Directors, shareholders and personal exposure.

The company is not a shield

Limited liability protects shareholders from the company's ordinary commercial debts. It does not convert a person into an abstraction. Criminal provisions apply to people. Regulatory duties attach to directors by name. Certain tax and employment liabilities can reach those who manage a company. And Section 36 of the Foreign Business Act is expressly directed at individuals on both sides of a nominee arrangement, not at the company that results from it.

This is worth stating early because it changes the shape of the problem. An owner weighing whether to review a structure is not only weighing a risk to an asset. They are weighing a risk carried personally by themselves, by their fellow directors, and by Thai nationals who agreed to something years ago for a modest annual fee.

What Thai law asks of a director

A director of a Thai limited company is expected to act within the company's registered objects and its articles, to exercise the care of a reasonable person in the conduct of the company's affairs, to avoid undisclosed conflicts and self dealing, and to ensure the company keeps proper accounts and makes its filings. Where a director causes loss to the company by acting outside those duties, the company, and in defined circumstances its shareholders, may pursue them for it.

Directors are also the natural point of accountability for the company's public obligations. Filings are signed. Declarations to the registrar are made by named people. Where a filing contains a statement that is not true, the person who signed it is the person who made it, and that is where false statement exposure under the Penal Code begins.

Criminal exposure under Section 36

Section 36 makes it an offence for a Thai national or Thai entity to hold shares on behalf of a foreigner so as to enable that foreigner to operate a business reserved to Thai nationals, and equally an offence for the foreigner to allow or participate in the arrangement. The penalty is imprisonment for a term not exceeding three years, a fine of between 100,000 and 1,000,000 baht, or both, with a court order to cease the arrangement and daily fines for continued non compliance.

The symmetry is the point. There is no reading of the section under which the Thai shareholder is a service provider standing safely outside. Advisers in this market also report further consequences following in practice, including false statement offences under the Penal Code, dissolution of the company by court order, and compulsory disposal of land held through the arrangement. Whether any of those arises in a particular case is a matter of Thai law and Thai facts and can only be assessed by counsel.

Tax, employment and the other personal strands

Several further exposures attach to people rather than to the entity. Failures to withhold and remit personal income tax, to register and pay social security contributions, or to file returns can create liabilities and penalties that reach those responsible for the company's management. Employment obligations, including severance, fall due whatever the state of the corporate structure. Where a company is wound up, directors and liquidators carry duties in relation to creditors, tax clearance and the proper distribution of assets.

None of these is exotic and all of them are manageable in a company that is genuinely run. They become difficult where the corporate position is fragile, because addressing one strand often requires a filing or a disclosure that touches the others, which is why sequencing matters and why it is a question for counsel.

There is also the position of a director who does not live in Thailand and assumes that distance is protection. It is not a safe assumption. Directorship is a matter of record wherever the individual happens to reside, the obligations attach to the office rather than to the address, and a director who signs a filing from abroad has still signed it. Non resident directors of Thai companies should understand their position with the same care as those on the ground, and should take their own advice where the structure of the company is in question.

The Thai director or shareholder who does not understand their position

In a large number of the structures under discussion, the Thai shareholders were introduced by an agent, signed documents in a language they may or may not read fluently, received a small annual payment, and were told the arrangement was routine. They frequently do not know that they appear as owners of a business, that they may be recorded as directors, that they carry a criminal exposure, or that documents exist which describe their shareholding as something other than what the register says.

It is difficult to read that description and conclude that the position is acceptable to leave in place. It is also the strongest practical argument for regularising early rather than late: an arrangement resolved voluntarily, with proper advice on all sides, ends the exposure those people carry. An arrangement resolved when it is discovered does not, and the individuals with the fewest resources are usually the least able to manage the consequences.

Separate advice is not a formality

Where a foreign principal and a Thai shareholder may both be exposed under the same provision, their interests are aligned only up to a point. A lawyer instructed by the company, or by the principal, cannot properly advise the Thai individuals as well. Those individuals are entitled to their own counsel, advising them alone, in their own language, and an owner who arranges and pays for that access without directing its content is behaving well rather than generously.

This also means that nobody in the arrangement should be coached, briefed on what to say, or asked to sign anything further while the position is unresolved. Every person involved should be free to describe the facts accurately to their own lawyer. That is the only basis on which sound advice can be given to anyone.

Resignation is not an exit

Directors who become uneasy often reach for the simplest step, which is to resign. It is worth understanding the limits of that instinct. Resignation is itself an amendment filing, and amendment filings have been reported since 1 April 2026 to attract source of funds scrutiny, so the act of stepping away may be the very act that brings the structure into view. More fundamentally, resignation does not undo what was signed while in office, and it leaves the remaining directors and the Thai shareholders in place with the same exposure.

The better order is to understand the whole position first with counsel, decide what the company is going to do, and then make the filings in a considered sequence as part of that plan. That is not a reason to delay. It is a reason to take advice before acting rather than after.

The humane course

The lawful course and the decent one point the same way here. Instruct qualified Thai counsel independently, be complete with them, make sure the Thai individuals in the structure have independent advice of their own, and work toward a position in which nobody is carrying a risk they did not understand and cannot afford. Asia Global Partners is a private office and not a law firm, and gives no legal or tax advice. What the office does is convene qualified Thai counsel and the accountants and valuers who support them, coordinate a process that usually takes months, and remain the single accountable relationship throughout.

This article is general information as at August 2026 and is not legal or tax advice, and it is not advice to any director or shareholder on their personal position. Asia Global Partners is a private office, not a law firm. Every individual concerned should instruct qualified Thai counsel independently. Verify company records, director filings and current requirements with the Department of Business Development, and verify personal and corporate tax obligations with the Revenue Department.

This briefing is general information, not legal, tax or investment advice. Thai rules change frequently and individual cases differ. Verify current requirements with the relevant authorities, including the Immigration Bureau, the Board of Investment, the Land Department, the Department of Business Development and the Revenue Department, and take advice on your own facts before acting.