AIG Partnership
AIG Partnership
In Thailand, the law limits foreign ownership in Thai limited companies to a maximum of 49% of shares. Attempting to bypass this restriction through unauthorized means, such as concealing true ownership or using a nominee to hold a larger share of ownership, is illegal and punishable by law. A common but illicit practice employed by some foreigners is the “Nominee Structure.” This involves having a Thai individual hold the majority of shares in name only, without the intention of actual participation in the business or receipt of dividends. The Nominee Structure poses legal risks for both the foreign and Thai parties involved. This is where the AIG Partnership is a 100% legal method of avoiding these issues.
The Problem – Nominee Structure
- Thai limited company usually limits foreign ownership of shares to a maximum of 49%.
- Operating a business without permission or concealing foreign ownership by using a nominee to hold up to or more than 51% of shares is punishable by law.
- To circumvent these restrictions, it has become common practice for foreigners to use an illegitimate structure, known as the “Nominee Structure”.
- The Nominee Structure is when the foreigner brings a Thai individual to “hold” shares in a company, however in practice the Thai shareholder will be there in name only and not operate or receive any dividends/income from the business.
Legal Background
- Foreign Ownership Restrictions (Land Code, B.E. 2497 (1954), Section 86).
- Beneficial Ownership (Revenue Department & Departmental Instruction No. Paw. 1/2528 1985).
- Genuine Thai Involvement (Foreign Business Act, B.E. 2542 1999).
- Dividend Distribution (Civil and Commercial Code).
- Dividend Payment Rules (Civil and Commercial Code.
The Crackdown on Nominee Structures
26,019
nominee cases were investigated by the Department of Business Development in 2024, in four business sectors: tourism and related enterprises, real estate trading, hotels and resorts, and logistics. [1]
231
suspects arrested during a crackdown on nominee businesses in Phuket, with assets worth over 1.5 billion baht seized. [2]
100,000 – 1M THB
in fines that could be paid as a penalty for business discovered to be using nominees, with additional daily fines of 10,000 to 50,000 THB. [3]
[1] The Thaiger, 22nd May 2024, “Foreign business as usual: Thailand schools diplomats on investment”.
[2] The Nation Thailand, 1st June 2024, “231 arrests in Phuket in crackdown on foreigners using Thai nominees”.
[3] Bangkok Post, 12 August 2024, “Addressing the Thai Nominee Problem in Foreign Owned Firm.
The Solution – AIG Genuine Partnership Model
AIG Co., Ltd (Asia Inter Group) presents a innovative solution to the restrictions and risks of the Nominee structure; our Genuine Partnership model. This model offers a fully compliant legal structure that adheres to Thai laws and regulations while providing the necessary support and expertise to help your business thrive. Contact us today for full details!