and we will answer it against the legislation.
Book a consultation →Sources Show all 13 sourcesHide sources
Every statement in this article rests on one of the 13 provisions below, each named by Act and section so it can be checked against the legislation itself.
- Foreign Business Act B.E. 2542, section 4. Definition of a foreigner, including a Thai-registered juristic person at least one half of whose capital shares are held by, or at least one half of whose capital has been invested by, foreign persons.
- Foreign Business Act B.E. 2542, section 8. List One prohibited to foreigners; List Two permitted only by the Minister with the approval of the Council of Ministers; List Three permitted only by the Director-General with the approval of the Commission.
- Foreign Business Act B.E. 2542, Lists annexed to the Act, List One item (9). Land trading.
- Foreign Business Act B.E. 2542, section 36. Assisting, joint operation held out as the Thai party's sole business, and acting as a foreigner's nominee in holding shares; the same liability for the foreigner who allows it; imprisonment not exceeding three years or a fine of one hundred thousand to one million baht or both; the court order to cease; and the daily fine of ten thousand to fifty thousand baht for violating that order.
- Foreign Business Act B.E. 2542, section 37. Penalty for a foreigner operating a business in violation of section 6, section 7 or section 8.
- Foreign Business Act B.E. 2542, section 41. Liability of directors, partners and persons with authority to represent a juristic person that commits an offence under section 34, 35, 36 or 37.
- Land Code B.E. 2497, section 74. Power of the competent authority to interrogate parties and summon persons concerned when recording rights and juristic acts, and the referral to the Minister where there is reason to believe the recording is in evasion of the law or that the purchaser is purchasing on behalf of an alien.
- Land Code B.E. 2497, section 94. Disposal of land acquired by an alien unlawfully or without permission, within a period prescribed by the Director-General of not less than one hundred and eighty days and not more than one year.
- Land Code B.E. 2497, section 96. Authority of the Director-General to dispose of land acquired by an owner in place of an alien or in place of a juristic person under section 97 or section 98.
- Land Code B.E. 2497, section 97. Juristic persons with the same rights in land as foreigners, including companies more than forty nine per cent of whose registered capital is foreign held, and companies in which foreign shareholders exceed half the total number of shareholders.
- Land Code B.E. 2497, section 98. A juristic person within section 97 that holds shares in, or invests capital in, another such juristic person makes that other juristic person a foreigner.
- Land Code B.E. 2497, section 113. Offence of acquiring land in the capacity of an agent of an alien or of a juristic person under section 97 or section 98; fine not exceeding twenty thousand baht, or imprisonment not exceeding two years, or both. Held in Thai only, so the section number and Act are given for checking against the Thai text.
- Department of Special Investigation, published guidance on business registration for foreigners. Cited as guidance, not as law.
Section numbers are given so you can check every statement in this article against the legislation itself. Where a provision exists only in Thai, the section number and the name of the Act are stated so the Thai text can be located. Statements about departmental working practice are labelled as practice and carry no section number, because there is none.
Does the Foreign Business Act define the word nominee?
No. Section 36 describes the conduct instead of defining a word: a Thai person or Thai company holding shares as a foreigner's nominee so that the foreigner can operate a business in a way that gets around the Act. The foreigner who allows it commits the same offence.
What is the penalty under section 36 of the Foreign Business Act?
Up to three years in prison, a fine of 100,000 to 1,000,000 baht, or both, for the Thai shareholder and the foreigner alike. The court also orders the shareholding or the business to end, and breaking that order costs 10,000 to 50,000 baht a day. Directors and signatories of an offending company who connived at it, or did nothing to stop it, face the same prison term and fine.
Is a company that is 49 per cent foreign owned a foreigner under the Foreign Business Act?
No. The Act treats a Thai-registered company as foreign only where half or more of its shares are held by foreigners. At 49 per cent it is a Thai company for the Act's purposes. The Land Code draws its own line for land at more than 49 per cent of the capital, and it also counts whether foreigners are more than half of the shareholders by headcount.
If a company with foreign shareholders owns another Thai company, does that affect the second company?
For land, yes. Where a company that the Land Code treats as foreign holds shares in another company, that second company is treated as foreign too. The Foreign Business Act reaches the same result through its own definition, which counts shares held by companies that are themselves foreign.
What does the Land Code say can happen to land acquired on behalf of a foreigner?
The Director-General of the Land Department can force its sale. Where it appears that someone acquired land as the owner in place of a foreigner, the Director-General sets a period of between one hundred and eighty days and one year for the land to be sold, and sells it if that does not happen. No court case has to come first. Acquiring land as a foreigner's agent is also a criminal offence, with a fine of up to 20,000 baht, up to two years in prison, or both.
This article is general information about Thai law, not legal advice, and reading it does not create a lawyer-client relationship. It reflects the legislation as reviewed on 2 September 2026. Thai law and administrative practice change, and practice varies between offices and provinces. For advice on a particular situation, get in touch. See our editorial standards and disclaimer.
← Back to Insights