Thailand has taken a significant step to strengthen oversight of foreign investment structures with the issuance of Department of Business Development (“DBD”) Order No. 1/2569, effective 1 April 2026. The measure reflects a clear shift in regulatory approach—from a formal, shareholding-based assessment toward a more substantive analysis of ownership, control, and economic reality—reinforcing longstanding policy objectives under the Foreign Business Act (FBA).
Historically, compliance has often been assessed by reference to foreign shareholding thresholds. However, the new Order signals that such formal metrics are no longer sufficient in isolation. Authorities are increasingly focused on who exercises actual control, including decision-making authority and economic benefit, particularly in structures where Thai shareholders may act as nominees for foreign investors.
A key feature of the Order is the empowerment of registration officers to request an investment confirmation letter in connection with certain corporate amendments. This effectively shifts the burden onto applicants to demonstrate that ownership and governance arrangements are genuine and not structured to circumvent foreign ownership restrictions. In practice, the corporate registration process is being repositioned as an early-stage compliance filter, allowing regulators to scrutinize structures at the point of change rather than post-facto.
Trigger Points for Enhanced Scrutiny
The Order identifies two principal scenarios where heightened regulatory review is expected:
1. Partnerships – Capital Shift Without Governance Alignment. Scrutiny is triggered where foreign partners increase their capital participation to 50% or more, while governance structures remain formally controlled by Thai nationals (e.g., absence of a foreign managing partner).
This mismatch between economic interest and managerial control is viewed as a potential indicator of nominee arrangements.
2. Companies – Board and Signatory Restructuring. Enhanced review applies where changes to the board or authorized signatory powers introduce foreign nationals into positions of control, particularly where the company was previously entirely Thai-managed.
This reflects a regulatory focus on decision-making authority, rather than purely shareholding composition.
From an enforcement standpoint, this development materially expands the DBD’s ability to assess substance over form. While the Order itself is procedural, it operates in close alignment with the FBA, meaning that structures identified as nominee arrangements may be subject to criminal liability, administrative sanctions, and potential operational restrictions.
For businesses, the implications are both immediate and strategic. Structures that rely—explicitly or implicitly—on nominee shareholders are likely to face increased scrutiny, particularly where there is a disconnect between legal ownership and actual control. More broadly, the threshold for demonstrating compliance is rising, requiring clearer documentation, stronger governance alignment, and a defensible commercial rationale.
In this context, businesses should reassess existing arrangements and ensure that ownership structures reflect genuine economic participation and decision-making authority. Where foreign ownership restrictions apply, reliance on informal or workaround structures is becoming increasingly untenable. Instead, companies should consider fully compliant pathways, including licensing or investment promotion regimes, supported by robust legal structuring.
Overall, DBD Order No. 1/2569 marks a clear evolution in Thailand’s regulatory landscape. The direction of travel is unambiguous: substance will prevail over form, and enforcement will increasingly focus on the underlying reality of control. Businesses that proactively align with this shift will be better positioned to mitigate risk and operate with greater certainty in Thailand’s increasingly sophisticated regulatory environment.