Hundreds of firms probed in nominee hunt
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Hundreds of firms probed in nominee hunt

Violations in Chiang Mai, Chon Buri

The Business Development Department has investigated 439 companies suspected of acting as nominees for foreign firms in an effort to curb the "grey" market in fiscal 2023, with legal entities engaging in potential nominee activities discovered in Chiang Mai and Chon Buri provinces.

According to Jitakorn Wongkhatekorn, deputy director-general of the department, the agency inspected 439 potential nominee businesses in three target groups: tourism and related businesses, real estate, and hotels and resorts.

The targeted provinces comprised: Chiang Mai, Chiang Rai, Phuket, Surat Thani, Chon Buri, Rayong, Prachuap Khiri Khan, Phetchaburi and Bangkok.

The inspections were in collaboration with the Tourism Department, the Special Investigations Department, the Tourist Police Bureau and the Immigration Bureau.

Mr Jitakorn said preliminary findings indicated legal entities engaging in potential nominee activities were discovered in Chiang Mai and Chon Buri, with two Thai shareholders found in 269 companies across various sectors. These sectors comprised service businesses (184 companies), real estate (60 companies), tourism and related businesses (six companies), hotel and resort operations (four companies), and other businesses such as retail, transport and agriculture (15 companies).

Further analysis is being conducted to assess investment values and additional business information, he said.

The department also identified several accounting and law offices that advise or hire Thais to hold shares on behalf of foreigners. This arrangement typically involves Thai individuals holding 51% of shares and foreigners holding 49% to allow businesses to operate as legal entities without the need for special permits.

If Thais are discovered to have intentionally assisted, supported or held shares on behalf of foreigners involved in nominee activities, legal action will be taken, Mr Jitakorn said.

"The majority of nominee violations are often a result of Thai individuals accepting benefits, giving their consent, or seeking legal advice to evade the law. We want to emphasise that 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 said.

"Such actions may result in legal consequences for legal entities, those providing assistance, and Thai shareholders owning companies on behalf of foreigners. The penalties include imprisonment for up to three years or fines ranging from 100,000 to 1 million baht. In addition, daily fines of 10,000 to 50,000 baht may be imposed until the violation ceases."

Regarding the inspection plan for fiscal 2024, Mr Jitakorn said the department is developing an annual inspection plan. The focus is on business compliance with Foreign Business Act requirements.

To enhance the effectiveness of these inspections, the department plans to continue collaborating with partner agencies. In addition, the department is promoting awareness and understanding of relevant laws concerning business operations, such as the Foreign Business Act.

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