Entering Thailand: Key Risks and Strategic Considerations for Foreign Businesses

The principal risk in entering Thailand is not that the rules are restrictive. It is that a structure which looked acceptable at incorporation may no longer withstand examination. Thailand’s Foreign Business Act has governed foreign participation since 1999, but the way it is enforced changed materially in 2026: regulators have moved from checking shareholding percentages on paper to asking who genuinely funds, controls, and benefits from the company.

For foreign businesses planning entry, this is not a reason to avoid the market. Thailand remains one of the most accessible economies in Southeast Asia, and a parallel liberalisation track is under way. But it does mean that structures assembled quickly, or copied from what a previous investor did five years ago, now carry a risk they did not carry then.

This article sets out how Thailand defines a foreign business, what changed in 2026, the legitimate routes to majority or full foreign ownership, and the commercial risks that no ownership structure addresses.

Key Takeaways

• A company is “foreign” at 50 per cent or more non-Thai shareholding under the Foreign Business Act, but enforcement in 2026 increasingly looks past the share register to actual control.
• Two DBD orders tightened registration scrutiny in 2026 — Order No. 2/2568 from 1 January at incorporation, and Order No. 1/2569 from 1 April extending to amendments, share transfers, and director changes.
• Nominee arrangements are prohibited and increasingly detected. Penalties reach imprisonment and substantial fines for both the Thai nominee and the foreign beneficiary.
• Legitimate routes to majority or full ownership exist — BOI promotion, a Foreign Business Licence, treaty arrangements, and activities outside the restricted lists.
• Structure is the smaller half of the problem. Most entries that fail commercially fail on partner selection, licence location, and unverified assumptions — not on the corporate form.

What This Article Covers

• What changed for foreign investors in 2026
• How Thailand defines a foreign business
• The nominee question — the risk that changed most
• Legitimate routes to majority or full foreign ownership
• Risks that structure does not solve
• A pre-entry verification checklist
• Frequently asked questions

What Changed for Foreign Investors in 2026

Two administrative orders from the Department of Business Development tightened the evidence required when foreign participation is registered. Order No. 2/2568, effective 1 January 2026, requires Thai shareholders in companies with foreign involvement to demonstrate that their investment capital is genuinely their own. Order No. 1/2569, effective 1 April 2026, extends comparable requirements to amendment filings — share transfers, capital increases, and changes to directors or shareholding composition.

The practical effect is that a registrar who previously processed filings largely at face value is now instructed to look behind the register. Source-of-funds evidence and signed confirmations from Thai shareholders are required, and filings may be cross-referenced against beneficial ownership information held under Thailand’s anti-money-laundering framework. Reporting from mid-2026 also indicates closer data sharing between the DBD and the Department of Lands where company-held land is involved.

The underlying shift matters more than any single requirement: assessment is moving from form to substance. A Thai-majority share register, on its own, is no longer treated as conclusive evidence that a company is Thai-controlled.

A separate liberalisation track is running in parallel. On 12 May 2026 the Cabinet approved in principle two draft instruments — a draft royal decree and a draft ministerial regulation — intended to remove the foreign business licence requirement for nine categories of activity already supervised by sector regulators. At the time of writing these remain drafts approved in principle rather than measures in force, and commentary suggests some of the proposed relief may carry conditions that narrow its practical value. Anyone relying on the change should confirm its current legislative status before structuring around it.

The question regulators now ask is not what percentage appears on the share register. It is who put the money in, who makes the decisions, and who takes the profit.

How Thailand Defines a Foreign Business

Under the Foreign Business Act B.E. 2542 (1999), a company is treated as foreign when non-Thai nationals or entities hold 50 per cent or more of its registered shares. Companies incorporated outside Thailand are also foreign for these purposes. Restricted activities are organised into three lists, each carrying a different level of restriction.

• List 1 — closed. Sectors reserved entirely for Thai nationals, including domestic media, farming, forestry, and land trading. No licence or investment level opens them.
• List 2 — national interest. Activities touching national security, natural resources, or cultural heritage. Foreign participation requires Cabinet approval in addition to a Foreign Business Licence.
• List 3 — the largest category. Sectors where Thai operators are considered not yet fully competitive, covering much of services, wholesale, and retail. Foreign majority participation requires a Foreign Business Licence unless another route applies.

Activities outside these lists are generally open to full foreign ownership, subject to any sector-specific licensing. Certain categories are also expressly exempt, including manufacturing goods for general sale and wholesale or retail operations above prescribed capital thresholds.

The first question in any entry plan is therefore narrow and factual: precisely which activities will the entity carry on, and where does each one sit? A single unexamined ancillary activity can change the licensing position of an otherwise straightforward structure.

The Nominee Question — The Risk That Changed Most

The Foreign Business Act prohibits a Thai national from holding shares as a nominee to allow a foreigner to operate a restricted business. Penalties extend to imprisonment and substantial fines for both the nominee and the foreign beneficiary, and a company may be ordered to cease operating. What changed in 2026 is not the prohibition but the probability of detection.

Nominee structures became common precisely because enforcement was historically formal. That assumption no longer holds. Where a Thai shareholder cannot evidence the funds used to acquire the shares, where the shareholder takes no economic benefit, where all decisions run through the foreign party, or where financing arrangements give a foreign lender effective veto rights, the arrangement is exposed regardless of how the register reads.

For foreign businesses already operating in Thailand, the practical question is whether the current structure would survive examination on its substance. For those entering now, it is whether the structure being proposed is defensible on its own terms — or merely conventional. Some arrangements that were widely used are no longer advisable, and being able to point to what other investors did is not a defence.

Nexus is not a law firm and does not provide legal advice. Structuring decisions of this kind should be taken with Thai counsel. What independent intelligence contributes is the factual picture underneath the structure: who your proposed Thai shareholders actually are, whether they have the means they are said to have, and what else they are involved in.

Legitimate Routes to Majority or Full Foreign Ownership

Full or majority foreign ownership is achievable in many sectors without any nominee arrangement. Which route fits depends on the specific activity, the capital available, and how quickly the business needs to begin operating — and the routes differ substantially on all three.

• Unrestricted activity. If the intended business sits outside the three lists, no foreign business licence is required and full foreign ownership is generally available from the outset. Establishing this properly is the cheapest step in the whole exercise.
• Board of Investment promotion. BOI promotion can permit majority or full foreign ownership in otherwise restricted promoted activities, and typically carries tax, import-duty, land, and work-permit benefits. Promotion applies to the promoted activity; non-promoted activities remain subject to the ordinary analysis.
• Foreign Business Licence. Available for List 3 activities but discretionary, evidence-heavy, and slower. It should be planned for as a timeline item, not assumed.
• Treaty arrangements. The US–Thailand Treaty of Amity permits US nationals and companies majority or full ownership across many otherwise restricted sectors. Comparable, narrower benefits exist under certain free trade agreements.
• Genuine joint venture. Where a Thai partner brings real capital, capability, or market access, a Thai-majority structure can be entirely appropriate. The distinction that matters is whether the partner is commercially real, which is a question of fact rather than drafting.

Risks That Structure Does Not Solve

Ownership structure absorbs most of the attention in market entry planning, and most entries that disappoint do not fail there. They fail because the local partner was accepted on introduction, the operating licence sat in a different company, or the plan assumed timelines that local process does not support.

The partner was never independently verified

Thai business runs substantially on relationships, and a warm introduction carries genuine weight. It is not, however, verification — particularly where the introducer earns a fee on completion. The standing, ownership, financial capacity, and history of a proposed partner are all checkable. We set out how in Who Are You Really Dealing With? Have You Verified Their Credibility.

The assets and licences sit elsewhere in the group

Thai business groups commonly operate through several related entities. Land, plant, permits, and key contracts may be held by an affiliate that is not party to your agreement. Confirm that the entity you are contracting with or investing in actually holds what the transaction depends on.

Licences were assumed to transfer

Sector licences are not uniformly transferable on a change of control, and some are conditional or under review. Confirm scope, holder, expiry, and transferability with the issuing authority rather than from a copy in the data room.

The record is in Thai

Corporate filings, court records, land titles, and local reporting carry the detail that matters, and they are in Thai. Diligence conducted only in English is partial by construction. This is also where meaning is most often lost in negotiation — a point we address through Legal Advisory & Cross-Border Support.

Timelines were built on optimism

Registration, licensing, visa and work-permit processing, banking, and lease execution each take longer than the headline estimate, and the 2026 documentary requirements have added steps at registration. Entry plans that assume best-case sequencing tend to compress verification — which is exactly the wrong response.

A Pre-Entry Verification Checklist

Before committing capital or signing, six things are worth establishing as fact rather than assumption. None requires the counterparty’s cooperation to begin, and all of them are cheaper than discovering the answer afterwards.

1. Map every intended activity against the FBA lists — including ancillary and future activities, not only the headline business.
2. Confirm the ownership route on its merits with Thai counsel, and stress-test whether it holds on substance rather than on the share register alone.
3. Verify the proposed Thai shareholders or partners independently — identity, financial capacity, other interests, and litigation record.
4. Establish where the assets and licences actually sit within the counterparty’s group, and whether they transfer.
5. Confirm licences and permits with the issuing authorities, including scope, validity, and conditions.
6. Build the timeline from confirmed process, not from estimates, and hold verification steps as gates rather than parallel activities.

Our case study Cross Border Market Entry Execution illustrates how this sequence runs in a representative engagement. Where the entry is an acquisition or investment rather than a greenfield establishment, the wider frame is set out in Pre-Investment Intelligence: What Smart Investors Check Before Committing Capital.