Foreign nationals doing business or investing in Thailand may face serious legal consequences if authorities suspect that they are involved in a nominee structure or activities connected to transnational crime.
In recent years, Thai authorities have increased scrutiny of companies with foreign involvement, particularly businesses suspected of using Thai nationals as nominees to circumvent foreign ownership restrictions. Enforcement has become more focused on the actual source of funds, ownership, management control and the person who ultimately benefits from the business.
What Is a Nominee Structure?
A nominee arrangement generally involves a Thai individual or Thai company holding shares or an interest in a business on behalf of a foreigner in order to bypass restrictions under the Foreign Business Act B.E. 2542 (1999).
Simply having Thai shareholders holding 51% of a company does not automatically mean that the structure is illegal. Authorities may examine whether the Thai shareholders genuinely invested their own money, whether they exercise genuine control and whether the foreigner is actually controlling or benefiting from the business.
Using nominees to circumvent foreign ownership restrictions is prohibited under Section 36 of the Foreign Business Act. Depending on the circumstances, violations can expose both the foreigner and persons assisting the arrangement to criminal penalties.
When Can a Nominee Case Become More Serious?
A nominee investigation can become significantly more serious if authorities suspect that the business is connected to other unlawful activities.
For example, investigators may examine:
- The source of investment funds
- Transfers between Thailand and foreign countries
- Beneficial ownership of the company
- The identity of the person actually controlling the business
- Property or assets acquired through the business
- Possible money-laundering activity
- Connections with foreign criminal networks
- Use of Thai companies to conceal the movement of funds
In appropriate cases, an investigation may therefore involve more than company law. It can potentially expand into criminal, immigration, tax, anti-money-laundering or other regulatory investigations.
What Does “Transnational Crime” Mean?
Transnational crime generally refers to criminal conduct involving more than one country or having significant cross-border elements.
For a foreigner in Thailand, allegations may arise where authorities suspect that the person has used Thai businesses, bank accounts, assets or intermediaries to facilitate criminal activity involving people or transactions outside Thailand.
Importantly, being a foreign shareholder, director, investor or business owner does not by itself establish criminal liability.
Authorities must establish the relevant facts and legal elements of the alleged offence.
Can a Foreigner Be Arrested?
Yes. If Thai authorities have sufficient legal grounds and evidence of an alleged criminal offence, a foreign national may be investigated, arrested or prosecuted in Thailand.
The consequences can extend beyond the criminal case. Depending on the circumstances, a foreigner may also face:
- Bail restrictions
- Asset or account investigations
- Immigration consequences
- Visa or permission-to-stay problems
- Deportation or removal proceedings
- Potential blacklisting
- Restrictions on conducting business in Thailand
The precise consequences depend on the offence alleged, the evidence, the person's immigration status and the decisions of the relevant authorities and court.
What Should a Foreigner Do If Accused?
If you are accused of participating in a nominee structure or transnational criminal activity, it is important not to ignore the investigation.
You should consider obtaining legal advice immediately and preserving relevant evidence, including:
- Share purchase and subscription documents
- Bank statements
- Investment records
- Company accounting documents
- Contracts and invoices
- Communications with shareholders or business partners
- Evidence showing the source of funds
- Evidence of actual business operations
Do not destroy documents, transfer assets to conceal them, or attempt to coordinate statements with other suspects.
A lawyer should first assess the allegations, evidence and legal status of the business before determining the appropriate defence strategy.
Why Legal Representation Matters
Cases involving foreign nationals, nominee structures and suspected transnational crime can involve several government agencies and multiple areas of Thai law.
A defence strategy should therefore consider not only the criminal allegation but also the company's ownership structure, financial transactions, immigration status and potential asset consequences.
Early legal advice may help identify weaknesses in the allegations, clarify the person's actual role and prevent additional legal problems from developing.
Conclusion
Being accused of being a nominee or participating in transnational crime in Thailand is a serious matter. However, an accusation is not the same as a conviction.
Foreigners facing an investigation should obtain qualified Thai legal advice as early as possible, understand the allegations against them and avoid taking actions that could worsen their legal position.
Nathee Legal provides legal assistance to foreign nationals facing criminal, business, nominee, immigration and related legal issues in Thailand.
If you or your company is being investigated by Thai authorities, obtaining legal advice at an early stage can be critical.