Thai business department investigates 439 firms for potential nomination violations
In a move to suppress the ‘grey’ market in the fiscal year 2023, the Business Development Department (BDD) investigated 439 companies, suspecting them of acting as nominees for foreign corporations. Interestingly, legal entities potentially involved in nominee activities were discovered in Chiang Mai and Chon Buri provinces.
The BDD Deputy Director-General, Jitakorn Wongkhatekorn, revealed that the agency inspected three targeted groups of businesses suspected of being nominees. These included tourism and related businesses, real estate, and hotels and resorts.
The provinces subjected to this scrutiny included Chiang Mai, Chiang Rai, Phuket, Surat Thani, Chon Buri, Rayong, Prachuap Khiri Khan, Phetchaburi, and Bangkok. This was undertaken in cooperation with several entities, including the Tourism Department, the Special Investigations Department, the Tourist Police Bureau, and the Immigration Bureau.
Jitakorn reported preliminary findings pointing to legal entities in Chiang Mai and Chon Buri engaging in potential nominee activities. Two Thai shareholders were found in 269 companies across various sectors. These companies were engaged in service businesses, real estate, tourism-related businesses, hotel and resort operations, and an array of other businesses such as retail, transport, and agriculture.
Jitakorn further mentioned that ongoing analysis is being conducted to evaluate investment values and obtain more business information. The BDD has also identified several accounting and law offices that counsel or employ Thais to hold shares on behalf of foreigners.
This setup typically sees Thai individuals holding 51% of shares and foreigners holding 49%, enabling businesses to operate as legal entities without requiring special permits.
Jitakorn warned that any Thais discovered intentionally aiding, supporting, or holding shares on behalf of foreigners involved in nominee activities would face legal consequences.
“Most nominee violations usually arise from Thai individuals accepting benefits, giving consent, or seeking legal advice to circumvent the law. Thais should not be misled into providing assistance or support, or holding shares on behalf of foreigners to allow foreign individuals to illegally conduct business here.”
He further clarified that such actions could lead to legal ramifications for legal entities, those assisting, and Thai shareholders owning companies on behalf of foreigners. The penalties could include up to three years in prison or fines ranging from 100,000 to 1 million baht. Additionally, daily fines of 10,000 to 50,000 baht could be imposed until the violation is rectified, reported Bangkok Post.
Regarding the inspection plan for fiscal 2024, Jitakorn stated that the department is devising an annual inspection plan with a focus on ensuring business compliance with the requirements of the Foreign Business Act.
The department plans to continue collaborating with partner agencies to enhance the efficacy of these inspections. Meanwhile, the department is also promoting awareness and understanding of relevant laws related to business operations, such as the Foreign Business Act.
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