THE Commerce Ministry has launched an in-depth investigation of 6,551 suspicious businesses wherein foreigners holding 50 percent or more shares are operating without permit in violation of an annex of the Foreign Business Act B.E. 2542 (1999) with technology used to analyse and link databases in screening them, PPTVHD36 said today (May 4).
At present the maximum foreign shareholding in a company registered in Thailand is 49 percent with several of businesses reserved for Thais. However foreigners have illegally used Thai nominees as proxy shareholders.
Mr. Poonpong Naiyanapakorn, director-general of the Ministry’s Department of Business Development, said this investigation is being carried out with partner agencies including the Department of Special Investigation (DSI) and tax authorities in order to expand the probe to related networks.
He emphasised that foreign business operators or investors must not engage in this practice. To invest and conduct business in Thailand, foreigners must strictly comply with this law which has outlined three categories either banned to them or allowed to be carried after getting permission as follows:
Category 1: “Absolutely Prohibited to Foreign Businesses” – These businesses are prohibited for foreigners due to their connection to the basic livelihoods of Thai citizens and are reserved for Thai nationals only. Examples include rice farming, orchards, fishing in Thai waters, logging, and land trading.
Category 2: “Concerning National Security, Culture, and Resources” – These businesses relate to national security or have a significant impact on the economy and society. Foreigners can conduct these businesses, but require permission from the minister, with the approval of the cabinet. Examples include businesses related to national security such as weapons, transportation, and natural resources.
Category 3: “Thais Not Yet Ready to Compete, Requires Permission” – These are businesses Thais are at present not yet ready to compete. Foreigners can conduct these businesses but require permission from the Director-General of the Department of Business Development with the approval of the Foreign Business Committee. They include service businesses like accounting, law, retail, wholesale, tourism, and hotels.
Those violating this law, or are complicit in the offence or fail to take reasonable preventative measures therefore could be prosecuted as accomplices, face three years’ imprisonment, a fine of 100,000 to 1 million baht, or both.
Thais are warned to not hold shares for foreigners as nominees,
The department is continuing to proactively utilise a linked database system and risk analysis technology to screen legal entities suspected of violating the law.
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Top and Front Page – Representative image of a man being arrested. Photo by Rainer Bleek on Unsplash
Mr. Poonpong Naiyanapakorn, head of Commerce Ministry’s Department of Business Development. Photo – PPTVHD36
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