When Do You Need a Thai Shareholder and Director?
Essential aspects of Thai laws related to the ownership of local business
In this article we will discuss an important topic of a local shareholder for Thai companies.
As you may have already heard, for many types of businesses, at least 51% of the shares must be owned by a Thai shareholder. This requirement comes from the Foreign Business Act of 1999, which defines which business activities are restricted for foreign ownership and therefore will require a majority Thai shareholding.
In this short video: We cover the rules under Thailand’s Foreign Business Act, the types of businesses that are restricted, and three legal ways to structure a Thai company while staying compliant.
📌 Topics Covered: Thai majority ownership requirements under the law Which business activities are restricted for foreigners When you can register a fully foreign-owned company BOI and Foreign Business License options Legal alternatives to nominee structures
RESTRICTED ACTIVITIES IN THAILAND
These restricted activities include:
- Retail and wholesale trade
- Advertising
- Hotel business
- Guided tour services
- And also all service-related industries.
In simple terms, if your business sells goods or services within Thailand, you will typically need a Thai shareholder holding at least 51% of the company’s shares.
Situations when a local shareholder is not required
However, if your company does not operate in the local market—for example, if it engages in trade between third countries—it can be 100% foreign-owned. The same applies to online businesses, such as app development or digital advertising.
Therefore, you can register a fully foreign-owned company in Thailand from the start, open a bank account, and work with both corporate and individual clients worldwide, excluding those in Thailand. If your market geography changes and you decide to enter the Thai market as well, you will need to think about finding a local partner; or, in some cases, apply for a Foreign Business License from the Thailand Board of Investment. There will be certain conditions to fulfill, like eligible activities, the amount of investment capital, manpower projection or innovation component.
Genaral rule: two shareholders and one director
As a general rule, to set up a limited company in Thailand, you need at least two shareholders and one director. One of the shareholders can also serve as the director.
Contact us for a free consultation on how to start a company in Thailand, whether for international activity or to operate in the local market, and we’ll help you start your business journey in Thailand on the right foot!
Can You Use a Nominee Shareholder in Thailand?
One of the biggest challenges for foreign entrepreneurs who want to start business in Thailand is local majority ownership requirements.
Under the Foreign Business Act (1999), most types of businesses must be at least 51% Thai-owned. These restrictions are set to protect local businesses and industries. As a result, private companies in most sectors—including trade, services, and manufacturing—require local shareholders.
Thus, many entrepreneurs ask the question: Are There Legal Ways to Have 100% Foreign Ownership?
In some cases, it is possible to own a business fully as a foreigner, but these options are limited. The two main ways to do this are:
- Obtaining a Foreign Business License (FBL), and
- Registering under the Board of Investment (BOI) – BOI-approved businesses can be 100% foreign-owned but must meet specific industry requirements.
Both options are quite difficult for small businesses for a few reasons. Not only do they require approval from Thai authorities, but the company also must meet certain conditions – for example, to be engaged in eligible activities, invest a substantial amount of capital in local operations, create enough manpower opportunities for local workers and so on.
In reality, for most small and medium-sized businesses, these options are not practical.
However, there are ways to solve the problem of a local shareholder for small businesses.
Three Legal ways to meet Thai ownership requirements:
First: Partner with a Thai co-founder – The simplest option is to start the company with a trusted Thai partner from the beginning. It is usually a physical person, a Thai citizen. This can be a person with the interest in the same business who you may already know from your business network, or somebody you know personally and who is keen to start a new business. In any event, human connections are very important!
Second: Form a joint venture with an existing Thai business. It is usually a company, for which you can provide some added value – it can be some goods as a part of their supply chain or some technical expertise or technology. In return, a local investor can be an added value for your business – by providing funding and strategic support.
Third: Gradual introduction of a local shareholder from the company employee:
- Initially, before fully starting the operations, the company can be registered as 100% foreign-owned. Right after the incorporation, the company starts to look for employees in the local market.
- As a part of the compensation, the employees can be given an incentive package in the form of company shares. This is quite a common employee incentive strategy used in large companies in many countries, where workers receive parts of the company profit through shares ownership as a bonus based on company performance.
- This is especially practical when shares are given to one of the key employees – CEO, Managing Director, Financial manager and so on. Such incentives are known for the ability to stimulate involvement in shared business values, achieving common goa;s and increasing productivity.
- It is also important to note that in order to protect the founders’ authority and overall control over the business, the company’s shareholding structure can be designed in an appropriate way; for example by using preferred shares and voting rights for the founders.
In all three scenarios, the utmost attention must be paid to properly structured agreements between partners or shareholders, defining their rights and level of involvement in the business management.
Finally, it should be well noted that Using nominee shareholders is strictly prohibited in Thailand.
- Thai authorities actively investigate and prosecute fake shareholder arrangements.
- Recent crackdowns in Phuket and other parts of Thailand led to hundreds of arrests. Offenders were charged and received punishments from heavy fines to imprisonment and deportation.
For this reason, we strongly recommend only legal solutions for structuring your business in Thailand.
If you need help legally setting up your company, contact us for a consultation to find the best approach for your business.
In order to help you set up your company in Thailand and operate legally, whether for international activity or to operate in the local market, contact us for a free consultation today!