He built a restaurant in Chiang Mai. Poured 18 months of savings into it. Hired a Thai partner he had known for years — a “trusted friend” — and gave him 51% of the shares, as Thai law requires for foreign-majority businesses. Then one day his friend stopped answering the phone.
What Is a Nominee Shareholder?
Under the Foreign Business Act, most business sectors in Thailand require at least 51% Thai ownership. Foreigners wanting full control often get around this by using a “nominee” — a Thai national who holds shares on paper but transfers any real economic benefit back to the foreigner through a side agreement.
The problem: those side agreements are not enforceable in Thai court. They are void. The nominee legally owns the shares. If they want to exercise that ownership, they can.
“Nominee arrangements” also violate the Foreign Business Act. Both parties can face criminal charges — not just civil ones. The foreigner loses the company. The nominee faces fines or imprisonment.
How This Story Ended
The nominee filed paperwork removing the German from the company. Under Thai corporate law, the majority shareholder can do this. By the time the German found a Thai lawyer who understood the situation, the restaurant had been sold to a third party. The proceeds went to the nominee.
“I thought I was being smart. I had known him for six years. We had been to his family home. My lawyer told me this was the normal way to do it in Thailand.”
The Legal Alternatives That Actually Work
Thailand does have legal paths to majority or full foreign ownership in many sectors. The most commonly missed ones:
- BOI Promotion — Thailand's Board of Investment grants 100% foreign ownership in promoted industries (manufacturing, tech, logistics, select services).
- Treaty of Amity — US citizens can own majority stakes in most sectors under a bilateral 1968 treaty. Often forgotten.
- Foreign Business License (FBL) — Obtainable for many service businesses. Slower, but legal.
- Preference shares — Structuring share classes so the foreign minority holder retains voting control even with a smaller economic stake.
Die Lektion / The Lesson
No relationship survives a financial betrayal. You cannot friendship your way out of a Thai legal dispute. If the structure you are using relies on trust rather than law, you do not have a structure — you have a gamble.
Before you register a company, open a restaurant, or sign any agreement with a Thai national as majority shareholder — talk to an advisor who has seen what happens when it goes wrong. The consultation costs almost nothing. The mistake costs everything.