Editorial
Thai Company Nominee Structure: 6 Legal Risks in 2026
By THAI.ESTATE Editorial Team16 min read
Using a Thai company to hold land as a foreign buyer is not a legal grey area. Under the Land Code and the Foreign Business Act, using Thai nominees - shareholders who hold shares on your behalf without genuine economic interest - is explicitly illegal. The structure does not protect you. It exposes you.
This guide breaks down the six most damaging legal risks, using anonymized case patterns from buyer situations the THAI.ESTATE Editorial Team has observed. For each risk, you will find the warning signs, the cost, and the prevention rule you can apply before signing anything.
Quick answer
- Thai law prohibits nominee shareholding for the purpose of allowing foreigners to own land. The Land Code (B.E. 2497) and the Foreign Business Act (B.E. 2542) both apply
- Penalties for the foreign buyer can include forced divestment of the land, criminal prosecution, and fines
- Penalties for the Thai nominees include criminal liability under the Foreign Business Act
- The Land Department has investigated nominee structures since at least 2006, with periodic enforcement sweeps continuing through 2025 and into 2026
- Legal alternatives exist: 30-year registered leasehold, condominium freehold in your own name (up to 49% of a building's floor area), or BOI-promoted structures for qualifying investors
- No structure designed to circumvent the Land Code is enforcement-proof, regardless of how it is drafted
Options and scenarios
Scenario 1: Is a Thai company a safe way to buy a villa?
The short answer is no, if the company exists solely to hold land for a foreign buyer. Here is the situation as it commonly appears.
A buyer from Europe identifies a villa in Phuket or Koh Samui priced at approximately THB 8-15 million. The developer or agent proposes transferring the property via an existing Thai limited company. Thai shareholders hold 51% of the shares. The buyer holds 49%. Additional tools - preference shares, shareholder loans, or a power of attorney - are used to give the foreign buyer de facto control.
On paper, the structure appears to comply with the 51/49 split required for a Thai company to own land. In practice, if the Thai shareholders have no genuine economic interest and hold shares as a favor or for a small fee, the structure is a nominee arrangement. The Land Department and the Department of Business Development have the authority to investigate the economic substance of the shareholding.
The warning signs that were visible before signing:
- Thai shareholders were introduced by the selling agent, not independently sourced
- Shareholders received a 'nominee fee' rather than a dividend or economic return
- The buyer was asked to sign blank share transfer documents as a security measure
- The company had no other business activity and no revenue other than holding the property
What it cost in documented case patterns: forced sale of the property at below-market value following a Land Department investigation, legal fees of THB 300,000 to 800,000, and in some cases, personal liability for outstanding company taxes and annual maintenance costs that accumulated during the dispute.
Prevention rule: If you are told a Thai company is the standard way foreigners buy villas, ask the advising lawyer - not the agent - to confirm in writing that the specific shareholders have genuine economic interest and independent legal representation. If they cannot, the structure is likely a nominee arrangement.
Scenario 2: What happens if the Thai nominee dies or sells shares?
This is one of the most financially damaging scenarios and one of the least discussed.
A retiree purchasing in Rawai or Hua Hin sets up a company structure with a Thai individual as the majority shareholder. No shareholders' agreement specifies what happens to those shares if the Thai nominee dies, divorces, becomes insolvent, or simply changes their mind.
In one pattern observed by this team, the Thai nominee's shares passed to their heirs upon death. The heirs had no obligation to maintain the nominee arrangement. They could vote to dissolve the company, force a dividend (which would expose the cash to tax), or sell their shares to a third party. The foreign buyer had no registered legal ownership of the land itself - only a shareholding in a company that the Land Department could challenge.
Warning signs visible before signing:
- No shareholders' agreement was drafted at company formation
- The nominees were elderly or in poor health
- There was no buy-sell clause or right of first refusal on shares
- The buyer's lawyer was the same lawyer who set up the nominee structure (conflict of interest)
What it cost: legal disputes lasting two to four years, costs of THB 500,000 to 1.2 million in legal fees, and in the worst pattern, a forced transfer of the property at a price set by the courts rather than the market.
Prevention rule: If you proceed with any company structure, insist on an independently drafted shareholders' agreement that covers succession, exit rights, and dispute resolution. Make sure the Thai nominees have their own legal counsel, separate from yours. This does not make a nominee structure legal, but it reduces the secondary risk of shareholder disputes.
Scenario 3: Can the Land Department identify and void a nominee structure?
Yes. The Land Department has published criteria for identifying nominee arrangements and has conducted enforcement activity across Phuket, Samui, Pattaya, and Chiang Mai. The most recent publicly documented sweep was in 2023-2024, with continued monitoring reported into 2025.
Officials look at:
- The source of funds: if the company's capital was funded entirely by the foreign buyer's wire transfers, this is a red flag
- Share price vs. market value of land: if 51% of shares were transferred for THB 1,000 while the land is worth THB 10 million, economic substance is absent
- Voting patterns and decision-making: if only the foreign buyer signs resolutions, the Thai shareholders' control is nominal
- Loan agreements: if the company borrowed money from the foreign buyer to fund the land purchase, the structure may be recharacterized as disguised foreign ownership
What it costs if the Land Department acts: the land can be ordered to be sold within a fixed period (often 180 days under the Land Code). If it is not sold voluntarily, the department can arrange a forced sale. Proceeds are returned minus penalties and costs. Market estimates suggest distressed forced-sale prices are 20-35% below fair market value.
Prevention rule: Before any company-based purchase, commission an independent title search and ask a property lawyer (not the selling agent's lawyer) to assess the specific company's shareholder history and capital structure. If the existing company was clearly set up for a previous foreign buyer, the risk is already embedded in the structure.
Scenario 4: What are the tax risks of running a property-holding company in Thailand?
A Thai company is a legal entity with annual obligations. Foreign buyers who use nominee structures often treat the company as a dormant shell, which creates its own set of risks.
A company that owns land and a building must file annual financial statements with the Department of Business Development and submit annual corporate tax returns to the Revenue Department. If the company provides accommodation to the foreign buyer rent-free, the Revenue Department can deem this a benefit in kind and assess tax on imputed rent. If the company charges rent to the buyer, that rental income is subject to corporate income tax (20% as of 2026) and VAT if turnover exceeds the registration threshold.
Accumulated penalties for non-filing can reach 1.5 times the tax due, plus surcharges. In one pattern, a buyer who had not filed for five years faced a tax liability and penalties of approximately THB 400,000 on a property with a capital value of THB 6 million.
Warning signs visible before signing:
- The selling agent said 'the accountant handles everything' with no specifics on cost or process
- Annual accounting fees quoted were below THB 15,000 - too low to cover real compliance work
- No audited accounts were available for the company being transferred
Prevention rule: Before acquiring shares in an existing company, obtain the last three years of audited financial statements and tax returns. Have a Thai-registered accountant review them. Budget THB 30,000 to 60,000 per year for real compliance (accounting, audit, and tax filing). Factor this into your total cost of ownership.
Scenario 5: Does a Thai company protect you if the developer goes insolvent?
No. Company ownership of land does not isolate you from developer insolvency risk on off-plan projects. And if the company itself has debts - unpaid taxes, unpaid contractors, or shareholder loans - those liabilities attach to the land as an encumbered asset.
In one pattern, a buyer acquired shares in a company holding a plot in Chiang Mai. Unknown to the buyer, the company had an outstanding judgment debt from a previous legal dispute. A creditor registered a lien against the land. The title (a chanote, meaning a full title deed with GPS-verified coordinates) appeared clean in a basic search, but the company-level liability was visible only in court records - which were not checked.
Prevention rule: Search for litigation against the company (not just the land title) at the Civil Court registry before any share transfer. This search takes two to three working days and costs approximately THB 5,000 to 10,000 in professional fees. It is not optional.
Scenario 6: Is there a way to convert a nominee structure to a legal structure?
This is the question buyers in existing nominee arrangements ask most often. The answer is: sometimes, with cost and complexity.
If your Thai company has genuine minority shareholders with real economic interest, an independent board, and a legitimate business purpose beyond land holding, a lawyer may be able to restructure it toward compliance. This may involve issuing preference shares with real economic rights, documenting shareholder loans as genuine arm's-length transactions, and ensuring all resolutions are properly executed by all shareholders.
Alternatively, you can exit the company structure by selling the land (as a Thai company asset) and re-purchasing on a 30-year registered leasehold in your personal name. The lease must be registered at the Land Department to be enforceable against third parties. A registered 30-year lease (chanote land only) costs approximately 1.1% of the lease value in registration fees and stamp duty at the Land Department.
In some cases, if you qualify for Board of Investment (BOI) promoted status as a long-term resident or as a qualifying investor (as of 2025-2026 BOI rules), you may be eligible to purchase up to 1 rai (1,600 sqm) of land for residential use in your own name. Confirm current BOI criteria with a licensed lawyer, as the rules are subject to change.
Comparison table
| Parameter | Nominee Thai company | Registered 30-year lease | Condominium freehold |
|---|---|---|---|
| Legal status for foreigners | Illegal if nominees lack genuine interest | Legal if registered at Land Department | Legal under Condominium Act |
| Land type covered | Any land class | Chanote and some Nor Sor 3 Gor | N/A (building unit only) |
| Foreign ownership limit | Technically 49% of company only | No cap on lease itself | 49% of building floor area |
| Typical setup cost | THB 30,000 to 80,000 (company formation) | THB 15,000 to 40,000 (legal + registration fees) | Standard transfer fees apply |
| Annual ongoing cost | THB 30,000 to 60,000 (accounting, audit, tax) | Minimal if no renewal issues | Juristic person fees only |
| Enforcement risk | High: Land Department and police scrutiny | Low if properly registered | Very low |
| Asset transfer at exit | Share transfer (company tax risk) | Lease assignment (if permitted in deed) | Direct unit transfer |
| Inheritance clarity | Low: depends on company structure | Medium: lease terms govern | High: standard succession rules |
Risks and mistakes
Risk 1: Accepting the agent's lawyer. The most common mistake is allowing the selling agent to introduce the lawyer who sets up or reviews the company structure. That lawyer's fee depends on the deal completing. Independent legal advice from a lawyer you source and pay directly is not a luxury - it is the minimum standard for a transaction at this scale.
Risk 2: Relying on 'everyone does it' as legal cover. Market prevalence does not create legal immunity. The Land Code does not have a tolerance clause for common practice. Enforcement risk has increased since 2006, not decreased.
Risk 3: Not reading the company's history before the share transfer. Buying into an existing company means inheriting its full legal and tax history. Undisclosed liabilities, pending litigation, and unpaid taxes attach to the company at the moment of transfer.
Risk 4: Using a power of attorney as a substitute for legal ownership. A power of attorney over a Thai company does not give you ownership of the land. It gives you the ability to act on behalf of a Thai entity that the Land Department can dissolve.
Risk 5: Assuming a 'premium' structure from a branded developer is legal. Developer reputation does not determine legal compliance. Even well-known developers have sold villa projects via company structures that carry nominee risk. Ask the developer for a legal opinion from an independent law firm, not their in-house counsel.
Risk 6: Deferring the legal review until after the reservation deposit. Reservation deposits in Thailand are typically non-refundable (THB 50,000 to 200,000 for villa projects). By the time many buyers commission legal advice, they are already financially committed and psychologically anchored to the deal. Commission the legal review before the reservation deposit, not after.
FAQ
Is it illegal for a foreigner to own a Thai company that holds land?
Holding shares in a Thai company is legal for foreigners. What is illegal is using Thai nominees - shareholders who hold shares without genuine economic interest - to circumvent the Land Code's restriction on foreign land ownership. The distinction is economic substance: do the Thai shareholders have real rights and real financial exposure, or are they placeholders for the foreign buyer?
What is the penalty for a foreign buyer caught in a nominee structure?
Penalties include a mandatory order to divest the land within a set period, fines under the Foreign Business Act, and potential criminal prosecution. In practice, most enforcement results in forced or distressed sales rather than imprisonment, but criminal liability exists in the statute. Penalties for Thai nominees include fines and up to three years imprisonment under the Foreign Business Act (B.E. 2542).
Can I use preference shares to maintain control legally?
Preference shares that give a foreign minority shareholder disproportionate voting power or economic rights can, in some structures, reflect genuine economic arrangements. However, if the sole purpose of the preference share structure is to give a foreign holder effective control over a land-owning company while nominally complying with the 51/49 rule, the Land Department may still characterize it as a nominee arrangement. A preference share structure needs a credible business rationale beyond land holding.
Is a 30-year lease actually enforceable in Thailand?
A lease registered at the Land Department is enforceable against the landowner and against third parties, including new owners if the land is sold. An unregistered lease - even a signed contract - binds only the original parties and is not enforceable against a new buyer of the land. Registration at the Land Department costs approximately 1.1% of the total lease value and takes one working day. Always register.
What does a chanote title mean and why does it matter for a lease?
A chanote (Nor Sor 4 Jor) is a full-title deed with GPS-verified boundary coordinates, issued by the Land Department. It is the most secure land title class in Thailand. Leases should ideally be registered against chanote land. Lower-grade titles such as Nor Sor 3 or Sor Por Kor have boundary limitations and may restrict or complicate lease registration. Always confirm the title class before signing any agreement.
Can I sell a property held in a Thai company?
Yes, but you have two options: sell the shares in the company (a share transfer), or sell the underlying land asset out of the company (a land transfer). Share transfers are faster but pass all company liabilities to the buyer. Land transfers trigger transfer tax and specific business tax at the Land Department. Buyers purchasing via share transfer face the same nominee risks you carried. This limits your buyer pool and can suppress the sale price.
What is the FET document and why does it matter for condominiums?
A Foreign Exchange Transaction (FET) document is a bank-issued certificate confirming that foreign currency was remitted into Thailand and converted to Thai Baht for the specific purpose of buying a condominium unit. The Land Department requires this document to register freehold ownership in a foreigner's name. If the transfer purpose is recorded incorrectly by the sending or receiving bank, the FET document fails and registration is blocked. This is a wire transfer mistake to prevent before you send money, not after.
Does the BOI long-term resident visa allow land purchase?
As of 2025-2026, qualifying BOI Long-Term Resident (LTR) visa holders are eligible to purchase up to 1 rai (1,600 sqm) of land for residential use in their own name, subject to conditions set by the BOI and the Land Department. The conditions include minimum investment thresholds and property location criteria. The rules are subject to revision; confirm current requirements with a licensed Thai property lawyer before relying on this route.
How do I find a lawyer who is truly independent of the deal?
Do not use a lawyer introduced by the seller, the developer, or the agent. Source your own lawyer through the Thai Lawyers Council register or through a referral from your home country's embassy commercial section. Pay the legal fee directly. A basic legal due diligence review for a villa-level transaction should cost THB 15,000 to 40,000. If a lawyer offers to do it for free because 'the agent covers it,' the lawyer is not working for you.
What should I check before signing any company share transfer agreement?
Before signing, verify: the company's full corporate history at the Department of Business Development; three years of audited accounts and tax returns; litigation history at the Civil Court; the title deed class and any encumbrances registered against the land; the genuine economic interest of each Thai shareholder; and the source of the company's original capital. Each of these checks requires a professional and takes between two and ten working days. None of them is optional.
Planning a property purchase in Thailand? Send us your requirements - the THAI.ESTATE team will reply with specific options and a safety checklist for your case.