Setting Up a Company in Thailand 2026 for Foreign Investors: The 49% Rule, Nominee Shareholder Risk, Capital and Work Permit Ratios, BOI and the New DBD Checks

Key takeaways

• Two promoters, not three. The Civil and Commercial Code amendment (No. 23) in force since 7 February 2023 cut the minimum number of promoters of a private limited company from three to two, allowed electronic board meetings and ended newspaper notice of shareholder meetings.
• 50% is the line. A company in which foreigners hold 50% or more of the shares is a "foreigner" under the Foreign Business Act and needs a licence to carry on any business on the Act's three lists. Below 50% it is treated as Thai.
• "Keep the foreign stake at 39% and you are safe" is dead advice. Since 2026 the Department of Business Development (DBD) traces where Thai shareholders' money came from, not just the percentages, and the government is working on adding "effective control" to the definition of a foreigner.
• Nominee shareholding is a crime. Sections 36 and 37 of the Foreign Business Act: up to three years' imprisonment, a fine of THB 100,000 to 1,000,000, a daily fine while the breach continues, court orders to stop the business or the shareholding, and for the foreigners involved, deportation.
• Every foreign work permit needs THB 2 million of paid-up capital and four Thai employees. A normal company is capped at ten foreign employees.
• Labour law changed in December 2025. Maternity leave is now 120 days (60 paid by the employer), there is a new 15-day paid leave for a spouse's childbirth, and the top severance bracket is 400 days' wages after 20 years of service.

Thailand remains one of the most popular places in ASEAN for a foreign company to put its first Southeast Asian entity. But Thai company law has been through its most intensive period of amendment in decades, and the 2018 playbook, "find three promoters and a Thai friend to hold 51%", is not just out of date in 2026; it can put the people behind the company in criminal court.

This guide sets out the full process of setting up a Thai private limited company from a foreign investor's point of view, and concentrates on the two places where things go wrong: the legality of the shareholding structure, and labour-law compliance once the company is running. I am a Taiwanese lawyer who has set up companies in Thailand for foreign groups for many years; the rules below apply to an American, European or Japanese investor exactly as they apply to one from Taiwan, with one exception for US nationals that I flag in section 5.

1. Three legal forms

The DBD registers three main types of business entity:

• An ordinary partnership, in which the partners have unlimited liability; it may or may not be registered as a juristic person.
• A limited partnership, in which at least one partner has unlimited liability; registration is compulsory.
• A limited company, in which shareholders' liability is limited to their capital contribution. In practice this is almost the only choice for foreign investors.

Everything below is about the private limited company.

What you need to incorporate

• At least two promoters (three before 7 February 2023; see the next section).
• A reserved company name, which must include a Thai-language name whether or not there is also an English one.
• Articles of association that state how disputes between directors or between shareholders will be resolved (a requirement added in 2023).
• Registration documents, the business objectives, an office lease and evidence of the landlord's title.
• A shareholder list showing each shareholder's name, address, age, occupation and number of shares.
• Registered capital divided into shares of equal value, with a par value of at least THB 5 per share.
• A memorandum of association signed by all promoters and two witnesses.

In practice we also recommend a separate shareholders' agreement covering voting, board seats, share transfer restrictions and exit. It is not a registration document, but it is the document that actually matters when a dispute arrives.

2. The 2023 amendment: from three promoters to two

This is the point on which most older guides are wrong. Amendment No. 23 to the Civil and Commercial Code was published in the Government Gazette on 8 November 2022 and took effect on 7 February 2023. It lowered the minimum number of promoters of a limited company from three to two (section 1097).

The same amendment brought several changes that foreign investors feel in practice:

• Board meetings may be held electronically (section 1162/1) unless the articles prohibit it. For a company whose directors live abroad, this is the single most useful change.
• Notice of a shareholder meeting no longer has to be published in a newspaper, unless the company has issued bearer shares.
• A memorandum of association stays valid for three years, within which it can be used to incorporate the company.
• A statutory merger was introduced, in which the surviving company takes over the assets, liabilities, rights and obligations of the company that disappears. Thai law previously knew only amalgamation into a new entity; the merger is an important tool for intra-group reorganisation.
• Dividends must be paid within one month of the shareholders' resolution.

3. The 49% line and the three lists of the Foreign Business Act

The test under the Foreign Business Act B.E. 2542 (1999) is simple: a company in which foreigners hold 50% or more of the shares is a "foreigner". A company below 50% is in principle treated as Thai and is outside the Act.

Restricted businesses are divided into three lists:

• List 1: closed to foreigners outright, for example media, rice farming and some agriculture and forestry, and trading in land. No licence or amount of investment opens them.
• List 2: businesses touching national security, natural resources or cultural heritage, for example domestic transport, mining and certain manufacturing. They need Cabinet approval and a licence.
• List 3: businesses in which Thai nationals are "not yet ready to compete". This is the widest list and covers most services, wholesale and retail, consultancy, accounting and engineering. A foreigner can enter by applying to the DBD for a Foreign Business Licence (FBL).

The minimum registered capital for a List 2 or List 3 application is THB 3 million.

4. Nominee shareholders: the criminal risk to watch in 2026

This is the section that has changed most, and the one that matters most.

In 2018 the advice circulating in the market was "have a Thai hold 51% and keep the foreign stake below 39%, and nobody will look". In 2026 that advice is wrong, and it is dangerous.

The DBD now looks at substance, not percentages

The DBD treats nominee shareholding as a structural problem and tightened its checks in several steps between late 2025 and 2026:

• DBD Order No. 2/2568, in force 1 January 2026: in a company with foreign shareholding below 50%, or a wholly Thai-owned company with a foreign authorised signatory, every Thai shareholder had to file bank statements proving they could afford their shares and showing where the money came from. The DBD said this alone cut attempted nominee registrations by about 65%. The order was replaced on 1 August 2026.
• DBD Order No. 1/2569, in force 1 April 2026: when a registration of changes made a foreigner an authorised director or added a foreign partner, the director signing the application had to file an investment confirmation statement. Also replaced on 1 August 2026.
• DBD Order No. 2/2569, in force 1 August 2026, the current rule: a new registration must include an investment explanation statement, three months of bank statements for every Thai shareholder going back from the date they paid for their shares, and a statement of the account of the director who received the capital. Where a change of registration makes a foreigner an authorised director or adds a foreign partner, the signing director files an investment confirmation statement. A company incorporated on or after 1 August 2026 that makes such a change within its first year must also file the explanation statement and bank statements showing the capital was received in full.
• In parallel, the authorities are developing an "effective control" test and have said openly that review will look through the shareholding percentages to who really controls the company.

In other words, whose name is on the shares is no longer the point. Where the money came from, and who makes the decisions, is. Holding the foreign stake at 39% gives no protection; it only makes the structure harder to explain when it is looked through.

The penalties

Under section 36 of the Foreign Business Act, a Thai national who assists a foreigner, or holds shares for one, so that the foreigner can carry on a restricted business commits an offence. Under section 37, so does the foreigner who carries on the restricted business without a licence. The penalty is imprisonment of up to three years and a fine of THB 100,000 to 1,000,000; while the breach continues, a further THB 10,000 to 50,000 per day. The court may also order the business to stop, the company to be dissolved or the shareholding to end, and the foreign executives involved may be deported and barred from re-entry.

Since 28 August 2026 a conviction under these sections is also a listed ground for deporting the foreigners involved; see Thailand's New Deportation Regulation 2026: How a Foreign Business Act Conviction Can End a Foreign Executive's Stay, Even on Probation or a Fine .

By the DBD's own figures, about 118,000 companies in Thailand have foreign shareholdings between 0.01% and 49.99%, and all of them are within range of these checks. Tourism, real estate and agricultural trading are the priority industries.

The commonest private version of that structure, a Thai company set up to hold a villa or land for a foreign buyer, and what the Department of Lands now does about it, is in Buying Property in Thailand as a Foreigner 2026: The 49% Condo Quota, the 30-Year Lease Ceiling, the Nominee Trap and What Your Heirs Can Keep .

The plain-language conclusion: if your company's structure stands on a Thai friend or employee holding shares on your behalf, that is not "a bit of risk". It is a problem the regulator is already looking for, and it should be reviewed now and moved to a lawful route. What that structure does to the foreign director who signs for the company is covered in our guide to director liability in Thailand for foreign directors .

What the review before a listing, a financing or a sale will look for in that structure, and why it cannot be fixed with a supplementary filing, is in Legal Due Diligence on a Thai Subsidiary 2026: What Buyers, Lenders and IPO Underwriters Check, the Nominee and BOI Deal-Breakers, and the 6-to-9-Month Timeline .

5. Four lawful routes to foreign control

You do not need nominees. Thai law itself provides regular routes to majority or 100% foreign ownership:

For most foreign manufacturers BOI is the first choice. It solves the ownership question, and at the same time the tax incentives and the work permit quota; in the current enforcement climate, BOI status is itself the best evidence of compliance. For an American investor the Treaty of Amity is the obvious alternative for a service or trading business, but it does not come with BOI's tax incentives or work-permit relief, and the company still has to meet the capital and employment ratios in section 7.

If a joint venture with a Thai partner is still unavoidable, which shareholders' agreement clauses protect a 49% investor lawfully and which ones are evidence of a nominee structure is set out in Joint Ventures and Shareholders' Agreements in Thailand 2026: Where Lawful Protection Ends and a Nominee Structure Begins under the New DBD Checks .

The corporate income tax, VAT, withholding and profit repatriation rules that apply once the company is running are in our Thai corporate tax guide .

6. The 2026 FBL relaxation: eight service businesses exempt since 28 August 2026

On 12 May 2026 the Cabinet approved a package of relaxations. The ministerial regulation designating service businesses that no longer need an FBL, Ministerial Regulation (No. 5) B.E. 2569 of the Ministry of Commerce, was signed on 18 August 2026, published in the Government Gazette on 28 August 2026 and took effect the same day. Since then foreigners may carry on these eight List 3 service businesses without an FBL or foreign business certificate:

• Telecommunications services (Type 1 licence holders without their own network).
• Treasury centres, subject to the Bank of Thailand's foreign exchange rules.
• Administrative, human resources and IT management services between affiliated companies (affiliation defined by cross-shareholding of 25% or more, common majority ownership or common directors).
• Domestic debt guarantees between affiliated companies, on the same definition.
• Leasing of space for financial-service electronic equipment and employee vending machines.
• Petroleum drilling services under direct contract with a concessionaire.
• Securities margin lending and repurchase transactions and other business regulated under the Securities and Exchange Act.
• Brokerage, dealing, advisory and fund management services for over-the-counter derivatives linked to exchange rates and interest rates.

The reasoning is that these businesses are already supervised by their sector regulators, so the FBL was a duplicate layer. Three points to keep in mind:

• The scope in force is what the ministerial regulation says. The other part of the package, a royal decree removing agricultural futures trading from the Act's schedule, had not been published at the time of writing and is not yet in force.
• The exemption removes only the "foreigner" licence layer. Sector licences still apply: a telecoms business still needs an NBTC licence, a treasury centre still has to meet Bank of Thailand standards.
• Exemption is not deregulation. Check before entry that your business really falls within the exemption, especially the affiliation definitions and the conditions attached to each category.

7. Capital and work permits: THB 2 million and the 4-to-1 rule

This is the threshold foreign investors most often underestimate when planning expatriate staff.

• Each foreign work permit requires THB 2 million of paid-up capital. Two expatriates need THB 4 million, and so on.
• Each foreign employee requires four Thai employees.
• A normal company may employ at most ten foreigners.
• An alternative calculation allows one foreign employee for every 50 Thai employees, capped at five.

A company that has reached ten foreign employees may go further only if it paid at least THB 3 million in income tax in the previous year, exported at least THB 30 million, or employs at least 100 Thai nationals.

BOI-promoted companies follow different rules; the standard ratios can be relaxed or waived, which is another benefit of the BOI route that is often overlooked.

The THB 2 million is the company's own working capital, not a fee paid to the government, but it must actually be paid in and the bank evidence kept: the Department of Employment and the Immigration Bureau rely on it when issuing work permits and extending visas.

What the expatriate then has to do, from the WP.3 pre-approval and the Non-B visa to the one-year extension and 90-day reporting, is in Working in Thailand as an Expat 2026: Non-B Visa, Work Permit, 90-Day Reporting, Personal Income Tax and Social Security Explained .

8. After incorporation: the 2025 labour law and severance

Incorporation is only the start. What really costs foreign companies money is labour law. The Labour Protection Act was amended significantly in 2019 and again in 2025.

The full rules, from the 17 minimum wage tiers and the 30-day salary test to overtime, leave, severance and the 2026 social security ceiling, are in Thailand Labour Law 2026 for Foreign Employers: Minimum Wage, Working Hours, Leave, Severance, Social Security and Work Rules Explained .

Work rules and annual reporting

An employer with ten or more employees must adopt Thai-language work rules covering at least working days and hours, holidays, overtime, pay dates and methods, sick and maternity leave, discipline, grievance procedure, and the conditions and calculation of severance.

The 2025 amendment added an annual duty: employers with ten or more employees must file an annual report on employment and working conditions with the Department of Labour Protection and Welfare every January.

Hours and leave

• Normal work: 8 hours a day, 48 a week; hazardous work: 7 hours a day, 42 a week; at least one hour's break after five consecutive hours.
• At least one rest day a week.
• At least six days' annual leave after one year of continuous service.
• At least 13 paid public holidays a year, including Labour Day.
• Sick leave as needed, paid by the employer for up to 30 days a year; a medical certificate may be required after three consecutive working days.
• Personal business leave: at least three paid working days a year (added in 2019; previously at the employer's discretion).

Family leave since 7 December 2025

Labour Protection Act (No. 9) B.E. 2568 was published on 7 November 2025 and took effect on 7 December 2025. It is the largest labour amendment in years:

• Maternity leave rose from 98 to 120 days, and the employer-paid portion from 45 to 60 days.
• New infant-care leave: where a newborn has an illness, abnormality or disability, the mother may take a further 15 days after maternity leave at 50% pay.
• New leave for a spouse's childbirth: 15 days on full pay for any employee whose spouse gives birth, to be taken within 90 days of the birth.
• New menstrual leave: one day per cycle for female employees, separate from sick leave; pay is governed by company policy or collective agreement. This is the first time Thai labour law has provided for it, and work rules need to be updated.

Social security maternity benefit still covers 45 days, so there is a gap against the employer's 60 paid days that has to be budgeted.

Termination and severance

Termination requires one month's notice, or one month's wages in lieu. Severance pay by length of service:

The top bracket was added in 2019. Retirement at retirement age counts as termination under Thai law and triggers severance in the same way; long-established foreign employers are regularly caught out when a cohort of staff retires at once, and should provision for it.

Severance is not payable where the employee was dishonest or committed a deliberate criminal act against the employer, deliberately or through gross negligence caused serious damage, breached work rules after a written warning, was absent without good reason for three consecutive working days, or received a final prison sentence. Even then the employer must issue a termination letter stating the reason.

Late payment of wages, overtime or severance carries interest at 15% a year, raised from 7.5% in 2019.

Social security: the 2026 ceiling increase

An employer with one or more employees must register them with the Social Security Office within 30 days, and new hires likewise. Employer and employee each contribute 5% of wages.

From 1 January 2026 the wage ceiling for contributions rose from THB 15,000 to THB 17,500, so the maximum monthly contribution per side rose from THB 750 to THB 875. This is the first phase of a staged increase, with further steps scheduled for 2029 and 2032. Foreign employees holding a valid work permit are insured and entitled to benefits on the same basis as Thai employees.

9. Four practical recommendations

First, settle the business activity before you design the structure. Which list your activity falls on decides whether you go BOI, IEAT, FBL, the Treaty of Amity, or face no restriction at all. Done in the wrong order, the work usually has to be repeated.

Second, review any existing shareholding now. If the Thai shareholders' capital cannot be explained from their own means and bank records, it is a risk position under the 2026 checks. Moving to BOI or an FBL early is far easier than explaining later.

Third, plan capital and headcount together. The number of expatriates you intend to send decides the capital you need and how many Thai staff you must hire first. A new company cannot obtain a single work permit until the Thai employees are in place.

Fourth, put labour cost into the investment appraisal. 120 days of maternity leave, 15 days of spousal leave and 400 days of severance after 20 years are predictable long-term liabilities. Do not wait for a dispute to calculate them.

Frequently asked questions (FAQ)

How many promoters does a Thai company need?

Two, under current law. Amendment No. 23 to the Civil and Commercial Code lowered the threshold in section 1097 from three to two with effect from 7 February 2023. Each promoter must subscribe for at least one share. The same amendment ended newspaper notice of shareholder meetings and allowed directors to attend board meetings electronically, which matters for companies whose directors live abroad.

What is the maximum foreign shareholding in a Thai company?

Under the Foreign Business Act a company in which foreigners hold 50% or more is a "foreigner" and needs a licence for restricted businesses, which is where the familiar 49% figure comes from. It is a definition, not a safe harbour. The lawful routes to majority or 100% foreign ownership are BOI promotion, an IEAT industrial estate, a Foreign Business Licence from the DBD, or, for US nationals, the Treaty of Amity. A BOI-promoted company may be wholly foreign-owned and receives tax incentives and work-permit relief at the same time.

What happens if I use a Thai nominee shareholder?

It is a criminal offence, not an administrative breach. Section 36 of the Foreign Business Act punishes the Thai national who holds shares for a foreigner; section 37 punishes the foreigner who carries on a restricted business without a licence. The penalty is up to three years' imprisonment and a fine of THB 100,000 to 1,000,000, a daily fine of THB 10,000 to 50,000 while the breach continues, court orders to stop the business or the shareholding, and possible deportation. Since 2026 the DBD requires Thai shareholders to produce bank statements showing the source of their funds, so "keep the foreign stake low" no longer works.

How much capital do I need for each foreign employee?

The standard rule for an ordinary Thai company is THB 2 million of paid-up capital and four Thai employees for each foreign work permit, with a cap of ten foreign employees. Two expatriates need THB 4 million of capital and eight Thai employees. The alternative route allows one foreigner per 50 Thai employees, capped at five. BOI-promoted companies follow different rules and the ratios can be relaxed or waived. The capital is working capital, not a fee, but it must be paid in and the bank evidence kept.

How is severance calculated in Thailand?

Six brackets by continuous service: 30 days' wages from 120 days to under one year; 90 days from one to under three years; 180 days from three to under six; 240 days from six to under ten; 300 days from ten to under twenty; 400 days from twenty years. The top bracket dates from 2019. Retirement at retirement age counts as termination and triggers severance, so long-established employers should provision for it. Late payment carries 15% interest a year.

Has Thailand really opened services to 100% foreign ownership in 2026?

Largely yes, for eight categories, since 28 August 2026. Ministerial Regulation (No. 5) B.E. 2569 of the Ministry of Commerce took effect that day and exempted telecommunications (Type 1 licence), treasury centres, intra-group administrative, HR and IT services, intra-group domestic debt guarantees, securities margin lending and repos, derivatives services, leasing of space for financial electronic equipment, and petroleum drilling services from the FBL requirement. Three caveats: intra-group services are limited to affiliates with 25% cross-shareholding or common directors, sector licences still apply, and the royal decree removing agricultural futures from the Act's schedule was still pending. Have the structure assessed before entering.

How Louis Group can help

Setting up a company in Thailand is not difficult. The difficult part is what structure you set it up with. The same limited company built on a nominee shortcut and one built on BOI promotion are completely different risk positions in the 2026 enforcement environment, and the labour cost that was not counted at incorporation tends to surface five or ten years later as a severance bill.

Louis Group has offices in Taipei and Bangkok, with Thai and Taiwanese lawyers working together. We help foreign investors with the classification of their business activity and the design of the structure, BOI, IEAT and FBL applications, review and restructuring of existing shareholdings, work permits and expatriate planning, and the drafting of work rules and employment contracts. If you are assessing an entry into Thailand, or have doubts about the compliance of a structure you already have, contact our team.

Author: Raymond Yu (Po-Chang Yu) , Founder and CEO of Louis Group.

*This article is general legal information, not advice on a specific case. The rules, in particular the application of the FBL exemption regulation and the DBD's nominee checks, are still moving; take professional advice before acting, and treat the latest announcements of the Department of Business Development, the Board of Investment and the Ministry of Labour as authoritative.*

Related reading

• The Complete Guide to Establishing Your Business in Thailand
• Director Liability in Thailand 2026 for Foreign Directors: Civil Exposure, Criminal Risk, Signing Authority and the Work Permit Trap
• Corporate Tax in Thailand 2026 for Taiwanese-Owned Companies