The Foreign Business Act 1999 regulates the business activities of foreigners in Thailand. The act classifies business activity into three categories and places restrictions of various degrees of severity on foreign ownership and operation of these businesses.
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Although it is possible to obtain an alien business license or American firms have the benefit of setting up an amity company, many foreigners choose to form a Thai majority company, that is a company where more than 50% of the shareholders are Thai, so that they are able to operate a business in a category that is restricted to foreigners. The formation of a Thai majority company generally requires less registered capital and less paperwork than the formation of a foreign company. Until recently, these companies were also under less scrutiny than foreign companies. A Thai majority company can also buy land.
A Thai nominee shareholder is a shareholder in name only; in actuality, nominee shareholders lack a real financial stake or interest in the company. The practice of nominee shareholders is illegal. The prohibition is found in the Foreign Business Act, the Land Act and other laws. It is a criminal offense often with significant penalties including fines and imprisonment .
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