Hua Hin nominee shareholder crackdown discussed in online seminar
Thailand’s nominee shareholder crackdown and its impact on companies in Hua Hin was the focus of a recent MBMG Group livestream moderated by Hua Hin Today Editor Jonathan Fairfield.
The YouTube discussion featured Khun Janjira Sumanus CEO of MBMG Group and Hua Hin Accounting & Law and examined growing enforcement action against Thai companies suspected of using nominee shareholders, particularly where foreigners use company structures to own land, hold property or operate businesses in sectors restricted under Thai law.
The discussion heard that many Thai companies are structured with 51 percent Thai shareholders and 49 percent foreign shareholders. Such a structure is not automatically illegal, but concerns arise when Thai shareholders are names on paper only and have not genuinely invested in, controlled or benefited from the company.
Khun Janjira said authorities are now looking beyond shareholder lists and are examining whether Thai shareholders have invested money into the company, have voting rights, attend company meetings, receive dividends and appear in proper financial records.
The issue is particularly relevant in Hua Hin, where many foreign residents bought property through Thai company structures years ago. In some cases, those buyers may not know who the Thai shareholders are, or may have inherited shareholder arrangements from lawyers, accountants or previous company owners.
Authorities seeking more evidence
The livestream discussed how the Department of Business Development has identified more than 100,000 companies with a 51 percent Thai and 49 percent foreign ownership structure.
Some companies have received letters asking them to provide evidence about shareholders, investment, financial statements and company operations. The discussion also said some people have now received summonses from the Central Investigation Bureau, marking a further escalation from DBD letters.
Those summonses may ask for shareholder records, proof of payment for shares, company affidavits, shareholder lists, pre-incorporation meeting records, bank statements, evidence of transactions between the company and director, proof of asset ownership, lease agreements and personal income tax filings.
The advice given during the livestream was clear: letters or summonses should not be ignored. If someone is not ready by the deadline, they may be able to request more time, but staying silent could make the situation worse.
Property companies under scrutiny
The discussion also covered problems with company accounts, particularly where a company owns land or a house.
Khun Janjira said company assets should be properly recorded in financial statements. If land or a house was purchased through a company, those assets should appear in the accounts. If a property was sold but the transaction was not recorded, or if a house was built but never booked as a company asset, that could create problems.
The livestream also explained that where a company owns a property being used by a foreigner, there should normally be a paper trail showing how the asset generates income, such as rent or land lease payments.
Potential consequences discussed included fines, imprisonment, forced sale of land, closure of a company and penalties against shareholders, directors, accountants or lawyers involved in setting up improper structures.
Anyone affected was advised to gather all available company documents, shareholder records, financial statements, land documents, bank records and correspondence from authorities, before seeking professional advice.
The discussion also looked at legal alternatives to nominee structures, including Foreign Business Licences, BOI-approved structures, representative offices, 30-year land leases, usufructs and superficies, depending on the circumstances.
The full livestream is available to watch on YouTube and is recommended for foreign residents, business owners and property owners in Hua Hin who may be affected by the current enforcement action.
The livestream took place in April, before the most recent reports of intensified enforcement action against nominee companies in Hua Hin.
