Southeast Asia is experiencing a booming digital economy, and Thailand is confidently claiming a leading role in this shift. For Ukrainian product IT companies, outsourcing agencies, and fintech startups, this jurisdiction is becoming increasingly attractive not only as a new solvent market but also as a convenient operational base for scaling across the entire Asia-Pacific region.

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However, first contact with local corporate law often leaves founders at a dead end because of strict restrictions on non-residents. To avoid scaling turning into a legal trap, it is important to understand the legal mechanisms that protect founders' rights and preserve full control of the company.

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Foreign business act barrier and the risks of "nominee schemes"

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The fundamental normative legal act regulating the presence and operational activity of foreign capital in the Kingdom is the Foreign Business Act B.E. 2542 (FBA). This law is built on a pronounced protectionist principle: its key task is to protect the domestic market and Thai entrepreneurs from direct competition with transnational players.

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Under the FBA's general rule, a legal entity is considered "foreign" if 50% or more of its registered capital belongs to non-residents (physical persons of foreign citizenship or foreign companies). The law includes three restrictive lists of activity types (Lists 1, 2, 3). The vast majority of the new economy sectors — including software development, system integration, marketing, engineering, and any B2B consulting services — fall under List 3 (List 3). For these areas, a strict restriction applies: foreigners are expressly prohibited from owning a controlling stake, and local capital (citizens or legal entities of Thailand) must hold at least 51%.

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When founders encounter this barrier, many try to find quick workarounds. A whole industry of dubious legal intermediaries in the local market offers foreigners the option to incorporate a standard private limited company (Thai Private Limited Company) using so-called nominee shareholders (Nominee Shareholders). The classic proposition looks attractive and deceptively simple: the agency provides dummy Thai citizens (often agency employees or low-income locals) who formally sign the constituent documents as owners of 51% of the shares. To reassure the foreign investor, intermediaries use artificial corporate superstructures — the issuance of preferred shares with different voting weight (where 49% of the foreigner has 90% of the votes), appointing the foreigner as the sole director with the right of signature or signing Thai nominee-undatnominee-undateder instruments (Share Transfer Instruments) and loan promissory notes.

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However, behind this illusion of control hides a colossal legal risk. The Thai judiciary's position is unambiguous: using nominee schemes is a criminal offence, expressly prohibited by Section 36 of the FBA. The law criminalises not only the very act of using dummy persons, but also the actions of a foreigner who knowingly uses such services. For Thai citizens acting as nominees, and for foreign beneficiaries organising such structures, the law provides l liability of up to 10 years, a monetary fine of 1,000,000 baht, and additional daily fines until the violation is liquidated. State bodies have moved from passive observation to large-scale aggressive audits.

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The Department of Business Development (DBD), in close coordination with the Department of Special Investigations (DSI) and the Tax Department, has developed effective tools for identifying fictitious structures. If previously the regulator checked only formal signatures, today there is a special protocol for financial verification of the origin of funds:

• Thai shareholders in companies with a share of foreign capital must document their financial capacity (Source of Funds). They must provide bank statements, tax returns, and proof of their actual capital contribution for acquired shares. If a citizen's official income in Thailand is minimal and they suddenly contribute millions of baht to the capital, the company's capital is automatically flagged as fraudulent.

• Regulators detailly analyse the minutes of general meetings and the profit distribution structure. If 51% of the shares belong to Thais, but 100% of the profit is withdrawn year after year in favour of the foreign director in the form of royalties, management remuneration, or dividends on preferred shares, the tax service qualifies such a structure as simulated legal action aimed at circumventing mandatory rules of legislation.

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Aside from the direct threat of criminal prosecution, deportation of management, and forced closure of the company through court, the nominee model creates insurmountable operational and commercial dead ends:

• Blocking of bank compliance: Thai commercial banks (Bangkok Bank, Kasikornbank, SCB) and international payment systems conduct deep checks of ultimate beneficial owners (UBO) when opening corporate accounts. When the financial monitoring department sees 51% local shareholders in the structure, it demands their physical presence at the bank branch and a detailed interview about the nature of the business. Fictitious nominees cannot pass this compliance, which leads to refusal to open accounts or sudden freezing of incoming foreign currency payments.

• Impossibility of attracting investment and venture capital: No international institutional fund, venture investor, or buyer (in an M&A process) will sign a deal with a company whose corporate architecture is based on grey schemes. The very first Legal Due Diligence will uncover the artificial nature of ownership, turning the company into a completely "unstable" toxic asset.

• Risk of corporate raiding and fraud: According to the Civil and Commercial Code of Thailand (CCC), a person entered in the official register of shareholders (Shareholders List, Bor.Jor.5) is the legal owner of the share against third parties. Any internal powers of attorney or pre-signed waivers of shares can be invalidated in court if they are concluded with the intent to violate public order. In practice, this often ends with nominees demanding real payoffs, blocking decision-making at meetings, or blackmailing the foreign founder by turning to law enforcement agencies.

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Board of investment advice

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Fortunately for the technology sector, the Thai government knows the country's digital transformation is impossible without attracting advanced international engineering experience, capital, and highly qualified specialists. That is why, for the innovation sector, the state has created a legal, transparent, and privileged incorporation corridor through the Thailand Board of Investment (BOI)—a government agency subordinate directly to the Cabinet of Ministers. The Kingdom's investment strategy, "Thailand 44.0 defines the digital industry as one of the key drivers of growth; therefore, according to the Investment Promotion Act, projects in the field of developing fintech solutions and artificial intelligence fall under preferential categories.

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Obtaining a BOI approval certificate radically changes the company's legal status. It gives Ukrainian founders a package of fundamental legal preferences, the main of which is 100% foreign ownership of the business. This status completely removes the protectionist barriers of the Foreign Business Act (FBA), as the Department of Business Development automatically issues the company a special Foreign Business Certificate. This allows founders from Ukraine to own all shares directly or through European holdings, fully maintaining control over the enterprise, intellectual property, and dividend policy without involving fictitious Thai co-owners.

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The next critical aspect is unprecedented tax holidays and fiscal incentives. Although the standard corporate income tax (CIT) rate in Thailand is 20%, companies with BOI accreditation in digital technologies can receive a full exemption from paying it for 3 to 8 years, depending on the complexity of development and the volume of investments. At the same time, dividends paid to shareholders from such privileged profits are exempt from Withholding Tax when funds are repatriated abroad.

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Additionally, the company is exempt from import duties on specialised server equipment, high-performance machinery, and software licenses imported into the country for research and development (R&D) and infrastructure expansion.

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Beyond financial incentives, BOI status radically simplifies operations by eliminating strict employment migration quotas (the "4:1 rule"). In standard practice, to hire one foreigner, a company must provide 2 million baht in capital and hire at least four Thai citizens, which is an unbearable financial burden for small startups. However, the Investment Board can approve a quota of foreign experts on a case-by-case basis, allowing companies to form and build a team of key Ukrainian developers from the first days of operations through the Single Window Investment Centre (OSOS). Centre employees receive access to privileged visa categories.

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In particular, the Smart Visa is issued for up to 4 years, includes built-in work rights without the need to obtain a classic paper Work Permit, replaces quarterly visits to the immigration office with a simplified annual online report, and applies to family members. At the same time, for founders with a high income level and recognized exrecognised0-year Long-Term Resident (LTR) visa is available, which additionally provides a reduced fixed personal income tax rate of 17% instead of the standard progressive scale of up to 35%, ensuring the fastest and most comfortable relocation of key management.

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Stages of opening an IT company via BOI

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Incorporating a technology business through the Board of Investment is not a standard one-day company registration; it is a multi-stage process that requires careful legal, financial, and technical planning. Successful completion of this path consists of five key stages:

• Business plan development and preparation of the technical presentation of the project: Unlike standard commercial registration, BOI experts evaluate your project through the lens of its utility to Thailand's economy. The submitted business plan must not be just a marketing pitch deck, but a deep analytical document. Government officials scrutinise the technology's innovative value, your software architecture, target sales markets, and technology transfer plans. Special attention is paid to the financial model: you must clearly demonstrate the structure of future revenues, the plan for creating highly qualified jobs (even if they are mostly foreigners), and, most importantly, the level of planned expenditures on research and development (R&D). Without demonstrating a real technological component, the project risks rejection.
• Application submission and official defence (Interview): After uploading the document package via the e-Investment electronic system, the Investment Board schedules an official interview with a profile officer. Project management (founders or future directors) must personally attend this defence. Today, the Thai government allows the interview to be conducted remotely via videoconference, which is a huge advantage for Ukrainian founders. During the interview, you will have to answer questions about the business model, financing sources, software specifics, and development plans in Southeast Asia. The goal of this stage is to convince the state that you are building a real IT product, not just looking for tax optimisation.
• Approval receipt and corporate registration at DBD: If the defence is successful, BOI issues an Approval Letter. This document serves as your legal "green light" and gives you 6 months to create the company. Having it in hand, you apply to the Department of Business Development (DBD) for classic incorporation. The process starts with reserving the company's unique name, signing the Memorandum of Association, drafting the Articles of Association, and formally appointing the board of directors. Thanks to the letter from BOI, the registrar automatically ignores the Foreign Business Act restrictions and allows Ukrainians to register as 100% owners.
• Issuance of shares, capital payment, and obtaining the BOI Certificate: Company registration itself is only half the battle. To activate all tax and migration privileges, the company must fulfil financial obligations. The law requires full formation of the authorised capital, which for BOI IT projects usually amounts to at least 1 million Thai baht (approximately $30,000). These funds must be actually transferred to the account from abroad as proof of direct foreign investment (FDI). After the shares are issued and the capital is paid, the company provides relevant financial confirmations to the Investment Board. Only then is the final document issued — the BOI Certificate, which enshrines all your preferences.
• Opening a corporate multi-currency account: The final stage is integrating the company into the banking system. With the newly created package of corporate documents and the BOI Certificate, directors apply to leading commercial banks in Thailand (the most popular for IT are Kasikornbank, Bangkok Bank, or Siam Commercial Bank (SCB)). The presence of BOI status acts as a powerful marker of trust for bank compliance, which significantly speeds up the KYC (Know Your Customer) process. At this stage, the company opens full-fledged multi-currency accounts (FCD - Foreign Currency Deposit) in dollars and euros, which is critically important for service exporters, and also connects payment acquiring tools and payroll projects for the future team.

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For a Ukrainian IT business, entering the Thai market through the BOI mechanism is the most mature model of commercial expansion. It requires careful preparation of documents and state compliance, but in return, it guarantees the inviolability of intellectual property rights, tax optimisation, and complete business security before regulators.

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Understanding the specifics of Asian corporate law and immigration procedures helps you avoid fatal mistakes when planning the structure. It helps you scale confidently in the international arena.

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Website: thaiukraine.org

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Email: info@thaiukraine.org

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LinkedIn: Thai-Ukrainian Chamber of Commerce