Phuket: The Commerce Ministry is conducting strict inspections of tourism businesses in Phuket and has found some to be operating as nominees. The Department of Business Development, Ministry of Commerce, is intensifying its crackdown on businesses engaging in "nominee" practices. Working with five partner agencies, they conducted inspections in Phuket of tour operators, hotels, restaurants, and boat rental businesses. They found various methods of using Thai nationals to hold shares on behalf of foreigners and are expediting legal action against offenders.
According to Thai News Agency, Mr. Poonpong Naiyanapakorn, Director-General of the Department of Business Development, revealed that the Department of Business Development, in collaboration with the Department of Special Investigation (DSI), Phuket Tourist Police, Phuket Immigration, the Phuket Provincial Tourism and Sports Office, and the Phuket Provincial Commerce Office, conducted inspections of targeted businesses suspected of using "nominees" to circumvent the Foreign Business Act B.E. 2542 (1999). Initially, 10 targeted businesses were inspected, revealing several irregularities. These included some companies having the same registered address as an accounting firm, accountants falsely claiming to be company directors, and using other people's identification cards to provide information on behalf of the actual directors. In these cases, officials filed charges under the National Identification Card Act B.E. 2526 (1983).
Furthermore, the department also investigated accounting and law firms engaging in risky behavior. It found that the directors of some of these companies held an unusually large number of shares in companies with foreign shareholders or directors. The department has summoned five individuals involved to provide further clarification and is currently conducting an in-depth investigation to ascertain the facts.
Data from the Department of Business Development indicates that Phuket province has 29,090 registered legal entities, with 11,263 of them (38.72%) being joint ventures between foreigners and Thais. In most cases, foreigners hold less than 50% of the shares, exempting them from foreign investment laws. However, this loophole could be exploited to allow for the use of nominees.
'This investigation disrupts the practice of using Thai nominees to hold shares in the tourism business, which constitutes illegal use of Thai resources. The Department will intensify its crackdown and upgrade its analysis of corporate behavior to improve law enforcement effectiveness and promote a fair investment environment for both legitimate Thai businesses and foreign investors,' Mr. Poonpong said.