Thai law has defined the scope of foreign business operations under the “Foreign Business Act, B.E. 2542 (1999).”
This restricts foreigners who wish to invest and operate businesses in Thailand, making it difficult or limited even when permissible.
If a corporate entity wishes to operate a business listed in the schedules attached to the Foreign Business Act, it must obtain permission to operate the business—commonly known as a Foreign Business License (FBL)—from the Cabinet or the Foreign Business Committee under the Department of Business Development. This requirement considers the maximum benefits to the country, the national economy, and the impact on Thai entrepreneurs, making approval difficult to obtain.
The “Foreign Business Act, B.E. 2542 (1999)” stipulates penalties for acting as a “nominee” as follows:
- Imprisonment for not more than 3 years, or a fine ranging from one hundred thousand to one million baht, or both.
- The court may issue an order to cease the business operation.
- The business may be blacklisted.
- Assets associated with the business involving the nominee arrangement may be seized according to the law.
- Immediate cancellation of the business license, resulting in the inability to continue operating a business in Thailand.
Acting as a nominee is viewed as a violation of business transparency because it conceals the true identity of foreign shareholders. Furthermore, it constitutes circumvention of laws designed to protect the interests of Thai citizens and the national economy.
