Connect with us

Law

Legal Risks of Nominee in Thai Corporate Entities

The forerunner of circumvention, the commonplace vehicle employed by renowned foreign MNCs and lesser SMEs all the same is the joint venture with local partner to form a corporate entity and to the effect of, the ‘naturalization’ of an otherwise statutorily-deemed “Alien” / “Foreigner” to become a Thai entity.

Published

on

law

The forerunner of circumvention, the commonplace vehicle employed by renowned foreign MNCs and lesser SMEs all the same is the joint venture with local partner to form a corporate entity and to the effect of, the ‘naturalization’ of an otherwise statutorily-deemed “Alien” / “Foreigner” to become a Thai entity.

Risks of severe legal ramifications & repercussions, albeit observably dormant risks are inherent in such ‘naturalization’. Some of these risks, without limitation, are set out below, with the overarching legal insinuation that these structures effectively allow the otherwise foreign entities to avoid the attraction of most foreign business restrictions (use of such structures to hold land is also dealt with briefly below) particularly the Thai Foreign / Alien Business Act (“FBA“), and essentially – a circumvention of the law.

1. Nominee Shareholding & Circumvention of the Law

Section 36 of the Foreign / Alien Business Act B.E. 2542 (A.D. 1999):

“A Thai national or juristic person that assists a foreigner in avoiding the Foreign Business Act by means of holding shares as a nominee or being a nominal owner of the company, shall [including the foreigner so allowing the Thai nationals or juristic persons to commit this offence] be liable for a fine of THB100,000 to THB1,000,000 and/or imprisonment of up to 3 years.”

Vis-à-vis, liabilities & stipulated possible penalties for circumvention of the FBA is shouldered by the Thai nominees, the actual foreign entity(ies) utilizing the Thai nominees and responsible authorized directors, directors & senior management of the same and includes:

Fine of THB100,000 – THB1,000,000;

Imprisonment of up to 3 years; and/or

Termination or dissolution of business and / or the Thai private limited company.

via Circumvention of Thailand’s Restrictions on Foreign Investment

Click to comment

Leave a Reply

Business

This is what global tax reforms could mean for Asia’s tech giants

A new set of agreed global tax reforms will change where tech giants and other global giants pay taxes, explain experts from the IMF. Investment hubs such as Singapore and Hong Kong SAR could lose up to 0.15% of GDP as a result.

Published

on

7f7ede46 singapore skyline unsplash crop

Asia’s advanced and emerging market economies have several locally headquartered tech giants and host foreign companies.

(more…)
Continue Reading

Investment

Thailand Issues New Incentives to Attract Wealthy global citizens and Retirees

Thailand’s cabinet passed a resolution on September 14, 2021, introducing immigration, tax, and land ownership incentives aimed at foreign investors and skilled professionals. The incentives are part of an effort to stimulate Thailand’s economy which has been badly impacted by the COVID-19 pandemic.

Published

on

Thailand Issues New Incentives to Attract Foreign Investors, Professionals, and Retirees

Foreign investors, professionals, and retirees will be able to enjoy a number of new incentives in Thailand, as the government seeks to attract high-earning overseas residents to help the country’s COVID-19 recovery.

(more…)
Continue Reading

Recent

Most Read

Join 14,209 other subscribers