Outbound Investment Series | 1 August Take Effect! Thailand DBD Order No. 2/2569 Brings New Substantive Control Rules – Nominee Shareholding Loopholes for Chinese Investors Are Closing

Thailand DBD Order No. 2/2569 – Key Updates

On 1 August 2026, Thailand's Department of Business Development (DBD) issued Order No. 2/2569, marking a fundamental shift in foreign investment regulation—from documentary compliance to substantive control and economic substance review.

Previously, DBD only reviewed whether Thai shareholders held 51% or more on paper. From 1 August 2026 onwards, DBD now traces the actual source of funds, real economic decision-making power, ultimate profit flow, and control over seals and bank accounts. Nominee shareholder arrangements are effectively banned.

Background

Many Chinese-invested companies have historically used Thai nominee shareholders to circumvent Foreign Business Act (FBA) restrictions—particularly in construction, consulting, wholesale and retail, property holding, and e-commerce. According to DBD figures released in July 2026, approximately 118,000 companies have been flagged for review, with enforcement actions spanning multiple government agencies.

Three Key Enforcement Mechanisms

First, fund traceability. Both Thai shareholders' capital contribution records and company receipts are cross-checked. Temporary borrowing or bridging funds without a clear source are treated as red flags.

Second, an Investment Confirmation Letter is now required for any registration involving foreign shareholders or directors. This signed declaration confirms actual capital contribution and confirms no nominee arrangements exist. False declarations trigger criminal liability under both the Foreign Business Act and the Criminal Code.

Third, inter-agency data sharing. DBD now shares data with the Revenue Department, Land Department, Anti-Money Laundering Office, Immigration, Police, and the Department of Special Investigation. Land and property held through nominee structures are subject to seizure.enalties for Non-Compliance

Penalties are severe. Offenders face up to three years imprisonment plus fines of between 100,000 and 1,000,000 Thai Baht. The court may order the business to cease all operations, revoke its registration, and confiscate land and property. Bank accounts may be frozen and tax reassessments with penalties and interest may follow.

Impact on Existing Companies

For high-risk nominee structures, any change involving foreign directors or shareholders will likely trigger a DBD audit. Two remediation options exist. Option A is to convert the nominee to a genuine Thai partner with real capital contribution and operational involvement. Option B is to transfer restricted business to a fully foreign-owned BOI entity, leaving only non-restricted business in the old shell company.

Genuine joint ventures with real Thai capital and participation are generally compliant, but must retain all bank statements, tax records, board meeting minutes, and dividend transfer records. One-way profit repatriation that may suggest foreign control should be avoided.

BOI or FBL holders are exempt from Order No. 2/2569 review and remain the most stable structure.

Impact on New Investments

For non-restricted industries such as manufacturing for export or software development, a 100% foreign-owned ordinary company faces no additional review.

For List 3 restricted industries such as construction, consulting, and retail with long-term plans, BOI promotion is recommended as it offers 100% foreign ownership, tax incentives, and land rights.

For smaller short-term projects in List 3 industries, the only viable options are a genuine Thai majority joint venture or an FBL application, although FBL approval is discretionary and often takes longer.

BOI vs FBL

BOI allows 100% foreign ownership for List 3 industries and offers tax exemptions of up to eight to thirteen years, land ownership rights, and work permit facilitation, with approval typically taking three to six months.

FBL also allows 100% foreign ownership for List 3 industries but offers no tax incentives, no land ownership, and no work permit facilitation. Approval takes six to twelve months or longer and is subject to discretionary case-by-case review.

Action Plan for Chinese Investors

Within the first three months, conduct a self-audit of all Thai entities and shareholder structures. Identify any nominee arrangements and decide on a remediation path, and secure all capital contribution records and proof of Thai director involvement.

For new investments, non-restricted industries should establish a 100% foreign-owned company directly. List 3 restricted industries should prioritise BOI application, or use a genuine joint venture as a fallback. Any hidden control arrangements should be avoided entirely.

For ongoing compliance, conduct annual legal reviews of foreign business control status, ensure all fund flows are documented with proper backing, and maintain all BOI compliance filings.

Conclusion

Order No. 2/2569 is not a short-term crackdown. It is part of Thailand's long-term regulatory framework to close foreign investment loopholes. Nominee structures are no longer a viable compliance option. For Chinese investors, the choice is clear: BOI promotion or genuine joint ventures are the only sustainable paths. While upfront compliance costs may increase, they eliminate criminal risk and unlock tax, land, and operational benefits, delivering stronger long-term investment certainty.

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