"The Business Development Department will team with the Department of Special Investigation (DSI) to establish a clear framework for nominees in Thai companies early next month and focus on checking almost 27,000 firms," reports the 19 July 2012 edition of the Bangkok Post.   As matters stand now, there is no clear and agreed definition or guidance on what constitutes an illegal nominee under the Foreign Business Act, B.E. 2542 (FBA).  The FBA contains broad prohibitions on foreign ownership, but not control, of businesses operating in Thailand.  More information on the FBA is available here.

In this same article, the Bangkok Post reports that "foreign influence in a business [and] management authority" will be among the factors used to determine if a company is employing Thai "nominees" illegally to circumvent the FBA.  The FBA's definition of an alien refers only to ownership of share capital and makes no reference to management authority or voting control of a company, let alone "foreign influence".  Indeed, when the FBA was enacted in 1999 to replace NEC decree no. 281 (a decree issued by a military government in 1972, which was often referred to as the "alien business law"), proposals were made to include foreign voting and management control in the definition of an "alien" company.  These proposals, however, were rejected because of fears that they would make Thailand less competitive in an increasingly competitive world. 

And in 2007 when the appointed national legislative assembly, or the NLA, tried to amend the FBA so that a company would be considered an "alien" under the FBA if foreigners had voting control, the Joint Foreign Chambers of Commerce in Thailand stated in a position paper that such a change would "necessarily criminalize structures that are legal under current law". There was considerable opposition from the foreign business community to the use of voting or management  control to determine if a company was an alien under the FBA, many arguing that the use of such criteria would constitute a compulsory divestiture or expropriation of foreign owned assets.  Concerns were also raised about whether such measures were consistent with Thailand's obligations under the WTO and its bi-lateral investment treaties.  And, of course, fears were expressed over how such measures would affect Thailand's reputation among foreign investors. Ultimately, the NLA's proposal to amend the FBA was dropped.  For more information, click here.