Thai Supreme Court Decision 5457/2560 (2017) – Nominee-Shareholder Loan Scheme Void
Decision 5457-2560 (2017): Disguised Loan & Nominee Shareholders Struck Down. The defendants claimed a THB-denominated loan from the foreign plaintiff, secured by the Thai company’s shares. Evidence showed the “loan” was a simulated act hiding an outright sale of the company to foreign owners, with Thai nationals holding shares in name only to skirt the Foreign Business Act B.E. 2542. Citing section 150 civil and commercial code, the Supreme Court declared the arrangement void and refused to enforce the loan note.
Practical impact
- Courts pierce nominee structures even when disguised as debt financing.
- All contracts aimed at evading the Foreign Business Act are null and unenforceable.
- Parties risk loss of consideration and possible criminal sanctions.