The structure that defined two decades of foreign villa ownership
For roughly twenty years, the standard route for foreigners wanting to own a villa on Thai land was a Thai limited company. The land could not legally be held in a foreigner’s name under Section 86 of the Land Code, but a Thai company could own the land, and the foreigner could own or control the company in practice through a 49 percent shareholding combined with Thai nationals holding the remaining 51 percent. In many such arrangements, the Thai shareholders were not active investors. They held shares on paper at the request of the foreign buyer, in exchange for a nominal fee or a personal relationship, with no genuine economic interest in the company or the property.
This pattern was widespread enough that “nominee structure” became standard terminology across the Thai property industry. It was never legally sound. Section 96 of the Land Code prohibits foreigners from acquiring land through nominee Thai nationals, and the Foreign Business Act has provisions that target the same conduct. The arrangement persisted because enforcement was inconsistent, because the consequences for owners using these structures rarely materialised in practice, and because the property industry continued to sell them despite the underlying illegality.
That position has changed materially in 2025 and 2026. The combination of new regulatory orders, AI-powered detection systems, coordinated enforcement across multiple government agencies, and announced policy intentions has shifted the risk calculation for foreign villa owners using nominee company structures from theoretical to active. This article explains what has changed, what the changes mean for owners of villas already held through Thai companies, and what prospective buyers should understand before purchase.
The specific regulatory changes
The most important regulatory instrument is Department of Business Development Order Number 2/2568, signed on 9 December 2025, published in the Royal Thai Government Gazette, and effective from 1 January 2026. This order replaced the previous Order Number 205/2555, which had governed the same area since 2012.
The change between the two orders is significant. Under the previous order, Thai shareholders in mixed-ownership companies were required to submit bank balance certificates evidencing financial capacity to pay for their shares. The review in practice was limited to confirming that the account balance exceeded the share investment amount. The order did not require evidence that the capital had actually been contributed, and as a result the requirement could be satisfied by Thai nationals who showed a bank balance on registration day without ever genuinely funding the investment.
Order Number 2/2568 changes this approach. Thai shareholders in companies that fall within scope must now submit bank statements covering the three months prior to the share subscription payment, from the account used to pay for the shares. The statements must show transactions corresponding to the share investment amount and timed to match the registration. The order shifts the focus from “did the shareholder have enough money at one point in time” to “did the shareholder actually pay for the shares from their own funds, traceable through their own banking history.”
The order applies to limited companies and partnerships in two specific situations: where foreign shareholders hold less than 50 percent of registered capital (which captures the classic 49 percent foreign and 51 percent Thai structure used for villa ownership), and where there are no foreign shareholders but a foreigner serves as a director with signing authority. The second category is important because it captures structures where foreigners avoided formal foreign shareholding but retained control through director appointments.
A companion order, Number 1/2569, took effect in 2026 and requires limited companies to certify that they do not employ nominee schemes and that Thai shareholders have made genuine investments. A further order, Number 5/2568, addresses the use of State Welfare Card holders, low-income Thai nationals, as nominee shareholders by requiring them to appear in person before the registrar with matching bank statements.
These regulatory changes are accompanied by an Intelligence Business Analytic System (IBAS), an AI-powered platform operated by the Department of Business Development since late 2025. The system cross-references corporate registry data with other government databases to identify companies showing patterns consistent with nominee arrangements. According to official sources, more than 46,000 companies have been flagged for review, and 852 prosecutions had been pursued by early 2026 with reported damages of approximately 15.1 billion baht.
What this means for existing nominee structures
The regulatory changes apply at company registration, but the enforcement campaign extends to existing companies through several mechanisms.
Property owners in some regions, including Hua Hin and Prachuap Khiri Khan, have reported receiving formal letters from the Department of Business Development requiring them to confirm that the company owning their land or villa is legitimate. The letters give recipients a period (often one year) to respond with evidence that Thai shareholders genuinely invested their own funds, that the company carries out genuine commercial activity, and that financial records reflect real business operations rather than passive land holding.
The criteria authorities are reportedly examining include whether Thai shareholders actually paid for their shares (supported by bank statements or official receipts), whether the company generates income from genuine commercial activity rather than shareholder loans, whether expenses match the nature of the stated business, and whether the company reports taxable profits rather than consistent losses or zero-profit filings.
The penalties under existing law include criminal sanctions. Under the Foreign Business Act, foreign investors using nominee structures can face fines of 100,000 to 1,000,000 baht and prison sentences of up to three years. Court-ordered dissolution of the company is possible, and the land held by the company can be seized. Thai nominees who allow their names to be used face equivalent criminal exposure, and the professional service providers (lawyers and accountants who originally set up nominee companies) are now also targets of enforcement.
Two Supreme Court decisions are relevant to how the courts have approached these structures. Supreme Court Decision Number 17923/2557 involved foreign buyers who acquired land through a Thai company with Thai nationals holding the majority on paper. The court examined the actual funding and control, concluded that the Thai shareholders were merely nominees, and ordered cancellation of the title. Supreme Court Decision Number 5457/2560 addressed a structure where a purported loan was used to disguise a foreign acquisition of a Thai company; the court treated the loan as a simulated arrangement designed to evade the Foreign Business Act and refused to enforce it. These decisions establish that Thai courts examine substance over form when assessing whether a company structure was genuinely a Thai-owned business or a nominee vehicle for foreign land acquisition.
Proposed changes that are not yet law
Separately from the orders already in effect, the Cabinet reviewed a progress report in February 2026 on further enforcement measures, including legislative amendments to the Land Code and the Foreign Business Act. The most consequential proposed change involves Section 94 of the Land Code, which currently requires foreigners holding land unlawfully to dispose of the property but allows them to receive the sale proceeds. The proposed amendment would remove the right to proceeds entirely, meaning unlawfully held land could be forfeited without compensation.
There are also discussions about classifying Foreign Business Act violations as predicate offences under the Anti-Money Laundering Act, which would allow asset freezing and seizure without the usual court process required for criminal forfeiture.
These changes are proposed rather than enacted. Whether they become law, in what form, and on what timeline is uncertain. Owners and prospective buyers should monitor developments but should not assume the proposed amendments will or will not be enacted.
What this means for prospective villa buyers
The practical implications for someone considering a villa purchase in Thailand in 2026 are different from the implications for someone who already owns through a nominee structure.
For new buyers, the nominee company route is significantly more difficult to establish than it was previously. Order Number 2/2568 means that any new company formed in 2026 with the classic 49 percent foreign and 51 percent Thai structure faces immediate scrutiny on the source of Thai shareholder funds. A Thai national without verifiable independent financial capacity to fund their share contribution cannot complete the registration in the same way that was possible under the previous regime. Lawyers and accountants who facilitated such structures previously now face their own professional and criminal exposure.
The legal alternatives that remain available for foreign buyers wanting to acquire residential property in Thailand are well-established and broadly understood. Condominium ownership allows foreigners to own units in their own name with full freehold title, subject to the building staying within the 49 percent foreign quota of total saleable space. Registered 30-year leases provide enforceable rights to occupy and use land, with the foreign owner typically holding the building separately from the land. Superficies grants the right to own buildings on another person’s land for a defined term. Usufruct provides the right to use and benefit from immovable property for a defined term or for life.
The Supreme Court ruling on 30+30+30 lease structures (covered in the next article in this series) has affected how lease renewals can be drafted, but properly registered 30-year leases remain available and are now the most common structure for foreign villa buyers seeking long-term security.
A genuinely operating Thai company with real commercial activity, real Thai investors with verifiable independent capital contributions, and proper financial substance can still legally own land. This is the structure that the law has always permitted. What has changed is that the regulatory environment now actively distinguishes between genuine companies and nominee arrangements, and the formal appearance of compliance is no longer sufficient.
For existing owners
If you currently own a villa through a Thai company that was structured with Thai nationals holding 51 percent on paper without genuine investment or commercial substance, the position has changed. Continuing as before is no longer the low-risk option it was previously. The right course of action depends on the specific facts of the situation: when the company was formed, what evidence exists of Thai shareholder funding, what commercial activity the company conducts, what records have been maintained, and what alternative structures might be available.
This is exactly the kind of situation that requires specific legal advice from a qualified Thai property lawyer with current knowledge of the enforcement environment, not generic advice. The specific facts of the company, the property, the location, and the owner’s circumstances all affect what options are realistic and what risks are involved in different courses of action. General guidance available in articles like this one is useful context for understanding the landscape; it is not a substitute for case-specific professional advice.
What is clear is that the option of doing nothing and hoping enforcement does not arrive is a significantly weaker position in 2026 than it was in previous years. The Department of Business Development has announced plans to inspect tens of thousands of companies, the AI-powered detection system is already operating, and information is being shared between the DBD, the Land Department, the Revenue Department, and the Anti-Money Laundering Office. Detection probability has increased substantially.
The architectural perspective
This article exists in an architecture and construction resource because the legal structure underneath a villa affects every subsequent decision about the property. A villa held through a structure that may eventually be unwound is a different planning and investment proposition from one held through a structure with secure long-term tenure.
Architectural design, material specification, and construction quality decisions are typically made on assumptions about how long the owner will hold the property and what the property’s eventual disposition will be. Owners who anticipate selling within five years specify differently from owners who anticipate twenty years of occupancy and eventual transfer to heirs. The tenure question is foundational to the brief.
For owners currently in nominee structures and considering whether to invest in upgrades, extensions, or significant maintenance, the legal review of the structure should come before the architectural review of the works. For prospective buyers, the choice of legal structure for the property is more consequential than the choice of finishes or fixtures, and it should be resolved before the design conversation begins in earnest.
The bottom line
The regulatory environment around foreign villa ownership in Thailand has shifted significantly between 2024 and 2026. Order Number 2/2568, the AI-powered detection systems now in operation, the coordinated enforcement across multiple government agencies, and the documented prosecutions of more than 850 cases all indicate that the practical risk of nominee structures has increased materially.
For prospective buyers, the legal alternatives (condominium freehold, registered 30-year leases, superficies, usufruct, and genuinely operating Thai companies) provide established routes to participate in the Thai property market without the risk profile of nominee arrangements. For existing owners, the question is no longer whether the structure is compliant in theory but whether it can withstand the substance-based scrutiny that is now being applied in practice.
Important note on legal advice
This article provides general information about regulatory developments in Thailand based on publicly reported sources and is intended as context for villa owners and prospective buyers. It is not legal advice and should not be relied upon as legal advice.
The Tropical Architect and Nay Sirirat are not licensed legal advisers. Property law and the regulatory environment around foreign ownership in Thailand are complex, change over time, and apply differently depending on the specific facts of each case. Any decision about purchasing, holding, or restructuring property in Thailand should be made on the advice of a qualified Thai property lawyer with current knowledge of the relevant law and enforcement practice. We strongly recommend that anyone affected by the matters covered in this article seek specific legal advice from a licensed Thai lawyer.
For structured guidance on every stage of a villa build in Thailand — from land purchase through to handover — see The Thailand Build Blueprint™ at thetropicalarchitect.com/the-blueprint
For architectural guidance on your specific project, book a consultation at thetropicalarchitect.com/consultations
