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

Key takeaways

• Your Thai subsidiary will be examined whenever the group does something big: an IPO or secondary offering at home, a bond issue, a syndicated loan, a private placement, or a sale of the group or of the subsidiary. Underwriters, lenders and buyers want a legal opinion from Thai-qualified counsel covering it.
• Six areas are always reviewed: foreign ownership and Foreign Business Act compliance, BOI conditions, land, factory and environmental permits, labour and work permits, material contracts and IP, and litigation and administrative penalties.
• Two findings stop deals: a nominee shareholding that evades the foreign ownership limit, and BOI incentive conditions that were never fulfilled. Neither can be fixed with a supplementary filing; both need months of restructuring.
• Home-country counsel cannot do this alone. The Thai parts of the opinion, from the legality of the shareholding to land title and permits, have to come from lawyers qualified in Thailand, who can also search the DBD, the courts and the IP office independently.
• Start six to nine months before filing. The review itself takes a few weeks to two months. The time goes into fixing what it finds, and that time cannot be compressed.

Supply-chain diversification has made Thailand the first Southeast Asian production base for many foreign groups. As the Thai subsidiary grows, something most groups do not plan for happens: every significant capital-markets or financing step the parent takes, at home or abroad, requires the parent to account for the Thai company's legal compliance.

The parent applies for a listing, raises equity, issues bonds, borrows from a bank syndicate, or negotiates a sale. The underwriter, the lender or the buyer asks for a legal opinion from Thai counsel on the subsidiary. If the review turns up a serious breach, the deal is delayed; if the breach is structural, it can be refused.

The problem is that most groups set up their Thai company for operating convenience and tax efficiency, not for "this will be examined by a capital market in five years". The shortcuts taken to get up and running quickly, a Thai friend holding shares, a BOI promise nobody tracked, become the biggest obstacle years later. I am a Taiwanese lawyer who coordinates these reviews for listed and pre-IPO groups together with our Bangkok office; the Thai side of the work is the same whether the parent is listed in Taipei, Hong Kong, Singapore, Tokyo or New York.

1. When a Thai subsidiary gets examined

Every market has its own test for which subsidiaries must be covered by a legal opinion, usually built on a share of consolidated revenue, assets, profit or investment, with a catch-all for subsidiaries the auditors consider material. Some markets set numerical thresholds; others leave it to the sponsor and the auditors. The details differ, but the trigger is the same everywhere: once the Thai company contributes a material share of the group's revenue, assets or profit, or carries a material share of the group's loans and guarantees, it will be in scope.

Outside the listing context, the same review happens in three other situations:

• Financing: a bank syndicate lending to the parent against the group's assets will want confirmation that the Thai subsidiary is validly owned and its licences are in force.
• Sale of the group or the subsidiary: the buyer's due diligence covers the same six areas below, and a nominee finding or a lapsed BOI condition becomes a price reduction, an escrow or a walk-away.

What the buyer is deciding on the other side of that table, from share deal versus asset deal to BOI approval as a closing condition, is in Buying a Company in Thailand 2026: Share Deal vs Asset Deal, the 49% Rule, Licence Succession, Merger Control and a 12-Point Due Diligence Checklist for Foreign Buyers .

• Internal restructuring: moving the Thai company under a new holding entity requires the same checks before the DBD will register the change, especially since 2026.

Practical advice: do not wait for the auditors or the sponsor to tell you the subsidiary is material. When it approaches a meaningful share of consolidated revenue, or when the parent is about to inject capital or lend to it on a large scale, put a Thai legal review into the timetable.

2. The six areas Thai counsel review

Beyond the standard corporate and contract review, due diligence on a Thai subsidiary has to follow Thailand's specific rules:

The first two, foreign ownership and BOI, are where foreign groups most often have problems and where the problems are hardest to fix in time. They get their own section.

3. The two deal-breakers

Deal-breaker one: nominee shareholders

This is the most common and the most serious finding.

To get around the Foreign Business Act's limit on foreign ownership, some groups set up their Thai company with Thai nationals holding shares in name only. That is unlawful under Thai law, and under any capital-market or buyer's review it is treated as a fundamental operating and legal risk.

The exposure runs on two levels:

• In Thailand: section 36 of the Foreign Business Act punishes the Thai national who holds shares for a foreigner, and section 37 the foreigner who carries on a restricted business without a licence. The penalty is up to three years' imprisonment and a fine, and the court may order the business to stop, the company to be dissolved or the shareholding to end.
• In the deal: once found, it goes straight to the outcome of the listing, the financing or the sale. Because it is a structural problem, it cannot be cured by a supplementary explanation.

The only remedy is to legalise the structure before filing, either by applying for an FBL where the business allows it or by moving to BOI promotion for lawful foreign ownership. That takes months and cannot be shortened, which is the main reason this guide recommends starting six to nine months ahead.

How to redesign the structure as a genuine joint venture, and which clauses survive the 2026 checks, is in Joint Ventures and Shareholders' Agreements in Thailand 2026: Where Lawful Protection Ends and a Nominee Structure Begins under the New DBD Checks .

One warning in particular: the Thai authorities have tightened their review of nominee structures sharply. Since 1 August 2026, DBD Order No. 2/2569 requires Thai shareholders' bank statements and an investment explanation statement at incorporation and on changes involving foreign shareholders or foreign authorised directors, and the review has moved from the percentage on the share register to where the money came from and who controls the company. A structure that worked years ago may not survive a look today. The lawful routes and the current DBD checks are set out in our guide to setting up a company in Thailand for foreign investors ; the exposure of the foreign director who signs for such a company is in our guide to director liability in Thailand .

Deal-breaker two: BOI conditions never fulfilled

Many foreign groups rely on BOI promotion to set up. The promotion certificate is the starting point, not the end.

The certificate usually carries conditions: local content ratios, technology transfer commitments, Thai headcount, and remittance of the registered capital within a set period. The review team does not just check that the certificate is valid; it goes through each condition and checks whether it was actually met.

If conditions were not met, the incentives can be revoked and tax reclaimed, with a direct and quantifiable effect on the parent's finances, which is exactly what shows up in financial forecasts and in the underwriter's or buyer's report.

The gaps we see most often are a technology transfer plan that was never carried out, Thai headcount that stayed below the commitment for years, and capital remitted late without an extension being requested. They are rarely deliberate; they happen because nobody tracked the BOI conditions after the company was set up.

4. How the review is done

To produce a legal opinion that a regulator, an underwriter, a lender or a buyer will accept, the review is normally run by the group's home-country counsel together with Thai counsel, using four methods:

• Documentary review. The legal team issues a tailored request list: registration records, board minutes, the BOI certificate, material contracts, the employee handbook, and cross-checks them against each other.
• Management interviews. Structured interviews with the subsidiary's general manager, CFO or legal head to surface risks that do not appear on paper: unresolved commercial disputes, an informal enquiry from the Revenue Department.
• Site visit. For companies with a physical plant or in high-regulation industries, the lawyers go to Thailand to confirm that the factory, the environmental installations and the working conditions match the documents.
• Independent public searches. Thai counsel search the DBD, the courts and the Department of Intellectual Property directly to verify registration details and litigation records.

The fourth method matters most. Its value lies in not depending on what the subsidiary provides. It is not unusual for the documents supplied to differ from the official registers, and the gap is often where the problem is.

5. Timeline and documents

Start six to nine months before filing

The time is not for the review itself, which usually takes a few weeks to two months. It is for fixing what the review finds:

• Restructuring the shareholding (an FBL application or the BOI route): months.
• Correcting and re-signing contracts: depends on the counterparty.
• Curing BOI conditions: requires discussions with the BOI and actual performance.
• Regularising land title or building permits: not within your control.

A group that starts three months before filing has no room to manoeuvre if the structure turns out to be the problem.

What the Thai side should have ready

• The latest DBD company file.
• The shareholder register and the history of every share transfer.
• The BOI promotion certificate and the annual compliance reports filed with the BOI.
• Material commercial contracts: syndicated loans, land purchase, construction, supply and sales agreements.
• Land leases or title deeds and the Land Office registration.
• Factory licence, building permits and environmental documents.
• Work permit and visa records of the expatriate staff.
• Evidence of Thai trademark and patent registrations.
• Employment contract templates, work rules and severance provisioning records.

On the trademark item: Thailand is a first-to-file country, so a brand the subsidiary uses but a distributor or former partner registered is a finding in its own right. Registration routes and timing are in Trademark Registration in Thailand 2026 for US and Foreign Brands: Fast Track 4 Month Plus+, Madrid vs Direct Filing, and the First-to-File Rule .

6. Team: why home-country counsel cannot do it alone

In the listing or financing process, the group's home-country counsel coordinates the project and gives the overall opinion. But on Thai law, the legality of the foreign shareholding, labour law, land rights and environmental permits, regulators, underwriters, lenders and buyers all require the review to be done, and the formal foreign legal opinion given, by lawyers qualified in Thailand.

That is a qualification requirement, not a preference. The workable set-up is therefore:

• Home-country counsel: knows the capital-market or financing rules, deals with the underwriter and the auditors, runs the timetable, gives the summary opinion.
• Thai counsel: qualified locally, carries out the on-the-ground review, searches the DBD, the courts and the IP office, issues the Thai legal opinion.

The two sides have to work as one team. The commonest loss of time happens in the gap between them: the home side does not know what the Thai review found, the Thai side does not understand what the home regulator actually cares about, and the back-and-forth takes longer than the review. When the Thai company is also the group's debtor or creditor in a dispute, the litigation search overlaps with what we describe in our guide to debt recovery in Thailand .

Frequently asked questions (FAQ)

When does my Thai subsidiary have to be covered by a legal opinion?

Whenever the group lists, raises capital, borrows on a secured or syndicated basis, or sells, and the Thai company is material to the group. Each market and each lender defines materiality differently, usually by share of consolidated revenue, assets, profit or investment, with a catch-all for what the auditors consider material. Once the subsidiary is a meaningful part of the group, assume it is in scope.

Can our usual home-country lawyers do the Thai review?

No. They can coordinate the project and give the overall opinion, but the Thai law parts, from the legality of the foreign shareholding to labour law, land rights and permits, must be reviewed and opined on by lawyers qualified in Thailand. Independent searches at the DBD, the courts and the IP office also have to be done locally. The practical point is to use a firm whose home-country and Thai lawyers actually work together.

Our Thai company was set up with a local nominee shareholder. Is that a problem in due diligence?

Yes, the most serious one. The Foreign Business Act prohibits nominee holdings used to evade the foreign ownership limit; section 36 punishes the Thai nominee, section 37 the foreigner, with up to three years' imprisonment and a fine, and the court may order the business stopped or the shareholding ended. In any capital-market or buyer's review it is treated as a fundamental legal risk and can block the deal. It cannot be papered over; the structure has to be legalised before filing, through an FBL or the BOI route, and that takes months.

We have BOI promotion. What does the review look at?

The BOI status is a focus item. The team checks that the certificate is valid and then goes condition by condition: shareholding limits, Thai headcount, local content, technology transfer commitments, and remittance of the registered capital within the deadline. Unfulfilled conditions can lead to revocation of incentives and tax clawback, which the underwriter or buyer will quantify. Most gaps come from nobody tracking the conditions after set-up.

How early should we start, and what should we prepare?

Six to nine months before the planned filing or closing. The review takes weeks; the fixes take months. Have ready the DBD company file, the shareholder register and transfer history, the BOI certificate and compliance reports, material contracts, land leases or title deeds, factory licence and environmental documents, expatriate work permit records, IP registrations, and employment contracts, work rules and severance records.

Will the lawyers actually go to Thailand, or just read documents?

It depends on the industry and the risk. The usual combination is documentary review against a tailored list, management interviews to surface what the documents do not show, a site visit where there is a plant or a high-regulation business, and independent searches at the DBD, the courts and the IP office through Thai counsel. The last is the most important, because the documents provided and the official registers do not always agree.

How Louis Group can help

When a Thai subsidiary grows into a material one, it is both the group's best asset and its potential weak point in a capital-market or sale process. The difference is when the problem is found: a nominee structure discovered nine months before filing is a project; discovered three weeks before the underwriter files, it is a crisis.

Louis Group has offices in Taipei, Hsinchu, Taichung and Bangkok, with Thai-qualified and Taiwanese lawyers working as one team. We provide legal due diligence on Thai subsidiaries, Thai legal opinions for listings, financings and sales, legalisation of foreign shareholding structures through FBL or BOI, BOI compliance reviews, labour and work permit checks, and coordination with underwriters, lenders, buyers and auditors. If your group is planning a listing, a financing or a sale and the Thai subsidiary is close to material, start with a structural review.

Author: Ming-Feng Ho , Director of Louis & Charles Hsinchu. Thai law input: Louis & Partners Thailand.

*This article is general legal information, not advice on a specific case. Materiality tests, review scope and regulators' practice vary with the facts and the market; take professional advice and rely on the latest rules of the relevant exchange, regulator and the Thai authorities.*

Related reading

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