Fact-checked by Barrister Garn Tuntasatityanond, Barrister-at-Law and licensed Thai lawyer (Thailand Lawyer Licence No. 3417/2553), on 25 October 2026.
Key takeaways
- A 51:49 shareholding ratio does not, by itself, establish lawful land ownership or a genuine joint venture.
- Shareholder agreements, loans and share pledges are not inherently unlawful. Their purpose and actual operation matter.
- An unlawful nominee arrangement can undermine contractual enforcement and recovery of money.
- Civil remedies, criminal liability and compulsory land disposal are separate questions.
Does a Thai 51:49 company automatically qualify to own land?
No. The Foreign Business Act and the Land Code apply different tests. Under Section 4 of the Foreign Business Act B.E. 2542 (1999), the definition of a foreigner includes specified Thai-registered entities with foreign ownership or investment of at least half their capital, as well as other statutory categories. Land ownership requires a separate analysis.
For a limited company, Section 97 of the Land Code treats it as foreign for land-rights purposes if foreigners hold more than 49% of its registered capital or constitute more than half of its shareholders. Section 98 also addresses ownership through specified juristic persons.
For example, one Thai shareholder holding 51% and two foreign shareholders together holding 49% may satisfy the capital ratio commonly discussed, but the foreign shareholders outnumber the Thai shareholder. The company therefore falls within the shareholder-number test in Section 97. Meeting numerical tests also does not cure an arrangement in which Thai participants hold land or shares on behalf of foreigners to evade the law.
Sources: OCS: Land Code, Sections 96–98; OCS: Foreign Business Act, Sections 4 and 36.
Which side agreements need closer scrutiny?
Review shareholder agreements together with any pre-signed share-transfer instruments, proxies, loan agreements, share pledges and voting or economic-rights arrangements. The issue is what the documents collectively do, rather than what any one document is called.
- Does the Thai shareholder invest and bear genuine business risk, or merely receive a fee for lending a name?
- Where did the share-purchase funds come from? If borrowed, is there a genuine debt and repayment arrangement?
- Who receives the economic benefits of the business and land?
- What rights and obligations does each shareholder actually exercise?
- Are the arrangements intended to bypass a legal restriction?
A loan from a foreign investor or the absence of dividend payments does not, alone, prove a nominee arrangement. Equally, a signed contract does not establish that an arrangement is lawful. The documents, funding and actual conduct must be assessed together. For the broader land-ownership context, see our guide to Thai nominee land ownership and forced-sale risks.
Why might a Thai court refuse to enforce the agreement?
Section 150 of the Civil and Commercial Code makes a juristic act void where its object is expressly prohibited by law, impossible, or contrary to public order or good morals. If an agreement is designed to circumvent restrictions on foreign land ownership, signatures and professional drafting do not make that object lawful.
Section 155 separately addresses a fictitious declaration made in collusion with the other party. Where it conceals another transaction, the law governing the concealed transaction applies. A private agreement is not automatically a sham merely because it is confidential.
Nor should every connected document automatically be declared void without analysis. Section 173 addresses partial invalidity and allows consideration of whether the valid part can be separated in accordance with the parties’ intended arrangement. The relationship between the agreements and their purposes must be examined.
Source: OCS: Civil and Commercial Code, Sections 150, 155 and 173.
Can an investor recover the money if the contract is void?
A refund should neither be promised nor ruled out without reviewing the facts. Section 172 directs that restitution arising from a void transaction be governed by unjust enrichment rules. Section 411 restricts recovery of property delivered in performance of an obligation contrary to a legal prohibition or good morals.
The analysis includes who received the money, why it was paid, the claimant’s involvement in the unlawful purpose, and the legal basis of the claim. Money paid under a genuine, lawful loan must not simply be treated as identical to money paid to carry out an unlawful nominee arrangement.
Relabelling an investment as a “loan” does not guarantee recovery if the evidence shows that the payment formed part of a scheme to evade the law. Obtain advice on the actual cause of action before demanding a share transfer or commencing proceedings.
Source: OCS: Civil and Commercial Code, Sections 172 and 411.
Could the arrangement also lead to criminal charges or a land sale?
Potential consequences extend beyond an unsuccessful civil claim, but each requires its own legal and factual basis.
Section 113 of the Land Code provides for a fine of up to THB 20,000, imprisonment of up to two years, or both, for acquiring land as an agent of a foreigner or the specified juristic persons. Section 36 of the Foreign Business Act addresses assistance and nominee arrangements used to evade or violate that Act; liability depends on its statutory elements, not simply the presence of a foreign shareholder.
For land held on behalf of a foreigner, Section 96 applies the disposal provisions of Section 94 by analogy. Under Section 94, the Director-General sets a disposal period of at least 180 days but no more than one year. If disposal does not take place within the prescribed period, the Director-General has statutory power to dispose of the land.
Losing a civil case does not automatically establish criminal guilt. Nor can the amount ultimately recoverable from a land sale be predicted without examining ownership, secured interests, costs and the applicable process.
Sources: OCS: Land Code, Sections 94, 96 and 113; OCS: Foreign Business Act, Section 36.
What lawful alternatives should investors consider?
Start with the actual objective: operating a business, occupying a building, using land or acquiring ownership. These require different rights and approvals.
Under the general Civil and Commercial Code rules, a fixed-term lease of immovable property cannot exceed 30 years. A lease exceeding three years must be in writing and registered to be enforceable beyond three years. Superficies can provide ownership rights in buildings or other specified improvements on another person’s land; usufruct provides possession, use and enjoyment within its legal scope. These rights require appropriate documentation and registration and are not equivalent to ownership of the land.
Source: OCS: Civil and Commercial Code, Sections 538, 540, 1410 and 1417.
For eligible promoted projects, Section 27 of the Investment Promotion Act permits land ownership for the promoted activity to the extent approved by the Board of Investment. It is not a general entitlement for every foreign investor, personal residence or property-development project.
Sources: OCS: Investment Promotion Act, Section 27; BOI: land-ownership permissions and procedures.
Frequently asked questions
Is a Thai 51:49 company illegal?
No. The ratio alone does not make the company illegal. Assess the applicable ownership tests, business restrictions and whether the Thai shareholders genuinely invest or hold shares on behalf of foreigners to evade the law.
Is a confidential shareholder agreement automatically void?
No. Confidentiality is not the deciding factor. The agreement’s object, terms and actual operation must comply with the law.
Does a share pledge protect a foreign investor against nominee risks?
Not automatically. Review the secured debt, the creation of the security and the entire arrangement. A pledge cannot be assumed to cure an unlawful nominee purpose.
Can a foreign investor sue a Thai shareholder who refuses to transfer shares?
The underlying rights and agreement must be examined first. A signed transfer instrument or agreement does not guarantee enforcement if the claimed right arises from an unlawful purpose.
What should an investor do if money has already been paid?
Preserve all agreements, payment records, shareholder records, land documents and communications. Have the rights of recovery and legal risks reviewed before making further payments, changing shareholders or filing a claim.
Legal references for these answers: OCS: Civil and Commercial Code, Sections 150, 155, 172, 173 and 411; OCS: Foreign Business Act, Sections 4 and 36.
Have the whole investment structure reviewed before relying on it
Effective investor protection begins with enforceable rights. Siam Center Law Group can review the shareholder structure, sources of funds, land rights, business permissions and connected contracts together. Meet our legal team to discuss an assessment in Thai or English.
This article provides general information as of 25 October 2026. It is not advice on a particular investment, contract or dispute. Enforceability, liability and recovery depend on the documents, evidence and applicable law.
