Thailand investigates 36,000 foreign-linked companies in property nominee crackdown

The Thai government has significantly escalated its enforcement against illegal foreign property ownership. According to Thai Times, the Department of Business Development (DBD) is currently investigating more than 36,000 foreign-linked companies suspected of using Thai nominees to acquire real estate illegally.

Alongside these mass investigations, authorities have introduced strict new financial checks for corporate formations. Thai Times reports that Thai authorities now require local partners in companies with foreign co-investors to provide extensive bank records. These statements must demonstrate that the local partners have the actual capital to fund their stated investment shares.

This directly targets the common practice of using "paper" shareholders to meet the 51% Thai ownership requirement for land and business ownership. For decades, overseas investors have relied on forming private companies with local citizens listed as majority shareholders to purchase land and villas.

As Chiang Rai Times notes, by forming these companies, overseas investors believed they were safely protected under national laws, but "[t]hat long-standing confidence is rapidly evaporating."

What this means for property owners

If you hold property in Thailand through a Thai majority-owned company, your corporate structure is now at an elevated risk of audit. The era of using local nominees who lack the financial means to support their shareholding is closing.

To protect your investments, you should take the following steps:

• Review your company's financial records to ensure all Thai shareholders can legitimately account for their capital contributions.
• Consult with a qualified Thai corporate lawyer to assess the operational and financial substance of your company beyond mere paper compliance.
• Prepare for potential inquiries from the DBD regarding ownership structure and capitalization.

While the crackdown is active, the exact timeline for auditing all 36,000 companies remains unclear. However, the new bank statement requirement for Thai partners is already impacting new joint venture registrations.