Stricter Company Formation Rules in Thailand

From 2026, forming a company in Thailand will require more documentation and a closer review of who truly owns and controls the business.  

From 1 January 2026, Thailand has implemented stricter administrative requirements for the registration of Thai companies. While the underlying legal framework governing foreign ownership remains unchanged, the Department of Business Development (DBD) has introduced new internal instructions that affect how company formations are reviewed in practice. These changes are particularly important for foreign investors, BOI-promoted companies, and joint venture structures involving Thai and foreign shareholders. 

Regulatory Context and Policy Direction

The new requirements should be understood as part of Thailand’s broader effort to tighten enforcement of existing foreign ownership restrictions, rather than as a formal amendment to the Foreign Business Act. For several years, Thai authorities have expressed concern about the use of nominee shareholder structures, where Thai individuals hold shares on behalf of foreign parties in order to circumvent statutory limits. The revised DBD instructions aim to address this issue by shifting the registration process from a formal review to an assessment of ownership, funding, and control. Structures that were previously accepted based on documentation alone may now be subject to deeper scrutiny by the government.  

Enhanced Scrutiny in Joint Venture Structures

The most significant impact will be felt in joint venture arrangements, particularly where foreign investors hold less than 50% of the registered share capital, or maintain operational or managerial control. Under the new approach, the DBD may require Thai shareholders to demonstrate that they are genuine equity participants with independent financial capacity. In practice, this means that Thai shareholders may be required to provide bank statements covering several months prior to the capital contribution, showing a clear and credible source of funds. The intention is to verify that the capital invested originates from the shareholder’s own resources and was not temporarily transferred or financed by a foreign party solely for registration purposes. For foreign investors, this adds an additional layer of due diligence that must be addressed early in the structuring process.

Implications for Foreign Directors and Management Control 

Even in companies that are formally Thai-owned, the appointment of foreign directors with signing authority may now trigger closer examination. The DBD has made it clear that management and control arrangements are relevant indicators when assessing whether a company is effectively foreign-controlled, regardless of the nominal shareholding structure. For foreign investors relying on minority shareholdings combined with management rights, this development underscores the importance of ensuring that governance structures are coherent, commercially justified, and well documented. While such arrangements are not prohibited, they must now be capable of withstanding regulatory review focused on substance rather than form.

BOI-Promoted Projects: No Automatic Exemption 

It is important to note that BOI promotion does not automatically exempt a company from DBD scrutiny at the incorporation stage. BOI-promoted companies may still be required to comply with enhanced documentation requirements, particularly where the BOI approval does not explicitly cover the entire shareholding or management structure. As a result, BOI applicants should ensure that their corporate setup, capital flows, and shareholder arrangements are fully aligned not only with BOI conditions but also with DBD expectations. 

Practical Consequences and Conclusion

From a practical perspective, the new rules are likely to result in longer preparation periods for company formation, especially in joint venture scenarios. Foreign investors can no longer assume that standard documentation will suffice. Instead, successful registration will increasingly depend on early coordination with Thai partners, transparent capital planning, and careful sequencing of corporate steps. 

The stricter company formation requirements effective from 1 January 2026 mark an important step. While foreign investment remains welcome and legally supported, the authorities are clearly signaling that corporate structures must reflect genuine economic substance. For foreign investors, BOI-promoted companies, and joint ventures, the key takeaway is that company formation in Thailand has become a more compliance-driven and documentation-intensive process. With proper planning, transparent funding structures, and well-advised legal guidance, these requirements can be managed effectively. However, investors who rely on legacy structures or minimal documentation may face delays or increased regulatory risk. 

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