Owning a business: the Foreign Business Act, 49/51 reality and the nominee trap
Facts verified · 2026-07-11
Under section 4 of the Foreign Business Act B.E. 2542 (1999), a Thai-registered company counts as "foreign" if half or more of its capital shares are foreign-held — which is why the classic structure is 49% foreign, 51% Thai. A foreign company needs permission for anything in the Act's three annexed lists. List 1 (media, rice farming, land trading, Buddha-image making and others) is closed outright. List 2 (national security, arts and culture, natural resources) needs Cabinet-level permission and at least 40% Thai shareholding (section 15). List 3 — the one that catches expats — covers businesses where Thais are "not yet ready to compete": accounting, legal, architectural and engineering services, construction, brokerage, retail under 100 million baht capital, wholesale, advertising, hotels (except hotel management), guided touring, sale of food and beverages, and a catch-all of "other service businesses". A majority-foreign restaurant or consultancy therefore needs a Foreign Business Licence from the Director-General of Business Development. Minimum capital for a foreigner starting a business is 2 million baht, or 3 million for listed businesses (section 14).
The shortcut everyone whispers about is the crime: section 36 makes a Thai who holds shares as a foreigner's nominee — and the foreigner who lets them — liable to up to three years' imprisonment or a 100,000-to-1,000,000-baht fine or both, plus court-ordered unwinding and daily fines of 10,000–50,000 baht for non-compliance. This is enforced: the DBD's Foreign Business Commission runs annual nominee-inspection sweeps (397 entities screened in the 2022 plan, targeting tourism, land/real-estate holding and agricultural sectors). Genuine Thai co-investment is legal; Thais fronting capital so a foreigner controls a restricted business is not. Exemptions exist by treaty (section 10, e.g. the US Treaty of Amity) and for BOI-promoted businesses, which get a certificate instead of a licence (section 12).
Legal basis
Foreign Business Act B.E. 2542 (1999), ss. 4, 8, 10, 12, 14, 15, 36, 37 and annexed Lists 1–3
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DBD screening practice (source-of-funds evidence demanded from Thai shareholders in majority-Thai companies with foreign directors) and the annual review of the annexed lists change administratively; amendments to the lists themselves require a Royal Decree or Act.
General information, not legal advice. Laws and practice change; for a decision that matters, confirm with the authority named in the sources or a licensed professional.