Pattaya News: DSI Raids Three Suspected Nominee Networks

This distinction gets lost in almost every bar-stool version of this story, so it is worth being precise about it.

Foreigners cannot own land in Thailand. They can own a condominium unit outright, provided foreign ownership stays within 49 per cent of the saleable floor area of the building. Beyond that, the common workaround is a Thai limited company: the foreigner takes 49 per cent, Thai shareholders take 51 per cent, and the company buys the land.

That arrangement is perfectly lawful when the Thai shareholders are real. They must have paid for their shares with their own money, be able to show where that money came from, and receive their share of the profits. If they hold the shares on the foreigner's behalf — funded by the foreigner, controlled by the foreigner, returning nothing to themselves — they are nominees, and section 36 of the Foreign Business Act B.E. 2542 (1999) makes that an offence for the Thai nominee and the foreigner alike.

The statutory penalty is imprisonment of up to three years, a fine of 100,000 to 1,000,000 baht, or both, with a further daily fine until the structure is unwound. That is the range on the books, not a prediction of any outcome in this case.

In practice, investigators test the shareholding rather than the paperwork: bank records against declared capital, whether dividends were ever paid, who signs the leases, who actually runs the business day to day. A shareholder whose declared income cannot support the shares she holds is the thread they pull. None of this is legal advice.

Find out who your shareholders actually are. A surprising number of owners have never met the two Thai names on their register. If they were supplied by the firm that set the company up, that is precisely the pattern under examination.

Ask whether they can evidence the money. The test is not whether the shares are registered but whether the shareholder paid for them and can show it. Bank statements from the time of incorporation are the document that matters.

Look for the tells. Preference shares with weighted voting that hand control back to the 49 per cent holder, blank share transfers held on file, or a loan agreement from the foreigner funding the Thai shares — all of these are read as evidence of a nominee arrangement rather than protection against one.

Get a second opinion from somewhere else entirely. One of the three premises searched on Friday was a law office. If the same firm formed your company, holds your documents and would be advising you now, that is not an independent review.

Know the lawful routes. A condominium in your own name inside the building's foreign quota. A registered 30-year lease. A Board of Investment structure for a real operating business. For Americans, the Treaty of Amity. They are less flexible than a nominee company, which is exactly why the nominee company became common.

If you are earlier in the process and simply working out what a long stay costs and what visa fits it, our guide to entry refusals and Thailand visa and immigration coverage are the sane starting points.

Friday's searches were not an isolated Chonburi operation. They are the latest stop on a national campaign that has been running since roughly May, and it has moved steadily through the places where foreign money meets Thai land.

In May, police raided 32 suspected nominee firms on Koh Phangan holding land valued at about 150 million baht. In July, authorities searched 31 suspected nominee companies in Chiang Mai. Also in July, and in Chonburi itself, police dismantled what was described as a Russian-linked property network covering some 775 homes worth around five billion baht. The DSI and the Department of Business Development have since extended the sweep across Koh Samui, Phuket, Phang Nga, Krabi and Surat Thani, with more than 48 arrests and thousands of companies examined.

Israeli nationals have featured heavily in the recent phase — twenty were named in Koh Samui warrants alone — which is context for Friday rather than a conclusion about it.

The pattern worth noticing is the change in target. Early raids went after the companies. This one went after the law office as well. Prosecuting the buyer of a nominee structure removes one owner; prosecuting the firm that manufactures them removes the supply.