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Recovery of Nominee Shares — Civil Claims Between Foreign Beneficial Owner and Thai Nominee
Foreign Beneficial Owner (Plaintiff) v Thai Nominee Shareholder (Defendant)
Composite summary — not a single reported case. This entry distils a settled line of Thai Supreme Court (Dika / ฎีกา) authority for legal education. It is not a transcript of one reported judgment, and the heading is not a citable case number. Do not cite it as specific case law — consult a Thai-qualified lawyer for the authoritative Dika number and current application.
Facts
A foreign individual had funded the entire capital of a Thai limited company used to hold land or operate a Section 8-restricted business. Thai 'shareholders' (often friends, employees, or local lawyers) held 51% of the shares on paper, having paid nothing for their subscriptions. After a falling-out, the Thai nominee refused to transfer the shares back, or refused to vote them in accordance with the foreigner's instructions, or attempted to claim that the shares were genuinely the nominee's own property. The foreign beneficial owner sued in the Civil Court for a declaration of trust, an order of transfer, an account of dividends, and damages.
Legal Issue
Whether a Thai court will assist a foreign beneficial owner to recover nominee shares used to circumvent the Foreign Business Act and the Land Code, in circumstances where the underlying arrangement was itself unlawful.
Holding
The Supreme Court has consistently held that such claims are unenforceable. Where the arrangement was created for the purpose of circumventing Section 36 of the Foreign Business Act or the Land Code's restrictions on foreign landholding, the contract underlying the nominee relationship is contrary to public order and good morals under Section 150 CCC and unenforceable under the in pari delicto principle. The foreigner cannot compel transfer of the shares, cannot recover the capital contributed (or can do so only in narrow restitutionary circumstances if at all), and may face criminal exposure under Section 37 FBA for being a foreigner who 'caused the violation'. Even genuine bookkeeping evidence of capital contribution does not rescue the underlying illegality.
Reasoning
Section 150 CCC voids juristic acts whose object is contrary to law, public order, or good morals. Sections 411–419 CCC on undue enrichment generally deny restitution where the plaintiff knowingly participated in the illegality. The policy rationale is to deter nominee structures by leaving the foreigner without civil remedy if the relationship breaks down. Section 36 FBA criminalises both the nominee and the foreigner; the court will not enforce the very arrangement the statute prohibits.
Significance
Together with the criminal-prosecution line, this is the decisive practical reason why nominee structures are a fundamentally unsafe foundation for foreign investment in Thailand. If the Thai 'shareholder' turns hostile, the foreigner has no civil remedy. Distinguishable from arrangements where the foreigner holds genuine voting preference shares or where Board of Investment / Treaty of Amity protection legitimately permits majority foreign ownership.
Practical Takeaway
Do not use nominee structures. If a structure cannot be defended on its merits — genuine Thai capital, genuine voting, genuine commercial role — the foreigner has no civil safety net if the Thai counterparty turns hostile. For real majority-foreign holdings, use BOI promotion, US-Thai Treaty of Amity registration, or legitimate preference-share structures drafted and registered by qualified Thai counsel.
Cited Statutes
- Foreign Business Act B.E. 2542 (1999), Sections 36, 37
- Civil and Commercial Code, Section 150 (acts contrary to public order are void)
- Civil and Commercial Code, Sections 411–419 (undue enrichment — in pari delicto)
- Land Code B.E. 2497 (1954), Sections 86, 96 bis
This entry summarises a representative line of authority from the Thai Supreme Court (ฎีกา). It is intended for general legal education only and is not a substitute for advice from a Thai-qualified lawyer. Individual Dika case numbers are being verified against primary sources; until then these entries are presented as composite doctrinal summaries.
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