A Thai Company for Land Ownership: How the Structure Works and Where the Risks Lie

Why the 'Company for Land' Structure Was Invented

There is no direct route to land ownership for a foreigner in Thailand. The Land Code in Section 86 prohibits foreign individuals from owning land, with narrow exceptions (for example, an investment of at least 40 million baht under Section 96 bis with ministerial approval). Because the prohibition is strict, the market has for decades offered a workaround: a Thai limited company that formally becomes the registered owner of the plot.

The idea is straightforward: a Co., Ltd. is formed in which Thai nationals hold 51 percent or more of the shares, while the foreigner controls the company through a directorship, share classes carrying differentiated voting rights, and loan instruments. On paper the landowner is the Thai company, so the formal prohibition of Section 86 appears not to have been violated. In practice this has long ceased to be a 'grey area' and constitutes a direct breach of the law whenever the Thai shareholders are nominees.

Where the Line of Legality Falls

A Thai company that owns land is lawful in itself, provided it is a genuine business with genuine Thai co-owners who have contributed their own capital and participate in management. What makes the structure unlawful is nominee shareholding: Thai nationals appearing on the register purely as a formality, contributing no capital and making no decisions, acting as a front for the foreigner.

The prohibition is explicit:

• Section 96 of the Land Code allows the compulsory disposal (forced sale) of land acquired in circumvention of the rules in the interests of a foreigner.
• Foreign Business Act (FBA), Section 36 prohibits using Thai nationals as nominee shareholders or interest-holders on behalf of a foreigner; a violation carries criminal liability for both parties.
• Section 150 of the Civil and Commercial Code (CCC) renders void any transaction whose purpose is contrary to law or public order. A company formed specifically to evade the prohibition may be declared a nullity by a court.

A 2006 Ministry of Interior directive instructed provincial land offices to scrutinise companies purchasing land, focusing on the legitimacy of the shareholders and the source of funds. The Department of Business Development (DBD) has tightened registration procedures to detect nominee structures.

How the Courts View the Scheme

Thai courts apply the principle of substance over form. They are interested not in the entry in the shareholder register but in real money and real control. If the Thai shareholders cannot demonstrate the origin of funds corresponding to their shares, and all financing and management flow from the foreigner, the structure will be treated as fictitious regardless of whether the certificate shows 51 percent Thai participation.

Supreme Court jurisprudence in recent years has been consistent: transactions are annulled, titles are cancelled, and fines are imposed on both parties. A foreign director who lacks a valid work permit also risks prosecution for illegal employment.

Additional Obligations That Are Often Overlooked

A company is not a 'dormant' asset-holding vehicle. The law requires it to conduct genuine business operations:

• annual financial statements and an audit must be filed;
• shareholder meetings must be held and minutes maintained;
• there must be a genuine commercial rationale, not merely 'holding a house'.

A dormant company with no turnover is one of the first indicators of a nominee structure when inspectors investigate. The ongoing cost of maintaining a company (accountant, audit, registration fees) is an annual expense that buyers frequently underestimate.

Comparison of Real Alternatives

A separate note on leasing: the '30+30+30 = 90 years' scheme is not legally established. Section 540 CCC caps real-property leases at 30 years; courts have on multiple occasions held that promises of automatic dual renewal are unenforceable. This is not a like-for-like substitute for ownership, but an honest long-term lease of 30 years is a legitimate instrument.

Where Regulation Is Heading

In 2024 and 2025 supervision has intensified: land offices are identifying dormant companies, the DBD requires documentary proof of the Thai shareholders' capital contributions, and a dedicated Nominee Transactions Act is under discussion that would provide for confiscation of land without compensation. The trend is clear: structures that rested on a formal 51 percent Thai holding are becoming increasingly vulnerable.

What to Check and What to Watch For

• Source of funds of the Thai shareholders. If the money is effectively yours, those shareholders are nominees, which constitutes a violation of FBA Section 36.
• Genuine business activity of the company. Is there actual operations, financial reporting, an audit, shareholder meetings, or is this simply an empty asset-holding shell?
• Control structure. Heavily weighted share classes and loans in favour of the foreigner are read by courts as indicators of fictitiousness.
• Your position in the company. Acting as a director without a work permit is a separate risk under labour law.
• Alternatives. For residential purposes, consider a condominium within the 49 percent quota (Condominium Act Section 19) or a transparent 30-year lease (CCC Section 540).
• Annual costs. Accounting, audit, and fees are a recurring burden, not a one-time payment.
• Independent legal review. Engage your own lawyer, not one recommended by the seller, and ask for a written assessment specifically of the legal risks of the structure.

A Thai company can lawfully own land, but only as a genuine business with genuine co-owners. A structure that depends on nominee Thai shareholders is unlawful from the moment of its creation, and time works against it, not in its favour.